The USA’s Exelixis is the latest company to slash jobs in a bid to keep its head above water and the biotech firm says it is focusing its resources on three late-stage compounds.

The South San Francisco-based biotech is cutting its staff by 40%, or 270 employees and claims that as a result of the restructuring, cash expenditures through 2011 will by reduced by $90 million. The savings are related to reductions in compensation and benefits, laboratory supplies and clinical trial costs.

Exelixis says its first priority now will be aggressively advance XL184 which is in Phase III trials for medullary thyroid cancer and is partnered with Bristol-Myers Squibb, as well as XL147 and XL765, two drugs being co-developed with Sanofi-Aventis for the management of solid malignancies. The company insists it retains “a fully integrated R&D organisation, and will continue to advance new compounds into development, although the number will be reduced for the foreseeable future”.

Exelixis added that it will be able to meet all of its obligations to partners and, as a result of retained R&D capabilities and “numerous unpartnered clinical and preclinical compounds, the company expects that its ongoing and future business development discussions will be unaffected”. It will record a restructuring charge of $15 million in the first quarter, which may increase later in the year, “depending on potential facility-related charges and other write downs that have not yet been finalised”.

Chief executive George Scangos said that “along with our investigators and partners, we remain enthusiastic about their potential as new anti-cancer agents and have retained the development expertise and capabilities to advance these compounds expeditiously”. He added that “we have scaled our fully-integrated drug discovery and preclinical development organisation to deliver one investigational new drug per year”, and a New Drug Application for XL184 should be filed in the second half of 2011.

Mr Scangos concluded by saying that the restructuring “is the right step for the company and positions us well to move into the future”. However, he acknowledged “it is extremely difficult to release many people who have contributed substantially to the company over the years and who are our friends and colleagues”.

XenoPort reduces staff by 50%
News of Exelixis job cuts came a couple of days after fellow Californian firm XenoPort said it reducing its workforce of about 220 by half. Chief executive Ronald Barrett said the firm needed to “prioritise later-stage development activity and eliminate our discovery research efforts”.

The move has been provoked by the US Food and Drug Administration’s rejection last month of XenoPort and GlaxoSmithKline's Horizant (gabapentin) as a treatment for restless legs syndrome. The reduction in workforce should save the company $15.6 million but will cost up to $4.2 million during the first half of 2010.

Mr Barrett said XenoPort will work with GSK (and partner Astellas in Japan) to get approval for Horizant and will also focus on completing a Phase IIb trial of arbaclofen placarbil for gastroesophageal reflux disease patients and start a mid-stage study of XP21279 for Parkinson's disease.