Onconova Quietly Terminates Another 21% of Its Workforce

August 31, 2016
By Mark Terry, BioSpace.com Breaking News Staff

NEWTON, Penn. – In an effort to reduce costs, beleaguered Onconova Therapeutics is cutting 21 percent of its workforce—six months after it reduced its employees by 17 percent for the same cost-cutting reasons.

In an 8K filing filed with the U.S. Securities and Exchange Commission, which was posted on Street Insider, the company said the job reductions, which were effective Aug. 30, amounted to six employees. Onconova said it estimates the annual cost savings will amount to about $1.4 million, while the company will incur about $400,000 in one-time severance-related charges during the third quarter of 2016. At the end of June, Onconova said it finished the second quarter with cash and cash equivalents of $12.8 million, down from $19.8 million at the end of December 2015.

The layoffs coincide with the final date Baxalta was required to provide continued financial support following the termination of a development and licensing agreement for its cancer drug rigosertib. The agreement between the two companies dates back to 2012 when the two companies inked a deal to develop rigosertib for the treatment of higher-risk myelodysplastic syndromes (HR-MDS). In March, when the decision was announced, Baxalta, which was recently acquired by Shire PLC , said the partnership with Onconova no longer aligned with Baxalta’s strategic priorities. As part of the agreement with Baxalta, Onconova would continue to develop rigosertib on its own.

Onconova is completing a Phase II trial for Rigosertib as an oral treatment for HR-MDS patients. The trial began enrollment before Baxalta terminated its agreement with Onconova. In June, the company presented data from a Phase II trial that showed the interim overall response rate was 77 percent among evaluable first- or second-line HR-MDS patients treated with oral rigosertib in combination with azacitidine.

Earlier this month, the company announced it was continuing to enroll patients in a Phase III trial for rigosertib as an intravenous treatment for patients with myelodysplastic syndromes. Onconova said it has added additional trial sites in Israel and Australia.

In addition to the recent layoffs, Onconova said it tapped Mark Guerin as the new chief financial officer. Guerin’s new position will provide him an annual salary of $280,000 with a 40 percent bonus target. The previous chief financial officer was caught up in layoffs that occurred in February. That round of layoffs also included the company’s president of research and development. The company’s chief executive officer, Ramesh Kumar, also agreed to cut his base salary by $136,000 this year during that round of layoffs.

Shares of Onconova closed at $3.44 on Aug. 30.