Praecis Pharmaceuticals is slashing 60% of its 182-person workforce as part of a dramatic restructuring initiative that will see the firm halting the promotion of its prostate cancer drug, Plenaxis (abarelix), in the US and suspending clinical development of an Alzheimer’s disease drug.
The company said that the move would significantly reduce its cost structure and would enable it to focus its resources on what it sees as its most promising assets and programmes, including development of PPI-2458 – an oral compound for the treatment of cancer and autoimmune diseases – its so-called Direct Select drug discovery technology.
President and chief executive, Kevin McLaughlin, explained that selling Plenaxis had proved more challenging than anticipated, given the limited patient population, and that it was unlikely to achieve revenue goals. However, the company remains committed to the drug outside the US market and hopes to win “a commercially acceptable” label in Germany, followed by the remainder of the European Union, through its collaboration with Schering AG. The AD drug is being shelved due to a lengthy investigational timeline and Praecis’ efforts to conserve its funds. It aims to continue to explore early-stage partnering for the compound to enable its further development in the future.
Praecis expects its annual cash burn to drop from around $60 million dollars per year to around $30 million for 2006, and that it should have available resources to allow it to pursue its remaining programs for approximately twenty-four months. Half of the restructuring charge of approximately $4.1 million will be made during the second quarter of 2005, with the remainder hitting second half results.