Centocor Inc. told its 190-person U.S. sales force two weeks agothat most of their jobs will be eliminated by the end of the firstquarter. According to spokesman Richard Koenig, the companywill have a total of 850 employees after the last member of thesales force leaves -- down from 1,600 in April of last year.
Koenig told BioWorld that the approximate annual cost ofmaintaining the sales force -- including salaries, benefits, traveland support staff -- was $20 million, an average of about$105,000 per employee.
On Jan. 18, the Malvern, Pa., company halted a Phase III trial ofits lead drug for sepsis, HA-1A, due to an excess of patientdeaths found in the placebo group. The company is stillanalyzing data to determine the cause of the unexpectedmortality finding. At the time, David Holveck, companypresident, said there were no plans to cut the sales positions.
Centocor's sales force has had to wear several hats in its time.Originally hired to sell HA-1A upon FDA approval, which wasexpected last spring, they were then asked to serve as clinicaltrial monitors when FDA required a third Phase III trial. Koenigdeclined to speculate on who would monitor the Phase III trialif it is resumed later this year.
Centocor has been cutting its burn rate since last April, andsome analysts predict it could be as low as $30 million for thefourth quarter of 1992 -- down from a peak of $50 million inthe first quarter. The company has approximately $150 millionin cash, with about $65 million in annual revenues from itsdiagnostics business, contract payments and interest income.
Koenig said that after the layoffs, one out of every threeCentocor employees will be involved in research anddevelopment activities. "Whether or not the HA-1A trialresumes, our focus going forward will be on research anddevelopment, product development and manufacturingcapability," he said.
Biotechnology analyst Wole Fayemi of Hambrecht & Quist inNew York issued a report on Centocor Wednesday, titled "ItAin't Over Till It's Over," in which he upgraded his rating onthe company from a "neutral" to a "buy."
Fayemi argued that the company's products and technology areundervalued at the current stock price and that its aggressivecost-cutting measures could help insure its long-term viability.He said the company now represents an "investmentopportunity" but maintained it is still a high-risk proposition.
Centocor stock (NASDAQ:CNTO) closed at $7.13 Wednesday, up63 cents a share.
-- Lisa Piercey Business Editor
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