Pharmaxis to cut 30% of jobs in restructuring

Pharmaxis (ASX:PXS) plans to cut 30% of its staff and implement more cost-cutting measures as part of a strategic restructuring focusing on partnership opportunities for Bronchitol.

The company said it had phased out costs associated with US activity and will downsize manufacturing in Australia and clinical spending in Australia and the EU.

Pharmaxis will now focus on finding partnership opportunities for Bronchitol in the US for cystic fibrosis and globally for bronchiectasis. Pharmaxis will also consolidate its production capabilities into a single NSW facility.

Pharmaxis plans to continue to invest in commercialising the Bronchitol dry powder for cystic fibrosis in Australia and the EU, and in regulatory teams to seek approvals in new markets.

Through the cutbacks, the company aims to cut its annualised cash loss by around 37% and reduce expenses by $12 million per year - or around 27% of total cash expenditure.

The restructuring comes after a run of setbacks for Pharmaxis’s efforts to commercialise Bronchitol alone. In April, a phase III trial in bronchiectasis failed to meet its primary endpoint, forcing the company to reconsider plans to file for approval and scale back its ambitions to the subgroup of bronchiectasis patients which responded well.

A month earlier, the US FDA knocked back Pharmaxis’s New Drug Application for Bronchitol in cystic fibrosis, recommending a new clinical trial.

As a result, the company is now seeking a US partner to conduct the remainder of cystic fibrosis clinical development and commercialisation efforts in the US, and a partner to develop Bronchitol for a bronchiectasis subgroup.

Pharmaxis is also in talks with both commercial and not-for profit companies seeking funding opportunities for two preclinical assets - SSAO and LOXL2 inhibitors.

“Our resources are now focused on short-to-medium-term value generation,” Pharmaxis CEO Gary Phillips said. “The balance of growth strategies and restructuring initiatives outlined today provides a sustainable business platform and the opportunity to capture significant upside as our portfolio of products mature.”

He said the company had cash reserves of $70.5 million as of end-April and access to a further US$20.5 million ($21.3 million) through its cystic fibrosis financing agreement with NovaQuest Pharma Opportunities Fund.

Pharmaxis shares were trading 4.35% lower at $0.22 as of around 1.30 pm on Tuesday.