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news.La Jolla Pharmaceutical Company stock slipped by more than 6% in after-hours trading following the announcement that it is to axe close to 40% of its workforce to help cut costs.
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The job cuts are part of a restructuring plan the company is implementing in order to reduce its costs. Around 60 jobs will be axed, leaving a workforce of approximately 95 staff members.
This action follows the recent announcement, based on the outcome of a meeting with the FDA, that La Jolla’s lupus renal disease drug Riquent is unlikely to receive an accelerated approval under the FDA’s Subpart H regulation.
Under the plan, the biotech firm expects to continue its ongoing clinical benefit trial of Riquent without any significant additional patient enrollment or site expansion and to continue with its small molecule inflammation program. The company also plans to continue its activities that would allow a filing of a marketing authorization application in Europe.
“When you have a great team, it is always difficult to make these types of decisions. However, we felt it was necessary to conserve our financial resources to focus on Riquent,” said Steven Engle, La Jolla’s chairman and CEO.
The company expects the severance costs to total around $1.5 million, of which approximately $1.3 million will be recorded in the first quarter and the remainder in the second quarter.
In addition to the current restructuring plan, La Jolla is also reviewing other areas where additional expenses can be reduced.