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UPDATE 1-Orexigen cuts 40 pct staff to save cash
February 9, 2011 / 10:44 PM / 7 years ago

UPDATE 1-Orexigen cuts 40 pct staff to save cash

* Cuts 23 jobs

* Expects charge of about $2.6 mln in Q1

* Sees cut in cash spending of about $5 mln

* Shares down 5 pct after market

Feb 9 (Reuters) - Orexigen Therapeutics Inc said it let go of about 40 percent of its workforce to save cash and focus resources on its experimental weight-loss drug.

The drugmaker said it expects to take a charge of about $2.6 million on the job cuts, which comes on the heels of the U.S. health regulator denying approval for the drug, Contrave.

On Feb. 1, the U.S. Food and Drugs Administration issued a complete response letter on the approval of Contrave, asking for a study to alleviate the agency’s concerns on cardiac risks from usage of the drug.

“Unfortunately, given the near-term uncertainty of Contrave approval, we felt it prudent to consolidate and focus our resources,” Chief Executive Mike Narachi said on Wednesday.

Orexigen expects the job cuts help to reduce its cash expenditure by about $5 million.

Shares of the La Jolla, California-based company, which have lost nearly two-third of their value since the FDA issued the complete response letter, were down 5 percent at $3.28 in extended trading. They closed at $3.44 on Wednesday on Nasdaq. (Reporting by Vidya L Nathan in Bangalore; Editing by Unnikrishnan Nair)

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