OSI Pharma, Long Island Biotech Bellwether, Shut Down by Astellas

5/14/13Follow @benthefidler

OSI Pharmaceuticals became the home-grown beacon of Long Island, NY’s biotech scene behind the lung cancer drug erlotinib (Tarceva), which was so successful that led Japan’s Astellas Pharma to buy the company outright in a $4 billion deal in May 2010. It took just three years to end the honeymoon, however: Astellas has shuttered OSI’s Long Island hub as part of a sweeping R&D restructuring that will affect 200 jobs in the U.S.

Astellas didn’t give much insight into exactly why it is closing OSI specifically in its announcement, but the company is restructuring a big portion of its research operations and shuffling a bunch of positions and centers around in the U.S. Astellas is also closing down Redwood City, CA.-based Perseid Therapeutics, which was developing drugs for rheumatoid arthritis and other autoimmune disorders, and scaling back the Astellas Research Institute of America in Evanston, IL. The institute, which conducts preclinical drug studies, will now focus on therapies for central nervous system disorders, according to Astellas.

OSI, originally known as Oncogene Science when it was formed in 1983, broke out in 2004 when the FDA approved erlotinib as a second-line therapy for patients with non-small cell lung cancer. A year later, OSI expanded the franchise by winning FDA approval to use erlotinib in combination with chemotherapy drug gemcitabine in people with pancreatic cancer. The drug became a big hit: by 2010, it was sold in 109 countries and brought in $1.2 billion worldwide for OSI and its partner, Roche. That was enough for Astellas, which snapped up OSI that year for $57.50 per share to gain a big presence in cancer research in the U.S. OSI served as the center of Astellas’ development for small molecule oncology drugs.

But OSI also had another notch on its belt in its hometown: it had become an important draw for life sciences startups in Long Island. The company is the anchor tenant for the Broad Hollow Bioscience Park, a not-for-profit partnership between Farmingdale State College, Cold Harbor Laboratory, and the Research Foundation of the State University of New York. The two-building, 102,500-square-foot facility is located on the campus of Farmingdale State College in Long Island and offers space for early-stage life sciences startups to perform the wet chemistry experiments that get their research off the ground. Other cancer drug producers such as IRX Therapeutics and Helicon Therapeutics have called the park their home. The college wanted to add a third building to the facility, but postponed those plans because of the OSI closure, Newsday reported late Monday.

Astellas spokeswoman Jenny Kite declined to specify exactly how many cuts would come at the OSI facility in particular, but says that the restructuring affects 200 jobs in the U.S. Newsday reported that 115 people worked at OSI’s lab. Kite says that Monday was the last work day for the majority of the employees at the lab, but that a few will be kept on to help with the transition at the facility. All OSI employees are getting first dibs on any open Astellas jobs around the globe, and are getting “generous” severance packages, according to Kite.

“We know this is a difficult time for them and we’re trying to make the transition easier,” she says.

She didn’t have an estimate for how long the wind-down period would take.

Ben Fidler is Xconomy's Deputy Biotechnology Editor. You can e-mail him at bfidler@xconomy.com Follow @benthefidler

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