Ariad Pharmaceuticals is to cut 40 per cent of its workforce in the US in order to cope with the suspension of its blood cancer drug Iclusig.
The cuts, which cover 160 positions across all departments, come after the Food and Drug Administration (FDA) suspended sales of Iclusig (ponatinib) after it was linked to an increased risk in blood clot.
The suspension has caused Ariad’s share price to drop significantly, considering Iclusig is the company’s only available product, winning approval in the US and EU in the past year.
The authorisations cover use of the drug to treat adults with advanced forms of chronic myeloid leukaemia (CML) or Philadelphia chromosome-positive acute lymphoblastic leukaemia (ALL).
The company said it expects the job cuts will be completed by the end of the year and will result in pre-tax savings of $26m in 2014. Ariad will also face a charge of $5m in the fourth quarter of 2013 to cover the restructuring costs.
Ariad’s CEO and chairman Dr Harvey Berger said the cuts were necessary to ensure the company’s long-term survival.
He said: “This reduction in our workforce is a very painful and difficult action in which we are losing highly talented and dedicated employees, many of whom have worked for Ariad for a number of years, but it is a necessary step in strengthening the company financially.”
The workforce reduction is part of a broader plan to reduce its expenses to plan for the prospect that Iclusig may be withdrawn in the US or have its use limited by the FDA after an investigation.
Authorities in the rest of the world have yet to take action on Iclusig, and the drug is still available in the EU.
As such, Ariad’s job cuts only affect the US, with European roles unaffected. Following the reduction, Ariad will be left with 295 employees covering both regions.
Although Iclusig is Ariad’s lead product, the company does have other cancer medicines in development, including AP26113, which is in phase II development as a personalised lung cancer treatment to target patients with either the ALK or EGFR gene mutation.