Winnipeg Free Press
Wednesday January 5 2005
By Geoff Kirbyson
THE president and CEO of Cangene Corp. isn't sure how much some new and pending contracts will add to its revenue, but he's confident its existing manufacturing facility is too small to meet the anticipated demand.
The Winnipeg-based biotech firm broke ground earlier this week on a 40,000-square-foot addition to its plant at the University of Manitoba's Smartpark.
John Langstaff said Cangene is expanding because it recently received licences to distribute its primary product, WinRho -- used to prevent hemolytic disease of the newborn, a serious blood-type incompatibility between a mother and a fetus -- to 10 European countries, including Italy, Portugal and Holland. Cangene already distributes the product in Canada, the U.S. and the U.K.
Cangene is also deep in negotiations with the U.S. government for bio-defence contracts with the Atlanta-based Center for Disease Control.
Langstaff said the talks are centred on expanding existing contracts signed during the last two years, but the ultimate dollar value remains up in the air. He said he's confident the contracts will be worthwhile.
"We have a significant working relationship with the CDC. We've been single-sourced for the hyper immune globulin against the toxins from botulism," he said. Langstaff said the plant's addition won't be fully operational until the summer of 2006.
"It's a very high-tech manufacturing area. It takes a considerable amount of time to get equipment installed and validated," he said.
He noted depending on the amount of new business it receives, Cangene would likely require a "significant" expansion to its current employee base of 450.
Langstaff said the addition is the second in two years and will expand its manufacturing facility to about 125,000 square feet.
Combined with the ongoing construction of the Richardson Centre for Nutraceuticals and Functional Foods and the recent opening of the IMRIS building, the Smartpark is in the midst of a "building frenzy."
"It's become a happening place for technology," he said. To finance the expansion of its bricks and mortar, Cangene announced yesterday it has arranged a new $30-million facility with its senior lender, Scotiabank. The company can draw on the building-expansion facility until September 2006, after which it becomes repayable over five years. It has also negotiated an increase in its operating line of credit from $15 million to $20 million.
Cangene's shares (CNJ/TSX) closed down 70 cents yesterday to $10.45 on volume of 7,700.
geoff.kirbyson@freepress.mb.ca