Vernalis announces staff cuts and restructuring

UK-based drugmaker Vernalis has announced plans to halve its current workforce as part of a major restructuring program. The cutbacks, which are in response to the failure of its drug Frova (frovatriptan succinate) to gain US Food and Drug Administration approval for the treatment of menstrual migraine last year (Marketletter October 8, 2007), will see current chief executive Simon Sturge leave the firm (see people column this page). Vernalis will also sell off the Parkinson's disease treatment Apokyn (apomorphine) which, since its acquisition in 2006 (Marketletters passim), has become the company's second biggest seller. Additionally, Vernalis said that it has agreed to pay $7.0 million in cash by way of an early settlement of its $56.0 million loan with USA-based Endo Pharmaceuticals. As part of the deal, the UK firm will forego future royalties on US sales of Frova, which was approved as a migraine treatment in 2001 (Marketletters passim), until they exceed $85.0 million a year. Shawn Manning, an analyst at Landsbanki, said that the restructuring effectively repositions Vernalis as a research-based biotechnology firm. Its share price rose 12.3% to 8.35 pence on the day of the news, February 20.