Late last week, Transcept Pharmaceuticals announced that it will reduce its staff by 45 percent after it received notice from the U.S. Food and Drug Administration rejecting the re-application for its insomnia medication, Intermezzo.
"Our staffing needs have changed after the recent news from the FDA on the regulatory status of Intermezzo,” said Transcept President and Chief Executive Officer, Glenn A. Oclassen, in a statement. “We are therefore phasing out certain positions that are non-essential to our plan to pursue potential paths forward with the FDA on the Intermezzo (New Drug Application), and to continue development of our TO-2061 program. This cost containment step is consistent with our long standing principle of conservative cash management."
In its press release, the California-based company didn’t say how many of its employees will be laid off, but the San Francisco Business Times reported that Transcept had previously said it had 31 employees, which would mean about 14 people will be let go.
The drug company said it expects its staff reduction to “reduce current annualized payroll and benefit expenses by approximately $2.1 million.” It expects a restructuring charge representing severance and continuation expenses of approximately $1.1 million in the third quarter of 2011. A stock compensation charge hasn’t been determined yet.
Transcept has been developing Intermezzo for treatment of middle-of-the-night awakening followed by difficulty returning to sleep. In its letter to Transcept, the FDA said that Intermezzo was effective, but expressed concern that the drug could be used safely.
In a press release, Transcept said that in its first application rejection, the FDA noted that the company must prove that Intermezzo “would not unacceptably impair next-morning driving ability.”
In its second application, Transcept said the FDA still maintains concerns that patients will take the medication with less than four hours of sleep before activity despite instructions on the drug’s packaging.
The FDA has suggested the drug company conduct more investigations. The company plans on meeting with the FDA to discuss the future of Intermezzo.