Xoma ($XOMA) has rung in 2012 with major cutbacks and organizational changes. The Berkeley, CA-based biotech company aims to axe 84 jobs or 34% of its work force by the end of the first quarter with plans to use the savings from the cutbacks for planned clinical trials, including the late-stage study of its lead drug gevokizumab (XOMA 052) for treating non-infectious uveitis.
The layoff ax is falling on about 50 employees immediately, with the rest expected to get pink slips by the end of March, the company announced Thursday afternoon. Its job cuts are a result of a decision made with its partner Servier, the French drugmaker, to use a contract-manufacturing group for large-scale production of its lead drug, and the company will be letting its lease expire on a 31,000-square-foot plant in 2013. Xoma said it's also letting go researchers whose duties can be outsourced to contract labs.
Beyond the layoffs, the biotech named John Varian, who was previously the company's interim chief executive, as the company's CEO. And the firm plans to stay clear of seeking further biodefense contracts, keeping its focus on the development of gevokizumab and its antibody drug discovery work, according to the company. In total, the company's planned cutbacks are expected to result in $6 million in restructuring and severance costs and to shed $14 million in expenses this year.
"We are streamlining Xoma's operations in order to focus on our key near-term value driver, gevokizumab, and to drive our discovery science toward development of value-creating products and technologies," stated Varian, who stepped in as interim chief in late August after the resignation of previous CEO Steve Engle. "We anticipate our global gevokizumab Phase 3 program in non-infectious uveitis, including Behçet's uveitis, will begin in the second quarter of 2012. We also have begun enrolling patients in our Phase 2 proof-of-concept trial of gevokizumab in moderate to severe acne as part of our plan to pinpoint additional indications that can expand the commercial opportunities for our lead drug candidate. Our strategy is to maximize the potential of XOMA's flagship product, pursue discovery-based opportunities, and establish a U.S. commercial presence."
Xoma is keeping its faith in its anti-inflammation antibody gevokizumab, which stumbled in a Phase II trial in Type 2 diabetics after failing to significantly improve glycemic control in patients with the disorder after 6 months. That failed trial, announced in March, triggered a steep drop in the company's share price and a call for previous CEO Engle's ouster.
- here's the release
- check out Reuters' report