UK biotechnology firm Vernalis is to cut over half its workforce as part of an extensive restructuring brought on by the rejection last year by US regulators of a supplementary filing for the migraine drug Frova.
Last October, the US Food and Drug Administration turned down a supplemental New Drug Application for Frova (frovatriptan) as a treatment for menstrual migraine, a move which meant that Vernalis missed out on a $40 million milestone payment from partner Endo Pharmaceuticals.
Now, as part of the restructuring, Vernalis has settled a $56 million loan from Endo, a deal which involves the UK firm paying $7 million to its partner. The loan has been immediately cancelled but Vernalis will now forego future royalties on US sales of Frova until they exceed $85 million per year. For the first nine months of 2007, Frova turnover was $38 million.
Back to the restructuring and Vernalis is reducing its headcount from 210 to approximately 90, most of which will come from corporate and other areas than R&D. Indeed, of the staff remaining, 75 will be involved in R&D, meaning that Vernalis will basically return to being a discovery and development firm.
This refocusing on research means that the company’s Apokyn (apomorphine hydrochloride injection) for Parkinson’s disease is to be divested, plus Vernalis’ commercial operations in the USA. The Winnersh-based company added that “detailed discussions are currently ongoing with interested parties on these divestments”.
Vernalis will continue developing four product candidates in house – compounds for Parkinson’s disease, ischemic stroke, neuropathic pain and obesity – and will carry on with collaborations with Biogen Idec (Parkinson’s) and Novartis (cancer). The restructuring, which should be completed in the second quarter, will leave cash use at less than £10 million a year and the company noted that at the end of 2007 it had cash resources of £20.5 million.
CEO steps down
The firm also noted that Simon Sturge will step down as chief executive and as a director at the end of this month and Peter Fellner, executive chairman, said he is now looking forward “to working directly with the management team to implement this revised business strategy”.
News of the restructuring has gone down well with investors and Vernalis shares were up 9.5% at 9.40 this morning to just over 8 pence.
