Small drug developers cut jobs to save cash in crunch

By Esha Dey

BANGALORE (Reuters) - As the credit crunch worsens, more small drugmakers are resorting to desperate measures like cutting jobs and halting trials of less-important drugs to save up cash for development of their lead products.

Pharmaceutical companies CombinatoRx Inc and A.P. Pharma Inc on Wednesday became the latest in a series of drug developers to cut jobs, as they focus efforts on near-term value drivers and conserve capital.

"People were expecting the credit markets to loosen up by the fourth quarter, but now it seems they might even get worse," Stephen Dunn of Dawson James Securities said.

"Companies are thus resorting to headcount reductions as there is no visibility when the market would be able to provide cash."

CombinatoRx, whose main drug candidate Synavive failed to meet the main goal of a mid-stage trial last month, plans to cut nearly 45 percent of its jobs to reduce cash burn and lower its capital needs.

"We don't need to raise cash currently; (still) the cost of raising cash in this current market is too high," CombinatoRx's finance chief Robert Forrester said.

CombinatoRx is developing Synavive, or CRx-102, as a treatment for knee osteoarthritis.

Ladenburg Thalmann analyst Jeff Nelson seconds the view that the company has enough cash in hand, but is not optimistic about its ability to find a partner for the drug.