Up to 500 roles at Idorsia are at risk as the Swiss biotech tries to halve its cash burn while it waits for its approved insomnia treatment Quviviq to pay off.
Facing a “challenging financial situation” due to “lower than anticipated product sales and a difficult global financial environment,” the company has decided to sacrifice its R&D work in order to “maximize the time the company has to deliver commercial success.”
Exactly what will happen is still to be decided. Idorsia will now review its development pipeline and jettison all candidates that can’t be “advanced rapidly and with reasonable financial investment.” Work on those unwanted programs will be either paused or prepared for partnership or out-licensing, the biotech explained in an early morning release Friday.
The ultimate goal is to reduce cash burn at the company’s Allschwil, Switzerland, headquarters by 50% by early 2024.
It means a worrying period of limbo for many employees. Up to 500 positions could be set to go as part of the “cost reduction initiative,” mostly located in the R&D team and related roles. The affected employees will be decided as part of a consultation process due to wrap up by the end of the year.
“I continue to believe that Quviviq can be the success we hope for, but unfortunately it will take longer than originally planned,” the biotech’s CEO Jean-Paul Clozel, M.D., said in the release. “Idorsia’s immediate objective is therefore to maximize the time the company has to deliver commercial success with its products. This means making any funds that are raised last as long as possible by significantly reducing our global cash-burn.”
“The cost reduction initiative together with potential collaborations will give the company the time it needs to realize the value we have created,” Clozel added. “I deeply regret having to launch such an initiative, but we simply cannot sustain current investment levels.”
While Idorsia has previously claimed that Quviviq has become the No. 1 branded insomnia treatment since Idorisa launched it onto the U.S. market in May 2022, delays in securing reimbursement meant it only brought in total net sales of 4.3 million Swiss francs ($4.9 million) in the first quarter of the 2023.
In an earnings report in April, Clozel insisted that when it came to the reimbursement delays, “progress has been made and the situation is steadily improving.”
The company ended March with 212 million Swiss francs ($245 million) in cash and equivalents. Since then, Idorsia has secured bridge financing of 75 million Swiss francs ($86 million) as well as sold its Asia-Pacific rights outside of China to Sosei Heptares.
If its commercial rollout has been slow, Idorsia hasn’t had much luck in the clinic in recent years, either. In 2021, its Fabry disease medicine lucerastat flamed out in a phase 3 trial, while cenerimod missed the primary goal in a phase 2b systemic lupus erythematosus study. The following year saw its selective orexin-1 antagonist ACT-539313 fail to hit its goal in a binge eating disorder study, prompting the company to give up on the indication.
It's made for a tough period for a company that arrived on the biotech scene with a splash in 2017 by way of a spinout from Actelion, which was bought by Johnson & Johnson. Idorsia launched with $1 billion in cash and a handful of clinical-stage drug candidates—plus a potentially lucrative development deal with J&J for the blood pressure medication aprocitentan, which has continued to show potential in a phase 3 trial.
Shares in the company have been on a steady decline in 2023, hovering around the 6.30 Swiss franc mark this morning from a January opening price 15.33 Swiss francs.