Arena Pharmaceuticals Axing 100 Employees, 73% of Workforce

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Arena Pharmaceuticals is eliminating nearly three-quarters of its workforce—approximately 100 employees—in the company’s second wave of layoffs in less than a year.

Arena said the reduction of 73% of its workforce reflects a shift in company priorities toward advancing three clinical programs and supporting four collaborations.

The company has also struggled with lower-than-expected sales of its single marketed product, the obesity drug Belviq (lorcaserin HCl), which generated $19.7 million in net product sales last year, compared with 2014 net product sales of $16 million—both far below analyst expectations.

The layoffs come less than 2 months following the appointment of Amit D. Munshi as president, CEO and interim principal financial officer—and less than a year after the company disclosed plans last October to  eliminate approximately 80 jobs—35% of its U.S. workforce.

The affected employees work “primarily in areas of research, manufacturing, and G&A [general and administrative],” Arena said in a regulatory filing yesterday. The company added that it plans to complete the layoffs by August 31.

Arena estimated that it will incur restructuring charges, primarily in the second quarter of 2016, of approximately $6.1 million—most of that in cash—in connection with one-time employee termination costs, including severance and other benefits.

However, the company is also projecting that the workforce reduction will also generate annual cash savings of  approximately $17 million for personnel and between $6 million and $8 million in related other operating expenses.

“We plan to implement additional cost control measures to further reduce our expenditures, including reductions at our Swiss manufacturing facility,” Arena warned.

Arena said the company is shifting its focus to advancing development of three pipeline treatments:

  • Etrasimod (APD334)—the next-generation, highly specific modulator of the sphingosine 1-phosphate subtype 1 (S1P1) receptor is in an ongoing Phase II trial for ulcerative colitis. Arena said it is exploring potential additional indications for the candidate, including beyond inflammatory bowel disease.
  • APD371—the cannabinoid-2 (CB2) receptor agonist most recently completed a Phase I multiple-ascending dose clinical trial with positive results, and is under study for pain indications.
  • Ralinepag (APD811)—the prostacyclin receptor agonist is in an ongoing Phase II clinical trial for pulmonary arterial hypertension.

The company is also focusing more on several existing collaborations. In addition to its alliance with Eisai on Belviq, Arena has partnered with Axovant Sciences to develop nelotanserin, an inverse agonist of the serotonin 2A receptor for central nervous system (CNS) disorders that is now in Phase II clinical trials.

Arena is partnering with Ildong Pharmaceuticals on temanogrel, an inverse agonist of the serotonin 2A receptor for thrombotic diseases now in a Phase I study, and with Boehringer Ingelheim on preclinical development of drug candidates targeting a central nervous system (CNS) receptor for psychiatric diseases.

Arena said it expects to further its revised strategic focus and cost reduction plan during its upcoming quarterly conference call. No date for that call has been posted on the company’s website, although according to the website of NASDAQ, where the company's stock is traded, an earnings announcement is expected August 3.








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