Obesity med Belviq hasn’t been coming through for Arena ($ARNA)--and the drugmaker has seen enough. It’s changing up its priorities, but the move will cost 100 workers their jobs.
The company is slashing its workforce by 73% as it pivots its focus to its clinical-stage pipeline, it said late Thursday. The job cuts will hit across research, manufacturing and general and administrative functions, and the San Diego-based company expects it will cut annual costs by between $23 million and $25 million.
In the meantime, though, the layoffs--which Arena expects to be complete by the end of August--will cost the company about $6.1 million, and it expects to chop additional jobs at a Swiss manufacturing facility, it said.
The reorganization is no surprise considering the struggles that Belviq has faced since launching in 2013. Despite a hefty investment from marketing partner Eisai--introducing DTC and a rep army hundreds strong--the med has failed to take off. In last year’s Q4, Arena netted just $3.9 million in royalties on just $8 million in Eisai sales--a top-line haul for the Japanese drugmaker that declined for the fourth straight quarter.
That performance spurred Eisai to rethink its commitment to Belviq, too. In March, it pulled back most of its reps, deciding to field a contract sales force of no more than 75 reps to promote the drug.
It’s not as though Arena’s alone, though. Its rivals in the obesity space--Vivus ($VVUS), which sells first-to-market Qsymia, and Orexigen ($OREX), which markets Contrave--have also foundered, resulting in some personnel changes of their own. Last year, Vivus scaled back its sales force in two straight quarters, bringing its rep tally down to 50. And Orexigen has had to regroup after commercial partner Takeda walked away from its marketing agreement in March.
Arena has also seen some change at the top, with CEO and founder Jack Lief stepping down last October at the board’s request. Investors approved, sending shares up when they heard the news. Since then, Amit Munshi has stepped into the head honcho’s role after a temporary CEO shift from director Harry Hixson.
Now, it’ll be up to Arena’s pipeline to help get the company back on track, and Munshi is confident it can do it. It’s currently working to advance candidates in ulcerative colitis, pain and pulmonary arterial hypertension, and it boasts collaborations in areas including CNS, too.
“We believe our clinical stage pipeline has the potential to deliver first-or best-in-class compounds for a broad race of indications,” he said in a statement. “Building a streamlined and highly focused organization supports our primary objective--developing our pipeline in a timely and effective manner.”
- read Arena’s release
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