No surprise here, the axe has fallen at San Diego-based Orexigen Therapeutics.
Orexigen (NASDAQ: OREX) said today it has eliminated 23 jobs, or about 40 percent of its workforce, a little more than a week after the FDA shot down Orexigen’s application to start selling its first product, a new drug for obesity. The company said it expects the staff cuts to save about $5 million a year.
“The Company is in the process of updating its corporate strategy following the receipt of the Complete Response Letter,” from the FDA, Orexigen said in a statement.
Orexigen has lost more than 60 percent of its stock valuation since it released the bad news on February 1, when it said the FDA refused to approve the combo of naltrexone and buproprion (Contrave) as a new weight loss drug in the U.S. The agency asked for another randomized, controlled study to offer assurance that the drug doesn’t offer any serious increased risk of cardiovascular disease. One analyst, Adam Cutler of Canaccord Genuity, forecasted that such a study could take three to six years to complete, and require Orexigen to raise another $100 million to $200 million, before it could satisfy the FDA’s requirements.
Orexigen had a little more than $100 million in cash and investments on its balance sheet at the end of September, according to its most recent quarterly report.