* To explore strategic options, including sale of co
* To cut 45 pct of workforce
* Sees charge of $0.5 mln in Q2 related to job cuts
* Shares fall as much as 24 pct (Adds analyst comments, updates stock movement)
March 24 (Reuters) - Poniard Pharmaceuticals Inc PARD.O said it would suspend its efforts to get approval for its lung cancer drug, picoplatin, and explore strategic options, including a sale of the company, sending its shares down as much as 24 percent.
The company would also cut about 45 percent of its workforce to a total of 12 employees, effective April 30, eliminating positions that were pursuing a new drug application for the company’s lead drug in small cell lung cancer and certain supporting functions.
Lazard Capital Markets analyst Joel Sendek said given the failure of the drug in the lung cancer trial and “underwhelming” data in colorectal and prostate cancer, Poniard will be unable to further develop the drug without a partner and may be forced to liquidate.
“Picoplatin development remains unlikely without a deep-pocketed partner ... We model a partnership for picoplatin in the third quarter, with a $20 million upfront payment,” Sendek said.
Poniard expects to incur a charge of about $500,000 in the second quarter due to the job cuts, which will reduce operating expenses by $2.2 million in 2010.
The company said it would focus its resources on developing clinical strategies for picoplatin in small cell lung cancer, as well as colorectal, prostate and ovarian cancers.
Poniard had cut more than half of its workforce last month to focus resources on the development of picoplatin and named a new chief executive officer. [ID:nSGE6120LS]
“A partnership should allow Poniard to raise additional cash in the financial markets in 2011,” Lazard’s Sendek said.
Last November, picoplatin had failed to meet the main goal of a late-stage study, named SPEAR, of showing significant overall survival benefit. [ID:nBNG53575]
“We believe the FDA rejected the company’s strategy to obtain picoplatin approval in small cell lung cancer, given the lack of a statistically significant outcome in the SPEAR trial,” Sendek said in his research note.
“In our opinion, the FDA likely recommended additional clinical trials to demonstrate picoplatin efficacy,” he added and maintained his “sell” rating and $1 price target on the stock.
The company engaged Leerink Swann LLC to conduct a comprehensive review of strategic options, including capital raising alternatives, merger, sale or partnership, it said in a statement.
Shares of the company were down 20 percent at $1.25 in mid-day trade Wednesday on Nasdaq. They touched a low $1.18 earlier in the session, their lowest in about 15 months. (Reporting by Esha Dey in Bangalore; Editing by Anne Pallivathuckal and Maju Samuel)