Thursday, May 6, 2004 - Page updated at 12:00 AM

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Chiron trims Seattle operations; Pathogenesis work shifts to California

Seattle Times business reporter

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Chiron, the big California biotech company that paid $720 million to take over Seattle-based Pathogenesis during the boom of 2000, made another round of cuts in its local operation yesterday.

The move — which consists of 11 transfers to California headquarters and 10 job cuts — raises further questions about Chiron's future in Seattle. The company laid off 30 research scientists in Seattle a year ago, and now has cut another important component of the business — the people who run clinical tests that turn research into real-world drugs.

Chiron is left with 85 people working at its Elliott Bay offices, about half the number there at the peak of Pathogenesis. Some workers do clinical research, while others develop chemical processes to build up drug manufacturing or work in information technology.

Some observers are critical of how Chiron has handled Pathogenesis, a company that developed an aerosol drug for cystic fibrosis called Tobi.

At the time it was acquired, Pathogenesis was not profitable, but growing, and had some anti-microbial drugs showing promise in animal testing.

When Chiron took over and found a company with a cross-departmental team culture, it split up the departments and had them report to new bosses at California headquarters. One former employee said the new organization created confusion.

"Chiron bought filet mignon, turned it into hamburger, and now it's burning the hamburger," said Dr. Arnold Smith, a researcher at Seattle Biomedical Research Institute and a current consultant to Chiron.

The job cuts came two weeks after Chiron fell short of Wall Street's profit estimates for last quarter. The company also recently announced it had scrapped development of an experimental cancer drug that failed in human tests.

John Gallagher, a spokesman at Chiron's headquarters in Emeryville, Calif., said the cuts and transfers were made because some projects didn't pan out, and the company wanted to consolidate the clinical department in one location to improve communication.

"It's not a reflection on our commitment to the Seattle facility, it's a matter of making sure our priorities and operations are aligned," he said.

Last year, Chiron recorded $172 million in Tobi sales, about one-tenth of the company's revenues. The company has invested in expanding Tobi's use, testing it in younger cystic fibrosis patients, in a dry-powder formulation, and for other lung infections.

Many former Pathogenesis people have moved on to other local biotech companies or nonprofit research centers. Bruce Montgomery, chief executive of Corus Pharma and the former head of research and development at Pathogenesis, said the newly laid-off drug developers should find strong demand for their skills.

Luke Timmerman: 206-515-5644 or

Copyright © 2004 The Seattle Times Company


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