Chelsea Therapeutics International Ltd said it plans to "significantly reduce" its workforce and explore strategic options, barely a week after the U.S. health regulator asked for an additional trial to approve its hypotension drug Northera.
The company also said Chief Executive Simon Pedder will step down effective immediately.
Shares of the company rose 5 percent to $1.30 before the bell. They closed at $1.24 on Monday on the Nasdaq.
The biopharmaceutical company is struggling to get its lead drug, Northera, approved by the U.S. Food and Drug Administration after it was rejected in March.
Northera is the most advanced clinical candidate of Chelsea, which does not have any approved products.
Chelsea, which was urged by its largest shareholder to explore strategic options last week, did not specify the number of jobs it would cut. The Charlotte, North Carolina-based company had 49 employees as of March 2.
The job cut is expected to be completed in the third quarter of 2012 and will result in annual salary reductions of at least $3.5 million, excluding any one-time restructuring charges.
Officers of the company last month agreed to take a cut in their compensation to contain costs to pitch the drug for approval again, underscoring Northera's importance for the company.
The FDA told the company last week that it would require to conduct a new trial to get Northera approved, unsettling Chelsea's plan to use data from an ongoing trial, named Study 306B. [ID:nL3E8I32U6]
On Tuesday, Chelsea said it would stop patient enrolment in the ongoing 306B trial in July, which should result in data by the year end.