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In Oxford Glycosciences Restructuring, Proteomics Will Play Second Fiddle

NEW YORK, Sept. 26 - Call it another small step for drug development.


Oxford Glycosciences has restructured its organization and created three distinct business units in which proteomics will play second fiddle to cancer-drug development, according to a company spokeswoman. The move, which took place over the past three weeks after US regulators delayed the approval of an important drug, cost 50 staffers their jobs and shuttered a facility in the United States that had opened only six months earlier.


Hoping to help the company rebound from the setback, new OGS chief David Ebsworth, who was hired in July, "took immediate action" to turn OGS into an "R&D based pharmaceutical company." To that end, he divided the firm into three units: oncology, proteomics, and inherited storage disorders.


According to the company, the proteomics division will be called upon to support the oncology and ISD units, which will "form the core" of OGS' product-development activities. The firm also closed its base in Bridgewater, NJ, which had opened in early February and supported a nine-person sales and marketing staff. These folks were all laid off, said the spokeswoman, who asked not to be named.


About 40 employees from the UK also were let go, among whom were scientists from the proteomics department whose jobs became superfluous after the company decided "it no longer needed people when machines could do the job," the spokeswoman said. Specific numbers were not available at deadline.


OGS said it took the step, which also caused the departure of new global therapeutics president Don DeGolyer, to help keep tabs on efficiency. "The purpose of the move is also to give each of the divisions more accountability, more transparency, and more responsibility," the spokeswoman said, who added that the units will have their own profit-and-loss indicators beginning in January.


The proteomics arm will be run by Andrew Lyall, a Glaxo alumnus who formerly led OGS' IT department. His group is pegged to become profitable sometime next year. By comparison, the ISD unit is expected to see black by 2005, while oncology has not been given a deadline, the company said. "This will be the more longer-term strategic investment," the spokeswoman said.


(Lyall took over the proteomics-research team from Raj Parekh, who left to run the oncology unit, according to the spokeswoman. Chris Moyses will lead the ISD unit, she said. It was not immediately clear how many scientists will work at the units.)


OGS went public in 1998 based on its proteomics technology. At that time investors were smitten with the company's technology but also noticed a drug in the pipeline--the type 1 Gaucher disease drug Zavesca. Bonus, they thought. Yet the drug entered Phase III trials just as platform companies began losing their luster among those investors. As a result, the product "really stole the limelight," the spokeswoman said.


"The company is reliant on the proteomics division and the ISD to fund some of the development pipeline, but the sustainable, long-term business will come from oncology," she added. In addition, she said, Ebsworth made clear his plans to "acquire either targets or companies to fill" the units pipeline.


This might be a boon to the proteomics division, now relegated to second-class status: a fertile pipeline will likely result in increased internal R&D spending. The restructuring, incidentally, will cost OGS £1.1 million, or roughly $1.7 million, in a one-time charge. OGS said it stands to save about £3.5 million per year beginning at the end of the month, £2.4 million of which will come directly from the protemics side.


Asked whether the move to divide the firm into three groups with three distinct P&L indicators is an overture to spinning them off, the spokeswoman said that while "it's not on the cards for the moment," the move will serve to grease the skids if the company decides to take that step in the future. "But it's not part of the plan at the moment," she stressed.

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