It wasn’t long ago that Ariad Pharmaceuticals (NASDAQ: ARIA) was building a massive new headquarters in Cambridge, MA, to help roll out its first FDA-approved cancer drug, ponatinib (Iclusig). Just a few months later, it’s on the defensive, cutting almost half of its workforce.
Ariad announced plans today to cut 160 jobs, about 40 percent of its staff in the U.S., in an effort to save cash. Ariad will finish the job cuts by the end of the year, and expects to net pre-tax savings of about $26 million in 2014 as a result. Ariad will take on a one-time $5 million restructuring charge in the fourth quarter.
Ariad isn’t eliminating any jobs in Europe, only in the U.S. It’ll have 295 workers total after the cuts.
“The reduction in our workforce is a very painful and difficult action in which we are losing highly talented and dedicated employees, many of whom have worked for Ariad for a number of years, but it is a necessary step in strengthening the company financially,” said Ariad chairman and CEO Harvey Berger, in a statement.
It wasn’t an unexpected step either. Ariad has been in a freefall over the past month, ever since it suspended, and then stopped altogether, all clinical trials of ponatinib due to safety concerns. Alarming toxicities—namely, serious blood clots—piled up at a higher than expected rate in patients dosed with its drug. That put the drug’s status in limbo. Though the FDA approved ponatinib in December to treat patients with chronic myeloid leukemia who are resistant to, or can’t tolerate other treatments, it did so with a black-box warning telling doctors to watch out for blood clots. Even so, Ariad saw a bright future for the drug as a potential competitor to Novartis’s blockbuster imatinib (Gleevec). But as more evidence from clinical trials rolled in, the blood clots became a bigger problem, and the FDA struck quickly. Just weeks after the initial revelation, the agency instructed Ariad to pull ponatinib off the market altogether.
Ariad has lost billions of dollars in value—more than 80 percent of its market worth—during the disastrous fall of 2013. Shares closed at $2.29 apiece on Thursday. They were worth more than $20 apiece in late September.