One of San Diego’s anchor biotech companies, Amylin Pharmaceuticals, has decided to cut one-fourth of its local staff, or about 340 jobs. The company said it had to make the move because it has been dealt a double-whammy of setbacks in the past couple months, with declining demand for its lead diabetes drug, combined with a regulatory delay facing its next big product candidate in the pipeline.
Amylin (NASDAQ: AMLN) said the cuts will help preserve $80 million it had planned to spend in 2009, and should help it turn cash-flow positive by the end of 2010, according to a statement.
“We’ve made a difficult, but necessary, decision as a result of factors affecting our business,” said Amylin CEO Daniel Bradbury, in the statement.
The cuts, he said, will affect administration and operations, as well as research and development. Amylin will not make any cuts at its Ohio manufacturing plant, and will have 1,800 employees worldwide, including 900 left in San Diego, after the layoffs are complete.
Amylin co-markets exenatide (Byetta) with its partner, Indianapolis-based Eli Lilly & Co. Exenatide, a twice-daily injection for diabetes, is Amylin’s main cash cow, generating $180 million in sales in the third quarter. But demand for the product has been falling since the FDA warned physicians in August about several cases of pancreatitis that have been reported in patients taking it, including two deaths. Then last week, Amylin reported that the FDA wasn’t satisfied that it has enough evidence to ask for approval of a newer, once-weekly version of exenatide, and that the company may have to run another clinical trial before it can submit an application. That may cause the company to miss its deadline of turning in the application by the end of the first half of 2009, the company said.
Amylin said in its third-quarter conference call last month that it has been saving for a rainy day. The company secured a $125 million payment from Eli Lilly to manufacture the once-weekly exenatide, and that it had squirreled away $805 million in cash and investments at the end of September to strengthen its balance sheet. The company plans to update investors on how these cuts will alter its financial outlook when it reports fourth quarter results in January.