12:00 AM
 | 
Jul 16, 2012
 |  BioCentury  |  Strategy

Burying Nutley

Genentech performance; need to free up cash drove Roche shutdown in Nutley

When Roche acquired Genentech Inc. in 2009, it was clear the pharma's Nutley, N.J., facility had been underperforming for years. Three years later, the continued poor performance of the Nutley site made it an obvious target for cost-cutting as the pharma reorganizes R&D to free up funds for its growing clinical pipeline.

Freeing up capital became more urgent in May after the Phase III blowup of dalcetrapib, which was supposed to be a cardiovascular blockbuster.

Meanwhile, R&D productivity at the Nutley research campus had not improved, especially compared to the output at Genentech. Indeed, Roche's decision in 2009 to move its U.S. commercial and administrative headquarters from Nutley to South San Francisco was a reflection of where the work was getting done (see BioCentury, July 28, 2008).

Roche's newest R&D reorganization simply completes the job. Shuttering Nutley eliminates the inflammation discovery and therapeutic area (DTA) in the Pharma Research & Early Development organization (pRED), and halts the division's small molecule discovery in oncology - two areas where programs from Genentech's Research and Early Development (gRED) have had a better track record in the clinic.

The reorganization follows a broader 4,800-employee (6%) reduction in headcount that Roche announced in November 2010, and continues R&D changes precipitated by the pharma's acquisition of Genentech. In 2010, Roche also shut down its Palo Alto research facility and reorganized its R&D into two autonomous divisions, pRED and gRED (see BioCentury, April 12, 2010).

pRED and gRED are responsible for the development of molecules from discovery to Phase II, after which they hand projects off to the late-stage Pharma Medicines development group (pMED).

pRED is organized into five DTAs - oncology, virology, metabolism/cardiovascular, CNS, and the soon to be closed inflammation unit. The Nutley campus led oncology small molecule research for pRED, and was the only pRED location where inflammation research was taking place.

Roche announced the closure of Nutley on June 26 and expects to cease business operations at the site by the end of 2013 and shut it down by the end of 2015. The company estimates this will eliminate about 1,000 positions, and leaves Genentech's South San Francisco site as the pharma's sole U.S research campus.

Not all of Nutley's programs will disappear. Many are being transferred to other sites, including programs in the virology DTA, and two preclinical inflammation assets.

To maintain an East Coast presence, Roche...

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