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Pharmaceuticals: Big job cuts at Exelixis follow clinical trial disappointment

by Rick Mullin
September 5, 2014 | A version of this story appeared in Volume 92, Issue 36

Exelixis, a South San Francisco-based small-molecule biotech firm, is eliminating 70% of its workforce following disappointing results in a Phase III clinical trial of cabozantinib, its thyroid cancer drug, for the treatment of metastatic castration-resistant prostate cancer (mCRPC). The job cuts will bring total employment to 70.

The news is the latest in a string of disappointments for the chemistry-based company, which in 2010 reduced its staff by 40%, eliminating 270 jobs, in an effort to narrow its once-broad focus on multiple cancer compounds.

Exelixis says the new job cuts, which hit employees involved with the mCRPC trials, will enable it to devote financial resources to late-stage trials of cabozantinib in metastatic renal cell carcinoma and advanced hepatocellular carcinoma.

Exelixis, which posted revenues of $31.3 million in 2013, down from $152 million in 2009, anticipates a one-time restructuring fee of up to $8 million as a result of the workforce reduction. The firm’s sales currently come from cabozantinib marketed as Cometriq for the treatment of metastatic medullary thyroid cancer, a rare disease.

At its prime, Exelixis had more than 300 research-related employees, a library of 4.5 million compounds that yielded 15 candidates deemed worthy of clinical trials, and partnerships with six large drug firms. Now its future hinges on a handful of clinical trials testing other indications for cabozantinib.

“From a balance sheet perspective they are in dire straits,” says Biren Amin, an analyst at Jefferies. The company has $349 million in debt and $352 million in cash, “but they are burning through that cash. Both trials require significant investment.”


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