Under Generic Pressure, San Diego’s Somaxon Looks for New Options
Business hasn’t gotten any easier over the past six months for San Diego’s Somaxon Pharmaceuticals (NASDAQ: SOMX), which says it has hired the investment banking firm Stifel Nicolaus Weisel to help the company assess its strategic options. The company also laid off 60 percent of its employees who aren’t out in the field.
The company has struggled to establish itself against lower-cost generics in the sleeping pill market. Somaxon began selling doxepin (Silenor), its prescription drug for insomnia in September 2010. In June, Somaxon filed patent infringement lawsuits against four generic drugmakers that are challenging its patents.
The banking firm was hired to help Somoxon identify alternative strategies, according to Somaxon CEO Richard Pascoe in a statement issued yesterday. That could include “one or more of a sale of the company or assets relating to Silenor, or partnering or other collaboration transactions relating to U.S. or ex-U.S. prescription or over-the-counter rights to Silenor,” Pascoe says.
While the company didn’t say yesterday how many employees were laid off, Somaxon reported in its third-quarter financial results that it had terminated 14 employees in November, after the quarter had ended.
Somaxon reported sales of just $3.7 million for the third quarter that ended Sept. 30, compared with sales of $38,000 in the same quarter last year, when Somaxon began Silenor sales. The company lost $17 million, or 36 cents a share, compared with $12.9 million, or 37 cents a share). Somaxon says it had $34 million in cash and cash equivalents at the end of September.
Somaxon says it intends to allocate significantly more marketing resources to direct-to-consumer marketing in 2012, concentrating in regions where there is a potential for sales growth based on managed care coverage, favorable insomnia demographics, feasible media costs, and in areas where the company has sales representatives. Somaxon says it plans to hire 30 sales reps by the end of the year.