Te­va ax­ing 14,000 work­ers, putting R&D and man­u­fac­tur­ing fa­cil­i­ties on the block in mas­sive re­struc­tur­ing

Im­age: Kåre Schultz, Te­va CEO. News Øre­sund

New­ly ap­point­ed Te­va CEO Kåre Schultz un­veiled a mas­sive re­or­ga­ni­za­tion of the com­pa­ny to­day, with plans to ax 14,000 work­ers, shut­ter R&D and man­u­fac­tur­ing fa­cil­i­ties in var­i­ous places and rad­i­cal­ly pare down $3 bil­lion in costs glob­al­ly to re­make the com­pa­ny in the wake of a pun­ish­ing down­turn in the gener­ic drug busi­ness.

Schultz and the team he’s putting to­geth­er for Te­va are mak­ing a rad­i­cal break from the past, shed­ding a long run­ning re­luc­tance to cut staffers in Is­rael. Al­to­geth­er, the com­pa­ny is cut­ting more than 25% of its work­force and slash­ing a large por­tion of its $16 bil­lion cost struc­ture.

That is a bit­ter pill for staffers at the com­pa­ny, but it is mu­sic to the ears of its in­vestors who have watched the num­bers de­te­ri­o­rate. Te­va’s stock spiked 16% af­ter the re­struc­tur­ing news hit.

The com­pa­ny’s state­ment says that they will close or sell off a “sig­nif­i­cant num­ber of R&D fa­cil­i­ties.” Man­u­fac­tur­ing fa­cil­i­ties will al­so be put on the block. And Schultz plans to launch a top-to-bot­tom R&D re­or­ga­ni­za­tion, start­ing with a com­plete re­view of its spe­cial­ty and gener­ic pipelines. When it’s done, he says, Te­va plans to have a sub­stan­tial pipeline in place able to pro­duce new and gener­ic ther­a­pies. But a com­pa­ny spokesper­son tells me there are no specifics yet on who’s get­ting cut in R&D and which fa­cil­i­ties will be shut­tered.

Te­va is meld­ing to­geth­er its gener­ics and spe­cial­ty drug busi­ness, in­te­grat­ing two re­search groups for brand­ed and gener­ic drugs and look­ing for “syn­er­gies” that al­low the com­pa­ny to cut deep in­to R&D. R&D chief Michael Hay­den is al­so head­ed out, as the com­pa­ny an­nounced ear­li­er.

“The on­ly thing we are re­al­ly pro­tect­ing is the prod­uct flow,” Schultz told an­a­lysts Thurs­day morn­ing. Every­thing else, with the ex­cep­tion of man­u­fac­tur­ing of prof­itable prod­ucts, faces the ax. The cuts are “all over the place,” both in the dif­fer­ent groups as well as the ge­o­gra­phies where Te­va works glob­al­ly.

Fo­cus­ing on man­u­fac­tur­ing, Schultz says that Te­va has 80 man­u­fac­tur­ing sites un­der re­view and there will be “dou­ble-dig­it plant clo­sures the next two years.” If the com­pa­ny was to wipe the slate clean and then start over, it would have a to­tal of on­ly 8 to 12 sites. It’s not re­al­is­tic to do that now, he adds, but over the next 10 years that’s the di­rec­tion the com­pa­ny plans to take fol­low­ing ini­tial cut­backs

Te­va will al­so set the stage for a planned launch of Auste­do and their CGRP mi­graine drug fre­manezum­ab. And the CEO cit­ed CNS dis­eases as Te­va’s best hope for de­liv­er­ing new med­i­cines as Te­va re­fo­cus­es R&D.

The CEO is al­so scrap­ping div­i­dends and bonus­es for 2017 as Te­va grap­ples with its fi­nan­cial cri­sis.

Says Schultz:

To­day we are launch­ing a com­pre­hen­sive re­struc­tur­ing plan, cru­cial to restor­ing our fi­nan­cial se­cu­ri­ty and sta­bi­liz­ing our busi­ness. We are tak­ing im­me­di­ate and de­ci­sive ac­tions to re­duce our cost base across our glob­al busi­ness and be­come a more ef­fi­cient and prof­itable com­pa­ny.

Rum­blings about these cuts have al­ready in­spired a string of protest plans on the part of Is­raeli unions, which hold a pow­er­ful po­si­tion at Te­va. Over the past year, though, Te­va has been in a fi­nan­cial tail­spin. Its deal to buy Al­ler­gan’s gener­ic busi­ness just ahead of the price ero­sion in the field has af­flict­ed all play­ers.

“I am aware that we will be part­ing with peo­ple who have ded­i­cat­ed years and con­tributed a great deal to this com­pa­ny,” Schultz says in a note to staffers, “and I deeply ap­pre­ci­ate their com­mit­ment. We are al­so aware that these changes im­pact not on­ly our work­force, but ven­dors, sup­pli­ers and com­mu­ni­ties where we have played a key role for years. How­ev­er, there is no al­ter­na­tive to these dras­tic steps in the cur­rent sit­u­a­tion.”

Brent Saunders [Getty Photos]

UP­DAT­ED: Ab­b­Vie seals $63B deal to buy a trou­bled Al­ler­gan — spelling out $1B in R&D cuts

Brent Saunders has found his way out of the current fix he’s in at Allergan $AGN. He’s selling the company to AbbVie for $63 billion in the latest example of the hot M&A market in biopharma.

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An­a­lysts have been watch­ing this race for awhile now, as Sanofi/Re­gen­eron won a snap pri­or­i­ty re­view for what is now their third dis­ease in­di­ca­tion for this treat­ment. And they’re not near­ly done, build­ing up hopes for a ma­jor fran­chise.

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Ini­tial­ly pen­ciled in at a uni­corn-sized $225 mil­lion, the KKR-backed biotech has spiked that to the neigh­bor­hood of $300 mil­lion, look­ing to sell 20 mil­lion shares at $14 to $16 each. That’s an added 5 mil­lion shares, re­ports Re­nais­sance Cap­i­tal, which fig­ures the pro­posed mar­ket val­u­a­tion for Neil Ku­mar’s com­pa­ny at $1.8 bil­lion.

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Judge Leonard P. Stark is­sued a tem­po­rary in­junc­tion ear­li­er this week, forc­ing My­lan, Dr. Red­dy’s Lab­o­ra­to­ries and Au­robindo Phar­ma to shelve their launch plans to al­low the patent fight to pro­ceed. He ruled that al­low­ing the gener­ics in­to the mar­ket now would per­ma­nent­ly slash the price for No­var­tis, even if it pre­vails. 

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Back in 2014, Stephanie Tagliatela opted to take an early exit out of her PhD program after working in Mark Bear’s lab at MIT, where she specialized in the synaptic connections between neuronal cells in the brain. She never finished that PhD, but she and fellow MIT student Kartik Ramamoorthi — who was on the founding team at Voyager — came away with some ideas for a gene therapy startup.

Today, fully 5 years later, she and Ramamoorthi are taking the wraps off of a $104 million mega-round designed to take the cumulative work of their preclinical formative stage for Encoded Therapeutics into human studies. They’ve now raised $158 million since starting out in Illumina’s incubator in the Bay Area, and they believe they are firmly on track to do something unique in gene therapy.

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Novotech CEO Dr. John Moller

Novotech CRO Award­ed Frost & Sul­li­van Best Biotech CRO Asia-Pa­cif­ic 2019

Known in the in­dus­try as the Asia-Pa­cif­ic CRO, Novotech is now lead CRO ser­vices provider for the grow­ing num­ber of in­ter­na­tion­al biotechs se­lect­ing the re­gion for their stud­ies.

Re­flect­ing this Asia-Pa­cif­ic growth, Novotech staff num­bers are up 20% since De­cem­ber 2018 to 600 in-house clin­i­cal re­search peo­ple across a full range of ser­vices, across the re­gion.

Novotech’s ca­pa­bil­i­ties have been rec­og­nized by an­a­lysts like Frost & Sul­li­van, most re­cent­ly with the pres­ti­gious Asia-Pa­cif­ic CRO Biotech of the year award for best prac­tices in clin­i­cal re­search for biotechs for the fifth year. See oth­er awards here.

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Richard Gonzalez testifying in front of Senate Finance Committee, February 2019 [AP Images]

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Top an­a­lyst finds a sil­ver lin­ing in Ab­b­Vie’s $63B Al­ler­gan buy­out — but there’s a catch

Af­ter get­ting beat up on all sides from mar­ket ob­servers who don’t much care for the lat­est mega-deal to ar­rive in bio­phar­ma, at least one promi­nent an­a­lyst now is start­ing to like what he sees in the num­bers for Ab­b­Vie/Al­ler­gan.

But it’s go­ing to take some en­cour­age­ment if Ab­b­Vie ex­ecs want it to last.

Ab­b­Vie’s mar­ket cap de­clined $20 bil­lion on Tues­day as the stock took a 17% hit dur­ing the day. And SVB Leerink’s Ge­of­frey Porges can see a dis­tinct out­line of an up­side af­ter re­view­ing the fun­da­men­tals of the deal.

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