In the wake of last month's Omontys recall, Affymax ($AFFY) is jettisoning three-fourths of its staff and considering bankruptcy. Without the fuel of Omontys sales, the small drugmaker is basically running on fumes. And it has to spend money to investigate the hypersensitivity reactions--and patient deaths--that triggered the recall. So, out comes the cost-cutting ax.
When Johnson & Johnson ($JNJ) had to yank millions of bottles of over-the-counter drugs, its McNeil Consumer Healthcare unit took an immediate $300 million hit to sales (and more since). But the massive conglomerate had plenty of other product lines to lean upon.
Not so for Affymax. The anemia treatment for kidney patients is Affymax's sole marketed drug. Without sales--and with additional expenses--the company will slash about 230 jobs and rally the rest to discover the cause of Omontys' trouble.
"While this decision was extremely difficult, aligning and managing our limited resources around our product investigation is our most important priority," CEO John Orwin said in a statement.
As Bloomberg notes, the company said in an Securities and Exchange Commission filing that it has no idea how long the investigation will take--or whether Affymax can actually drive it to completion. And that's why the company is weighing bankruptcy. It might sell itself, alternatively, or simply wind down operations.
- check out the Affymax statement
- read the Bloomberg piece