January 21, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEWARK, Calif. – Martin McGlynn, the departing chief executive officer of StemCells, Inc. , received a $1 million parting gift as he left the company, the San Francisco Business Times reported this morning.
While a large severance package is not unusual, especially in the biotech industry, the Times notes the payout comes at a time when the company is undergoing a restructuring that includes a $450 million deficit and a layoffs of about 25 percent of its employees.
In December, StemCells, Inc. announced its realignment that included the suspension of a mid-stage trial for a therapy for macular degeneration in favor of the company’s HuCNS-SC platform technology for the treatment of chronic spinal cord injury (SCI). The company said clinical trials have shown its technology “offers therapeutic promise to restore lost function previously considered unrecoverable.” In December, McGlynn said focusing on the spinal cord treatment is “the right course of action” for the company as it moves forward “thereby best serving the patients who would benefit, while creating substantial long-term value for our stockholders as early as possible.”
StemCells, Inc. said it anticipates the realignment will save the company $20 million over the next two years and move its spinal cord treatment into a Phase III trial. Over the past year, company stock has dropped approximately 65 percent from a high of $1.38 per share in March to 31 cents per share this morning. StemCells, Inc. closed out the third quarter with $21 million in cash and other resources.
With the layoffs, the company said it anticipates to incur about $400,000 in restructuring charges during the first quarter of 2016.
This week the company announced McGlynn’s leaving the company and current chief operating officer and company president Ian Massey taking over the CEO role. Massey came to StemCells, Inc. in March 2015 after a 30 year career in the industry, including a stint as president of U.S. Operations of Biotie Therapies Corporation, a co-founder of Synosia Therapeutics where he licensed drug candidates from Novartis AG , Hoffman-La Roche AG , and Syngenta AG for clinical development as potential therapeutics for the treatment of CNS disorders.
In a statement McGlynn said Massey has “a stellar track record of successful clinical development through regulatory approval and on to commercialization for numerous products,” which is something the company will need as it looks to move its spinal cord treatment to a Phase III trial and, if successful, to market.
StemCells HuCNS-SC platform uses human neural stem cells, which are extracted from fetal brain tissue from surgical abortions, the Times reported. The treatment is designed to produce myelin, an “insulating layer surrounding neurons, for patients with paralyzing neck injuries,” the Times said.
Approximately 1.3 million people in the United States report being paralyzed due to an SCI, and there currently are no effective treatments available, the company said. Of those, approximately 56 percent of the spinal cord injuries occur in the cervical region. Overall, approximately 13 percent of SCI patients have no mobility and 35 percent have limited mobility after the traumatic injury, the company said.
