Alkermes Inc. said it is restructuring its operations and cutting 150 jobs, or 18 percent of its total work force, following the March 7 decision by Eli Lilly and Co., of Indianapolis, to pull out of its deal to develop and commercialize AIR inhaled insulin. (See BioWorld Today, March 10, 2008.)

Shares of Cambridge, Mass.-based Alkermes (NASDAQ:ALKS) closed at $10.82 Wednesday, down 3 cents.

Lilly's action to terminate the program followed similar decisions by New York-based Pfizer Inc., which ended its deal for Exubera in October with Nektar Therapeutics Inc., of San Carlos, Calif., and Bagsvaerd, Denmark-based Novo Nordisk AS, which terminated its deal in January to develop AERX iDMS with Hayward, Calif.-based Aradigm Corp. (See BioWorld Today, Oct. 19, 2007, and Jan. 16, 2008.)

Lilly's termination of the AIR program, said Alkermes CEO David Broecker, "forced us to make difficult choices about the optimal size of the organization."

The firm's financial foundation, he said in a statement, "remains strong, and we are focused on maintaining this strength moving forward."

Alkermes said it is closing its AIR commercial manufacturing facility in Chelsea, Mass., and expects to take a restructuring charge in the fourth quarter of fiscal 2008 of about $5 million to $10 million associated with the reduction in work force and facility-related expenses.

The company also said it expects to take an impairment charge of up to $15 million related to fixed assets at the Chelsea facility.

Alkermes said it anticipates having no cost savings from the restructuring in 2008 but will have savings of $15 million to $20 million in 2009. As of Dec. 31, Alkermes reported cash and total investments of $516.6 million.

"The flexibility of our business model allows us to adapt our cost structure while maintaining our ability to develop innovative products of our own," Broecker said.