Durham drug developer BioCryst Pharmaceuticals said Friday it is cutting half its staff in the wake of a failed merger attempt and two suspensions of experimental drugs.
BioCryst, with employees in Alabama and Durham, plans to operate with 37 employees, a move designed to save $15 million to $18 million next year and intended to stretch BioCryst’s finances through 2014.
“They had no choice,” said analyst Stephen Brozak with WBB Securities in Clark, N.J. “It’s the realities of biotech.”
The company’s stock is near a decade low, falling 10 cents Friday to close at $1.37. Shares had climbed as high as $5.61 a share in March before dropping to a quarter of that value after a series of setbacks began surfacing in mid-October.
The 22-year-old company is awaiting word on drug test results, and on federal research grant applications for viral treatments, that could infuse tens of millions of dollars into BioCryst’s coffers. The research could be applied to weaponized viral agents for counteracting bioterror attacks, company officials said.
One of BioCryst’s recently canceled drugs, peramivir, had kept the company going for years through $235 million in federal research funding. Peramivir, a flu treatment, was approved in Japan and Korea in 2010. BioCryst does not have a product on the U.S. market.
CEO Jon Stonehouse told analysts the company remains committed to developing its remaining portfolio of experimental drugs and rebuilding shareholder value.
“We have a path forward and we need to conserve cash to get there,” Stonehouse said. “The last two months have been very challenging and made even more difficult by the decision to restructure and the impact that it has on a number of our talented and dedicated colleagues.”
By cutting staff, BioCryst hopes to stretch more than $35 million of cash onhand as it seeks its next sources of financing. Options include venture capital and stock sales, which could come next year based on favorable outcomes of current products under development, said analyst Rahul Jasuja of Noble Financial Capital Markets in Boca Raton, Fla.
“The advantage they have is cash onhand and cash equivalents,” said Brozak, who has followed the company for more than a decade.
BioCryst wants a partner to finance the third and final phase of testing of a gout treatment on humans, Jasuja said.
The company is also developing products in three areas, including the viral research for federal biodefense contracts that’s being tested on rats. One is a Hepatitis C treatment that is set to be tested in low doses on chimpanzees next year to determine whether research can proceed.
BioCryst is also developing treatments for hereditary angioedema, a rare genetic disorder that causes painful swelling and afflicts only about 6,000 people in the United States.