Cangene goes commercial

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This article was published 14/07/2012 (5055 days ago), so information in it may no longer be current.

Announcements from Cangene Corp. this week probably won’t have any significant immediate impact on the Winnipeg firm’s operations, but likely are indications of broader changes to come.

The biopharmaceutical company acquired exclusive U.S. rights for a Swedish drug called Episil used for the relief of pain associated with oral lesions resulting from cancer therapy and other causes.

Later in the week, it announced it has cancelled its product development program for Immune Globulin Intravenous (IGIV), an anti-infective used for a variety of indications.

The plasma-based IGIV was considered to be right in Cangene’s wheelhouse of therapeutics made from refined blood plasma.

The cancellation of that program is an indication of a dramatic turn away from the niche production and research and development the company has built in Winnipeg, into a more marketing-focused operation needing product for its new U.S. sales force.

With revenue and profits on the decline — the company has had three straight quarters of net losses — it has made it clear it’s limiting its research and development and trying to acquire the rights to other drugs that are all ready for commercialization.

With the announcement of the licence for Episil, Cangene CEO John Sedor said in a release, “We are focusing on late-stage, in-licensing opportunities to enhance our pipeline.”

Revenues are falling because the lucrative $500-million-plus program of anti-bioterrorism products for the U.S. Biomedical Advanced Research and Development Authority is winding down.

Some say Cangene may have missed the opportunity to leverage the work it was doing with the U.S. government either into more sales of that product or some other formulations.

Tracey Maconachie, the CEO of the Life Sciences Association of Manitoba, said, “The biggest product Cangene was selling was the bio-defence application and that market has shrunk.

The company was trying to find new products to incorporate into the pipeline… there is an ebb and flow. Sometimes a company gets the timing right and other times they don’t.”

Company officials were unavailable to comment.

Doug Loe, a biotech analyst with Byron Capital Markets, has followed Cangene for five years.

He has had a recommendation to hold the stock for some time now. For the past five years, Cangene’s stock has fallen steadily from $8 to close Friday at $1.55, up 11 cents.

“I’m not sure what to think of it anymore,” Loe said.

“As a publicly traded company, you have to identify growth opportunities because those, in part, are what investors are looking for. The company has clearly not grown.”

Loe said in addition to the fact the U.S. government contracts for botulism antitoxin heptavalent (BAT) and anthrax immune globulin (AIG) are winding down, sales of Cangene’s core product, WinRho, are in decline.

“We were always looking for ways that they could lever what they know about how to isolate plasma-based therapeutics,” he said.

“We thought the positive signal was nailing down that sizable U.S. government contract, but it never got supplanted with anything.”

One local industry source, who spoke on condition his name not be used, said there was a complete focus on the bioterrorism government work and the company took its eyes off the ball on the commercial side.

“They probably missed some significant opportunities and now they are definitely behind the 8-ball trying to change the company,” he said. “It will be a challenge.”

Since announcing layoffs of 20 per cent of its workforce at the beginning of the year, the company — which once had bragging rights as one of the most profitable biotech companies in the country — has said very little.

The current size of the Winnipeg workforce is unclear. Layoffs in January were said to cut the company-wide workforce to 580 from 700.

In 2009, there were about 550 people in Winnipeg, but that number is significantly lower now.

Cangene also employs about 100 at its contract manufacturing facility in Baltimore; it has about 35 people in its U.S. sales force; and probably about 100 people at four plasma-collection centres, including one in Winnipeg.

Since the appointment of Sedor as CEO, he and other senior executives are effectively based in a new executive office in Philadelphia.

One source said the decision to close the IGIV program will likely mean staff at the Winnipeg production and research and development operations will be depleted even further.

 

martin.cash@freepress.mb.ca

Cangene Corp. financial results (all amounts in thousands)

	2009	2010	2011	2012*
Revenue	$238,751	$150,471	$149,707	$82,577
Profit (loss)	$60,512	$16,467	$1,509	($12,889)

 

 

* First nine months of fiscal 2012