July 1, 2016
By Mark Terry, BioSpace.com Breaking News Staff
San Diego-based Arena Pharmaceuticals announced today that it is laying off about 100 people as part of a strategic change in priorities.
The company says its U.S. workforce reduction will be completed by August 31 of this year, and expects restructuring charges, mostly in this year’s second quarter, to be $6.1 million related to one-time employee termination costs. The job cuts account for 73 percent of its workforce, and will primarily take place in research, manufacturing and G&A. It expects to save personnel expenses annually of $17 million and between $6 and $8 million in operating expenses.
The company intends to focus on its clinical programs, notably etrasimod (APD334), which is currently in a Phase II trial for ulcerative colitis—APD334 is a modulator of the spingosine 1-phosphate subtype receptor; APD371, which is wrapping a Phase I dose trial for pain; and ralinepag (APD811), currently in a Phase II trial for pulmonary arterial hypertension (PAH).
In addition, Arena will continue to support various ongoing collaborations. It is working with Eisai Inc. and Eisai Co., Ltd. and other companies for BELVIQ for weight management. Axovant Sciences and Arena are in Phase II trials of nelotanserin for central nervous system disorders. And the company has a Phase I trial for temanogrel for thrombotic diseases in a Phase I trial with Ildong Pharmaceuticals Co.
“We believe our clinical-stage pipeline has the potential to deliver first or best-in-class compounds for a broad range of indications,” said Amit Munshi, Arena’s president and chief executive officer, in a statement. “Building a streamlined and highly-focused organization supports our primary objective—developing our pipeline in a timely and efficient manner.”
Amit Munshi only recently took over the reins of the company in May. Prior to joining Arena, Munshi was president, chief executive officer, and a director of Epirus Biopharmaceuticals. Before that, he was president and chief executive officer of Percivia.
Spenser Osborne, writing for Seeking Alpha, noted that the company’s cash was heading downward and that investors had concerns over whether it would get some clinical data out before the cash level became a problem. Today’s announcement gives the company some time, but maybe only a few weeks.
“With a much leaner operation,” Osborne writes, “and a pair of drugs in Phase II clinical trials, Arena is more marketable than ever at this point in time. Near term cash concerns have not evaporated, but the costs of the business have just been improved substantially.”
But the first Phase II results aren’t expected until the first or second quarter of 2017. Osborne suspects the company may have positioned itself for a private placement.
“Make no mistake,” Osborne writers. “It is still my belief that the cash situation at Arena has not yet been solved. I do feel that the options available to Arena have just increased. Dilution in any form is never fun for existing investors, but in my opinion it would be better than giving up too much of a percentage to a big pharma partner on APD334 or APD811.”
Arena is currently trading for $1.67 per share.
