Arena Pharmaceuticals Axes One-Fourth of Workforce As it Hangs On With Obesity Drug

1/27/11Follow @xconomy

Arena Pharmaceuticals (NASDAQ: ARNA) is making a big round of job cuts today to conserve cash as it keeps pushing to satisfy questions U.S. regulators have about its lead obesity drug in development.

The San Diego-based developer of the obesity treatment lorcaserin said today it has eliminated 66 jobs, or about 25 percent of its workforce. The layoffs will enable the company to save about $13.5 million a year of cash.

“We deeply regret having to reduce our workforce, greatly appreciate the efforts of the employees affected by today’s announcement and thank them for their significant contributions to Arena,” said Jack Lief, Arena’s CEO, in a statement. “This workforce reduction strengthens our financial position by focusing our resources on the prioritized programs that we believe have the greatest potential to deliver value.”

Arena has been forced to regroup since October when the FDA said it refused to clear the company’s treatment for sale in the U.S. Regulators raised questions about “marginal” effectiveness of the drug, and about some animal studies which suggested rats appeared to form tumors when given extremely high doses of the pill. The FDA has also raised concerns about potential abuse of the weight loss pill, Arena said. Despite the agency’s questions, Arena has said it believes it can satisfy all the requested tasks, and resubmit its application for FDA approval of lorcaserin by the end of 2011.

If the company can get the green light, it would be in position to offer a new weight loss option for millions of people in the U.S. who are overweight, and at increased risk of heart attacks, strokes, arthritis, depression, diabetes and a litany of other health problems.

“We now have a greater understanding of the FDA’s position as we move forward with our plans to resubmit the lorcaserin new drug application,” Lief said in a statement.

Arena isn’t the only company that has had a hard time with the FDA’s tough stance toward new obesity drugs. Abbott Laboratories pulled sibutramine (Meridia) off the market after clinical trial data suggested a link to higher rates of heart attack and stroke. Mountain View, CA-based Vivus (NASDAQ: VVUS) also failed to win FDA clearance of a new weight loss treatment last fall. San Diego-based Orexigen Therapeutics (NASDAQ: OREX) had better luck at an FDA advisory panel last month, but it is eagerly awaiting final word in coming days on whether the agency will allow its treatment to be sold in the U.S.

Lief, Arena’s CEO, will be one  of  the featured speakers tonight at an event I’m moderating for Xconomy, titled “San Diego’s Fight Against Diabesity.” I’m sure he would rather talk about the exciting prospects for his new drug in the market than about job cuts, but the latest move is really a predictable part of a sobering storyline we’ve seen unfold over the past few months with both diabetes and obesity drugmakers. If you’d like to join the conversation, a few tickets can still be had at the door. Registration starts at 5:15 pm. See you there.

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  • Jerry Jeff

    Sorry to hear it. Best of luck to the newly unemployed.

  • fda-sucks

    I said this before and I’ll say it again, America’s getting fatter and sicker while the FDA’s sitting with their thumbs wedged up their collective asses.