Despite reports that it is sitting on cash reserves that should last at least two years, Neurogen Corp. on Wednesday trimmed its staff by 10 percent, eliminating 24 positions in a cost-cutting move.
The small-molecule drug discovery and development company reported $91 million in cash and marketable securities as of June 30, and Neurogen said its current cash balance, as supplemented by research funding pursuant to collaborative arrangements, would sufficiently fund operations into at least early 2005.
The Branford, Conn.-based firm said the cost reductions provide short-term flexibility without sacrificing its long-term strategic plan. Neurogen made the job cuts under its ongoing Operational Excellence program, an internal initiative begun in January.
"[The program is] aimed at improving the effectiveness of the organization," said Elaine Beckwith, Neurogen's associate director of investor and public relations. "Some of the key components have been to evaluate our R&D processes for productivity improvement. We've been doing some refining of our organizational structure. And we have instituted targeted discovery teams that have brought a disciplined approach to identifying future targets."
The laid off employees are eligible for severance pay, continuation of benefits and personnel outplacement support, Neurogen said.
Beckwith said the company's cost reductions do not include the cancellation or postponement of any of its drug development and discovery programs. As part of a long-standing relationship with Pfizer Inc. that dates to 1992, Neurogen has progressed into clinical trials in a pair of programs; a compound to treat Alzheimer's disease is in Phase II testing, and an insomnia drug is in Phase I.
While the relationship with Pfizer has netted millions for Neurogen, the company suffered a setback when late last year the collaborative effort with the New York-based pharmaceutical firm fizzled on news that Neurogen's anxiety disorder drug, NGD 91-3, failed to meet Phase IIa endpoints of efficacy. Beckwith said the job cuts were not related to that setback. (See BioWorld Today, Dec. 21, 2001.)
But as other programs continue to progress, an additional pharmaceutical pairing has brought funds into Neurogen. A partnership with Aventis Pharma SA, of Frankfurt, Germany, is exploring depression stress through a CRF1 receptor antagonist program. The deal brought Neurogen an initial payment of $10 million.
Internal programs include a Phase I study of inflammation focusing on a C5A receptor antagonist. Neurogen also owns all rights to its preclinical investigations into pain studying the VR1 receptor antagonist, as well as discovery research into obesity and diabetes.
Neurogen's stock (NASDAQ:NRGN) closed down $1.21 to finish at $7.29.