Shares of Exelixis Inc. shed more than half their value Tuesday before markets opened and a day after the drug developer said its potential treatment for an advanced form of prostate cancer fell short when compared with another drug in late-stage research.
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The South San Francisco, California, company also said it will cut its workforce by about 70 percent, or 160 employees, because of the study results.
Exelixis said cabozantinib did not meet a main goal of showing a statistically significant increase in overall survival in patients treated with that drug compared with those who were treated with the steroid prednisone. The drug was tested in men with a form of prostate cancer that had spread after other treatments.
Exelixis said it will have about 70 employees remaining after it makes cuts. The reductions will allow it to focus financial resources on late-stage studies of cabozantinib in other forms of cancer. The drug developer expects to book a one-time charge of between $6 million and $8 million from the cuts, which will largely be completed by the end of the year.
The Food and Drug Administration has already approved cabozantinib, which goes by the brand name Cometriq, as a treatment for an advanced form of thyroid cancer.
Shares of Exelixis sank 53 percent, or $2.20, to $1.94 Tuesday in pre-market trading. The stock had already dropped 32 percent so far this year as of Friday.