Penwest Q2 revs up, but job cuts likely

By Gareth Macdonald

- Last updated on GMT

Related tags Opioid

Penwest Pharmaceuticals raises guidance citing Opana ER royalties, deals and patent settlements as Q2 highlights; but warns that job cuts likely under cost cutting plan.

The US firm, which develops delivery and formulation technologies, posted operating income of $8.4m (€6.3m) for the three months to June 30, up from the $1.9m loss it posted in Q2 2009.

Penwest attributed the reversal to a 56 per cent hike in total revenue, to $13.6m, thanks largely to a more than two-fold increase in the amount contributed by its partnership with Endo Pharmaceuticals.

The partnership, which is based on application Penwest’s Timerx delivery system to the opioid painkiller Opana, received a further boost in the quarter with the resolution of long-running patent battles with Barr, Impax and Sandoz.

The settlements mean that Opana ER will face only limited generic competition for the next two and a half years at which point Impax, which has first-to-file status, is entitled to market its non-branded version of the product.

CEO Jennifer Good described settlement of the Opana ER disputes as very significant for Penwest, explaining that the deals protect “most strengths of the product until January 2013​.

Now that it has dealth with the threat of generic competition, albeit temporarily, Penwest’s now expects revenue to be between $46m to $48m, up from the $43m to $45m forecast it issued earlier this year.

Partnerships

The TimerX technology was also at the core of collaboration deals Penwest signed in the first six months of 2010, most notably its agreements with Alvogen​ and Japanese developer Otsuka Pharmaceuticals​.

And, such activity is likely to continue under if plans to “[leverage] its drug delivery technologies and drug formulation expertise by… establishing collaborations with significant revenue​” which were unveiled at Penwest's Q2 presentation are successful.

The firm also said that it plans to collaborate on development of its Friedreich's ataxia candidate, if it successfully completes ongoing Phase IIa assessments by the end of the year.

Restructuring

The other part of the firm’s plan for the year will involve “Aggressively reducing non-drug delivery partnership-funded cash expenses.”

This, the firm went on to explain, is likely to involve a “reduction in staff levels as well as an overall reduction in other costs​,” which it said would be enacted by the fourth quarter.

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