With generic competition for its cash cow CellCept (oral mycophenolate mofetil) looming in 2009, Aspreva Pharmaceuticals Corp. announced plans to lay off about a quarter of its worldwide staff.
In a research note, Stanford Group Co. analyst Han Li called the move a "logical step" that readies the company for long-term growth by "improving efficiency and strengthening the balance sheet." Aspreva estimates the reorganization, which affects 33 employees including Chief Scientific Officer Richard Jones, will be completed during the third quarter at a cost of $1.5 million to $2 million.
The restructuring comes just two weeks after William Freytag replaced founding CEO Richard Glickman at the helm of Aspreva. Freytag previously served as president, chairman and CEO of Myogen Inc., which was acquired last year by Gilead Sciences Inc. for $2.5 billion. (See BioWorld Today, Oct. 3, 2006.)
The move also closely follows the completion of the induction portion of a Phase III trial with CellCept in lupus nephritis. The trial missed its initial primary endpoint; CellCept's efficacy was similar to, but not better than, cyclophosphamide. A previous Phase III trial of CellCept in myasthenia gravis also failed. (See BioWorld Today, Oct. 30, 2006, and June 28, 2007.)
Despite its failures, CellCept makes a nice chunk of change for Aspreva. That's because F. Hoffmann-La Roche Ltd., of Basel, Switzerland, markets the drug for the prevention of rejection in kidney, heart and liver transplants. Aspreva, which in-licensed the CellCept rights in autoimmune disease applications, sits back and collects a royalty from Roche for off-label autoimmune prescriptions. The approach resulted in first quarter revenues for Aspreva of $59.3 million and second quarter unaudited revenues of $63 million.
Yet CellCept's success may be threatened by generic competition, expected in 2009. In the interim, Aspreva is conducting the three-year maintenance portion of the lupus nephritis trial, which will compare CellCept to azathioprine in maintaining remission and renal function. The company also is conducting a Phase III CellCept trial in pemphigus vulgaris, an autoimmune skin disease. Analysts expect a potential supplemental new drug application filing in pemphigus vulgaris next year, although whether Aspreva will seek approval in lupus is less clear.
Regardless, Raymond James Ltd. analyst Brian Bapty said Aspreva has "consistently indicated" they plan to build the pipeline beyond CellCept through in-licensing. He predicted they may look for a renal disease drug, which would be synergistic with their lupus expertise, and they may seek to acquire a company with both earlier- and later-stage drugs in development.
Aspreva thus far has avoided providing a specific timeline for completing a deal, and company spokespersons did not return calls seeking comment. But most analysts expect to see one or two partnerships signed before the end of the year.
"They have to have something done this year because they've been spending a lot of money on business development," Bapty told BioWorld Today. Otherwise, they'll need to "consider the validity of their business plan" and perhaps look at a financial transaction that would involve "closing up shop" and paying off the shareholders, he said.
Victoria, Canada-based Aspreva had $277.2 million in cash and securities at the end of the first quarter. Shares (NASDAQ:ASPV) fell 33 cents to close at $18.96 on Thursday.