Achaogen to Cut 80 Jobs as Part of Corporate Restructuring

Achaogen, headquartered in South San Francisco, announced that as part of its strategic update and corporate restructuring, it will eliminate 80 positions, or about 28 percent of staff.

Achaogen focuses on drugs to treat multi-drug resistant (MDR) gram-negative infections. On July 20, the company announced that Zemdri, which was approved in the U.S. for adults with complicated urinary tract infections (cUTI), was on the market. It was approved for cUTI, including pyelonephritis, due to specific Enterobacteriaceae. It was approved by the U.S. Food and Drug Administration (FDA) on June 25.

At the time, Blake Wise, the company’s chief executive officer, stated, “The challenge that healthcare providers face every day of addressing difficult-to-treat infections is significant and growing. We are excited to launch Zemdri and partner with the infectious disease community in both the hospital and outpatient settings around the proper use, efficacy and safety of Zemdri, including its activity against certain MDR bacteria and its 30-minute, once-daily dosing regimen.”

Now the company is indicating it needs to focus its resources on the commercialization of Zemdri, the Marketing Authorization Application (MAA) for the drug in Europe, and continued development of its C-Scape program. Its research-and-development efforts will focus on C-Scape, an oral beta-lactam/beta-lactamase inhibitor, as well as new aminoglycoside antibiotics.

“Despite being on course for a successful launch of Zemdri in the United States and a MAA filing in the EU in the second half of this year, the environment for novel antibacterials requires us to improve our cost structure and narrow our focus to position the company for long-term success,” Wise said in a statement. “I take great pride in the entire Achaogen team that worked exceedingly hard to make Zemdri commercially available in less than one month after FDA approval, and I am saddened to announce a restructuring that broadly impacts the organization, including high caliber partners on the executive team. I thank the entire Achaogen team for all they have done to build this company.”

Because of its focus on the Zemdri U.S. launch, none of its commercial and medical affairs groups will be affected. It plans to cut spending on early-stage research and development, technical operations and general and administrative expenses. There will be a one-time employee severance and benefits charge of $6 million in the third quarter of this year.

In addition, there will be significant changes in the executive management team. Kenneth Hillan, president of R&D, is leaving the company on October 15, but will stay on the Board of Directors.

Tobin Schilke, chief financial officer, is leaving the company on September 30.

Lee Swem, chief scientific officer, leaves on September 24.

Zeryn Sarpangal, currently chief of staff, will take on the role of chief financial officer on October 1, and Liz Bhatt, currently chief business officer, took on the duties of chief operating officer on July 26. In addition to her current corporate development responsibilities, Bhatt will assume oversight of Achaogen’s technical operations.

“Zeryn and Liz are accomplished and strategic Achaogen leaders as well as trusted partners to the board and me,” John Smither, Achaogen board member and Audit Committee Chair, and chief financial officer of Sienna Biopharmaceuticals, said in a statement. “As a former investment banker and prior leader of Achaogen’s financial function, Zeryn possesses strong financial acumen in addition to a deep understanding of the company’s strategy and business operations, which uniquely prepare her to deliver shareholder value in her new role as chief financial officer. I look forward to supporting Zeryn, Liz and the entire leadership team as they capitalize on the potential of the company’s first revenue-generating product.”