CoCensys Inc.'s top research executive lost his job in a management shake-up announced Monday, as the company’s recently hired chief executive, F. Richard Nichol, moved to make his mark on the organization.
The company eliminated five positions, including vice president of research and development held by David A.H. Lee. Analysts noted that the company’s efforts to develop drugs to treat brain disorders have been dogged by slow progress in clinical tests--a problem that has jeopardized the financially shaky pharmaceutical company.
Nichol attributed Lee’s departure to efforts to streamline management and said the company would save money by eliminating the position. “We were able to reassign all of his responsibilities to other people and flatten the organization so we could increase efficiency,” he said.
Nichol wouldn’t comment on whether there’s a link between Lee’s departure and sluggish drug development but emphasized that the company has plenty of expertise in both laboratory and clinical trials.
Lee, hired in 1992, served as the company’s No. 2 executive under longtime chief executive Daniel L. Korpolinski. Korpolinski resigned last October, and Nichol was hired to replace him in January.
Edmund Debler, an analyst at Mehta and Isaly in New York, said he worries whether the company can produce successful human tests of its drugs fast enough to keep attracting new infusions of cash.
“They need to advance their products to get the money. And to get the money, they need to advance the products,” Debler said. Any mistakes in clinical development now could be perilous, he said.
In April, Debler cut his rating on the stock to a “hold” from a “buy.”
In other changes announced Monday, CoCensys eliminated its human resources manager and three jobs in its research and clinical areas.
Lee’s duties were divvied up between Dr. Joann L. Data, its senior vice president of clinical development and regulatory affairs; Dr. Eckard Weber, its senior vice president of research and development; and Ronald Susek, who was promoted to vice president of corporate business development.
Like many young biotech companies, CoCensys continues to seek corporate partners to help finance its costly drug development and clinical tests. In April, it lost Swiss drug-maker Novartis AG as its partner for developing a compound to treat stroke and traumatic brain injuries. CoCensys is seeking a replacement for Novartis.
The company reported a loss of $18.5 million for 1996, compared with a loss of $18.1 million for the prior year. Revenue rose 23% to $15.2 million from $12.4 million.
Jim McCamant, editor of Medical Technology Stock Letter, said the organizational changes make sense. “Things are coming together--everything but the stock price,” he added.
CoCensys stock slipped 12.5 cents a share in Nasdaq trading to close Monday at $3.875--less than half its initial offering price of $9 four years ago.