OSI Ties Guidance Withdrawal to New Greenburgh, NY, Campus; Eyes $60M Capital Renovation Costs, $25M Restructuring Costs
OSI Pharmaceuticals executives announced on their quarterly conference call with analysts this week that the forthcoming consolidation/expansion in the New York City suburb of Greenburgh, NY, has prompted the company to withdraw its guidance for the rest of 2009 with respect to its research and development, selling, general and administrative expenses; cash; and earnings per share, as the company decides details of accounting the expenses associated with the move.
The withdrawal is "subject to a full analysis and the understanding of timing and accounting treatment related to the US consolidation project spending," Pierre Legault, OSI's chief financial officer, executive vice president, and treasurer, said on the July 22 conference call.
The executives also offered some more details this week on the projected cost of consolidating the company's operations from four sites — two of them, including its headquarters, in the New York suburban region of Long Island — at the 43-acre, 400,000-square-foot Ardsley Park Science & Technology Center in Greenburgh.
Legault said that the company expects to incur $60 million in capital renovation costs, plus another $25 million in expenses stemming from its consolidation plan, under which the company will bring 350 current employees, then hire another 400 staffers by 2012 [BRN, July 17, July 10].
The figures are roughly in line with past OSI statements, which have pegged the total cost of the relocation/expansion at $95 million to about $100 million.
"Moving to the US site consolidation, we currently expect approximately $25 million in restructuring related costs over the next two years, which will primarily relate to one-time labor related and facility exit costs. In addition, we purchased the Ardsley campus for $27 million, and we expect to incur approximately $60 million over the next 18 months in capital-related renovation costs," Legault said.
Legault repeated earlier OSI projections that the consolidation will save the company $15 million a year after it is completed, something the company anticipates happening by the fourth quarter of 2010.
"Moving the business to a location with a significantly improved labor market and an emerging biotech cluster offers us appreciable advantages as we prepare for an anticipated period of sustained growth," CEO Colin Goddard said on the conference call.
Dendreon Identified as Biomed Company Eyeing Manufacturing Plant near Atlanta
Dendreon plans to invest about $80 million in a manufacturing operation near Atlanta and create at least 300 jobs, the Atlanta Business Chronicle reported this week — days after breaking news of the project without identify the company involved [BRN, July 17].
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Dendreon did not comment on the Business Chronicle's follow-up story, which speculated that the logistics of treating people with the company's Provenge prostate-cancer immunotherapy "could be another reason Dendreon picked a location close to the world's busiest airport, Hartsfield-Jackson Atlanta International Airport." The company is pursuing final approval of the drug from the US Food and Drug Administration following successful clinical trials, though the application was tabled earlier this year to await additional results.
According to the newspaper, Dendreon would occupy a 202,000-square-foot building to rise as part of the 137-acre Airport Center III site, near the airport. Developer Majestic Realty won approval for the building in June from officials in Union City, Ga.
Dendreon might be positioning itself for the impending FDA approval with the potential facility, Omer Kucuk, professor of hematology and oncology at Emory Winship Cancer Institute, told the Business Chronicle.
Dendreon is on a growth wave, having hired a construction manager for its planned $50 million expansion of its therapeutic biotechnology processing facility in Morris Plains, NJ [BRN, June 26], then disclosing plans to more than double the size of its headquarters near downtown Seattle, as well as searching for about a quarter-million square feet of office and laboratory space along the city's waterfront or South Lake Union neighborhood [BRN, July 2].
NIST Awards $55.5M for Four New University Research Facilities
The US Commerce Department's National Institute of Standards and Technology has awarded grants totaling more than $55.5 million funded by the $787 billion federal stimulus measure, the American Recovery and Reinvestment Act, to four universities toward the construction of new scientific research facilities:
• University of Miami (Fla.) — $15 million for a Marine Technology and Life Sciences Seawater Research Building, matched by $28.8 million;
• Auburn (Ala.) University — $14.4 million for a Center for Advanced Science, Innovation and Commerce, matched by an equal amount;
• William Marsh Rice University, Houston, Tex — $11.1 million for the new Brockman Hall for Physics, matched by $33.4 million; and
• University of North Carolina-Wilmington — $15 million for the new Marine Biotechnology in North Carolina, or MARBIONC, facility, matched by an equal amount.
NIST said it expects to award approximately $120 million in additional research
construction grants under a new competition announced in May. Those awards will be announced by March 2010.
Bausch & Lomb Says Grants Key to Choosing Madison, NJ, for New Global Pharma HQ
Bausch & Lomb has opened a new 30,000-square-foot global pharmaceutical division headquarters in Madison, NJ, a facility the company said will create 70 new full-time jobs.
“It’s all about people, and the best people in health care in the world are located in New Jersey,” Gerald Ostrov, CEO of the eyecare giant, told the weekly business newspaper NJ BIZ. He said B&L is in the process of recruiting executives to work at the Madison office, and it makes sense to locate a pharmaceutical headquarters where there’s already a sizeable work force from which to recruit.
New Jersey was attractive because its concentration of drug firms “opens up opportunities to partner with other pharmaceutical companies and to drive commercialization of new products,” Ostrov told the newspaper. The company also cited the state’s “vibrant pharmaceutical and biotechnology industries” as a key factor.
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“We’re looking forward to growing our presence here, which in turn will help us bring the best possible eye health products and services to people around the world,” he said.
Key to the company agreeing to build the Madison facility, Ostrov told NJ BIZ, was the state's Business Employment Incentive Program, which will award Bausch & Lomb grants equivalent to the state income taxes paid by the company's employees: “Obviously, this was our preferred location, but we got the right kinds of incentives. I think we’re going to create a lot of jobs in Madison.”
Bausch & Lomb plans to keep its world headquarters in Rochester, NY; the new Madison facility is the pharmaceutical division’s headquarters. B&L, which employs 10,000 worldwide, sells everything from contact lenses and over-the-counter solutions to lenses for cataract surgery.
CML Eyes End-of-August Shift in API Production to New Germantown, Wis., Plant
Cambridge Major Laboratories will begin transferring active pharmaceutical ingredients production to its 125,000-square-foot manufacturing plant in Germantown, Wis., at the end of August, though the new facility will be officially opened next week, In-pharma technologist reported.
The facility features six good manufacturing practice quality production suites that can make multi-ton quantities of both active pharmaceutical ingredients and pharmaceutical intermediates. The plant's overall output capacity is 18,000 gallons, though that capacity can be increased by another 30,000 gallons for especially large manufacturing projects.
“Without this site we would never be considered for large-scale commercial manufacturing,” CEO Michael Major told the online news site, adding that in the past, the firm had lost out to rivals with larger manufacturing capacity.
“Now we have the horsepower to take our clients new molecules from concept to full commercialization,” Brian Scanlan, CML's chief business officer, told In-pharma technologist, adding that “with all the hype surrounding drug safety and quality from offshore suppliers CML’s model has shown that US-based manufacturing is still alive and well.”
CML hopes the new facility will enable it to emerge as a leading supplier of API and intermediates to the pharma and biotech industries, a field that was all but certain to be dominated by Asian companies due to lower production costs and available capacity, until a series of scandals with APIs processed in the region gave US and European companies what they consider an opportunity to gain back market share, the news site reported.