Arena Pharmaceuticals saw its shares sink 15% as further details surrounding its response to the US Food and Drug Administration's rejection of its weight management drug lorcaserin emerged alongside news of a 25% cull of its workforce to save cash.
Back in October US regulators issued a complete response letter regarding lorcaserin's New Drug Application, which included a number of questions - including some relating to tumours found in animal studies and the exact benefits of the drug - that must be addressed before its marketing application can be resibmitted.
Arena said last week that it is still in discussions with the FDA on finalising the protocols for activities designed to address the issues raised by the FDA and the assessment of the benefit-risk profile of lorcaserin. But while the drugmaker stressed it continues to believe it can resubmit the NDA for lorcaserin NDA by the end the year as planned, it seems shareholder confidence might be wavering.
For one, the numerous batches of new data required by regulators includes a possible 12-month study in female rats to test whether transient prolactin elevation mediated by short-term exposure to lorcaserin could cause mammary tumors, and Arena did add the caveat that certain activities required by the FDA could impact the timeline for resubmission or potential approval.
In parallel, the firm also announced that it is shedding 25% of its workforce in a bid to save around $13.5 million a year, to help it focus resources on securing approval for lorcaserin and progress certain earlier-stage research and development programs.
Aside from lorcaserin activities, Arena said it plans to this year complete the ongoing Phase Ia clinical trial testing APD811 for pulmonary arterial hypertension as well as advance APD334 for the treatment of multiple sclerosis toward clinical development. In addition, the group is planning to explore exclusive partnering opportunities for range of internally discovered, oral GPR119 agonists.
While the firm "deeply regrets" having to reduce its workforce, the move "strengthens our financial position by focusing our resources on the prioritized programs that we believe have the greatest potential to deliver value," explained Jack Lief, Arena's president and chief executive.
The company said it expects to incur restructuring charges, primarily in the first quarter of 2011, of around $3.8 million in connection with the workforce reduction.