Keryx cuts 50% of jobs on Sulonex termination

The USA's Keryx Biopharmaceuticals is losing 50% of its workforce as part of a restructuring plan to deal with the negative outcome of its pivotal SUN-MICRO Phase III trial of Sulonex (sulodexide) for diabetic nephropathy. The firm hopes that the savings program will help reduce its cash burn rate to $10.0 million - $15.0 million for the remainder of the year. Following the job cuts, the company will have approximately 25 full and part-time employees.

Keryx expects to end the first quarter of 2008 with $50.0 million of cash, cash equivalents, investment securities, interest receivable and license receivable. $12.0 million of this total is invested in auction note securities, which have failed auctions in 2008. Accounts payable and accrued expenses as of the end of the first quarter are expected to total approximately $17.0 million, and are primarily related to the completion and shut-down of the Sulonex clinical program and restructuring costs.

Keryx will also close its facility in San Francisco, California and Memphis, Tennessee, offices as well as the Wisconsin manufacturing site built to support the commercialization of Sulonex, and divesting the assets from these facilities. The restructured company will be able to conduct a Phase II high-dose study of its iron-based compound Zerenex, as well as continuing work on novel formulations and market research on the hyperphosphatemia drug. 12 of 20 early-stage clinical studies of KRX-0401 (perifosine) will be terminated and the commencement of a Phase III trial of the drug will be delayed. As a result of this restructuring, the firm will incur between $12.0 million and $15.0 million of charges in first-quarter 2008, primarily associated with employee severance benefits and a non-cash write-off of the assets of the Sulonex facility.