(Reuters) - U.S. health regulators declined to approve NeurogesX Inc's patch derived from chili peppers to treat HIV-related pain and sought new trial data, and the company said it will cut half its workforce to save costs.
The U.S. Food and Drug Administration told NeurogesX that to gain approval for the treatment, Qutenza, the company would need to submit additional clinical data from at least one adequate and well-controlled trial.
NeurogesX said it does not expect investing in further clinical studies for Qutenza at this time, but will work with the agency to better understand the requirements for approval.
NeurogesX said as part of a restructuring, it will cut 43 full-time employees, or 57 percent of its workforce, focus more on the development of NGX-1998, a non-patch liquid formulation of capsaicin, the agent that makes chili peppers hot and is also used in Qutenza.
The cost cuts will ensure the necessary funds to complete all development and regulatory activities to start a late-stage trial of NGX-1998, Chief Executive Ronald Martell said on a conference call.
"Obviously they have only got a limited amount of resources and they have chosen to invest it in developing a more user friendly version of the product," Wedbush Securities analyst Gregory Wade said.
In early February, an FDA advisory panel voted 12-0 against approving Qutenza for the new proposed indication, saying clinical data did not show substantial evidence that it was effective at treating neuropathic pain among people infected with the AIDS-causing virus.
The patch is already approved by the FDA as a treatment for pain related to shingles.
"I think they are going to keep making it available for patients, but they are going to dramatically reduce the effort to commercialize the patch," analyst Wade said.
He said the cutting of costs associated with Qutenza patch and the promising data on its liquid formulation will help boost shares.
San Mateo, California-based NeurogesX's shares, which have lost 18 percent of their value since the FDA panel's decision in February, fell 21 percent to 52 cents in premarket trading on Thursday.
They have fallen nearly 82 percent over the past year. (Reporting by Kavyanjali Kaushik in Bangalore; Editing by Anthony Kurian and Gopakumar Warrier)