Neothetics to Slash an Unknown Number of Jobs, Review Strategic Alternatives
July 11, 2017
By Alex Keown, BioSpace.com Breaking News Staff
SAN DIEGO – Shares of California-based Neothetics (NEOT) jumped more than 9 percent in premarket trading after the company announced plans to review strategic alternatives that include a possible acquisition or partnership to maximize shareholder value.
But, as part of the process, the company said it intends to streamline operations, which will include the cutting of an unknown number of employees. In its statement issued Monday afternoon, the company did not provide specifics as to how it will streamline operations or how many employees will be terminated.
The new course of action for Neothetics follows the company’s Phase II failure for its investigational drug LIPO-202-CL-31, which is being developed for the reduction of submental subcutaneous fat, also known as a double chin. In June, the company announced that LIPO-202 did not demonstrate improvement on any efficacy measurements or separation from placebo. At the time of the failure, Kim Kamdar, a member of the company’s operating committee and board of directors, said the company would now look for a way forward.
LIPO-202 is a proprietary injectable formulation of the well-known long-acting ß2-adrenergic receptor agonist, salmeterol xinafoate, according to the company website.
This is not the first time that drug has failed to meet endpoints in clinical trials. In December 2015, LIPO-202, failed in two late stage trials. Both studies evaluating the safety and efficacy of LIPO-202 failed to meet its primary and secondary endpoints.
Fast forward a few weeks and the company has now determined the strategic alternatives being explored are that way forward. In its statement, Neothetics said it will seek an acquisition, business combination or partnership to provide the best value for shareholders’ investments. On Monday, Kamdar said the decision of the board of directors was unanimous. The company has secured Oppenheimer and Co. to act as its exclusive financial adviser during the process.
“In addition, we continue to review all operational expenses in order to facilitate our ability to enter into a strategic transaction,” Kamdar said.
As of the end of the first quarter, Neothetics had approximately $9.7 million cash on hand.
In February 2016, the company announced George Mahaffey, chairman and chief executive officer, abruptly resigned his position. That announcement sent share prices down more than 10 percent.
Neothetics has been in a steady decline for the past two years. In August 2015, company shares were trading a high of $14.53. On Monday, the stock closed at 53 cents per share. In premarket trading, it has climbed to 58 cents per share.
Alongside LIPO-202, Neothetics is also developing, LIPO-102, an injectable form of a combination of salmeterol xinafoate and fluticasone propionate. LIPO-102 is being developed for the thyroid-related eye disease caused by expansion of fat and muscle behind the eye. The drug is primarily being developed for the “orphan indication of symptomatic exophthalmos,” a protrusion of the eye from the orbit, the company said.