After FDA Rejection, Bay Area's Coherus Axes 30% of Employees
June 28, 2017
By Mark Terry, BioSpace.com Breaking News Staff
In light of a June 12 rejection from the U.S. Food and Drug Administration (FDA), Coherus Biosciences disclosed to the U.S. Securities and Exchange Commission (SEC) that it plans to pink-slip 30 percent of its staff.
Based in Redwood City, Calif., Coherus focuses on developing and commercializing biosimilars, which are basically generic versions of biologics medications. On June 12, the FDA issued a complete response letter (CRL) for its biologics license application (BLA) for CHS-1701, a biosimilar to Amgen ’s Neulasta (pegfilgrastim).
The CRL, essentially a rejection, revolved around the FDA’s request to reanalyze a subset of samples using a different immunogenicity assay, as well as requests for additional information related to the company’s manufacturing processes. It did not ask for a clinical study on oncology patients. It also did not request more process qualification lots or express concerns over the GMP status of CHS-1701 bulk manufacturing and fill-finish vendors.
“While we are disappointed in the delay that this additional request has caused, we remain confident in our ability to address the FDA’s requests for the purpose of obtaining approval for CHS-1701,” said Denny Lanfear, Coherus’ president and chief executive officer, in a June 12 statement. “We are encouraged that a patient study has not been requested and we expect that we will be able to respond to the FA and meet with them to define a path forward in the coming months. Neulasta is the largest selling oncology biologic in the U.S., and we anticipate CHS-1701’s approval will generate significant U.S. healthcare savings while increasing patient access.”
On June 21, Coherus’ Compensation Committee of the Board of Directors approved a restructuring plan to cut costs and better align its workforce. As part of this plan, 51 employees will lose their jobs. They are eligible for severance pay, reimbursement of COBRA and outplacement services.
The company stated, “Employees party to change of control and involuntary termination benefit agreements will continue to vest their stock options pursuant to the terms of their agreements. Certain senior executives received accelerated vesting of certain stock options and an extension to the post-termination exercise period for certain stock options.”
Coherus believes that the staff cuts will decrease annual operating costs by about $10 million. There will be an aggregate restructuring charge of about $3.7 million, which it will include in the second quarter of 2017. This is related to one-time severance payments and other employee-related expenses, including $1.6 million of stock-based compensation expenses associated with the acceleration of stock options. Most of those will be paid out in the third quarter, with the rest in the fourth quarter.
At the company’s first-quarter financial statements on May 8, Coherus reported total revenue for the quarter was $161,000 compared to $12.4 million in the first quarter 2016. The drop is because of the termination of a deal for CHS-0214, a biosimilar candidate for Amgen ’s Enbrel with Shire . R&D expenses for the quarter were $53.8 million compared to $65.3 million in the same period in 2016. Cash and cash equivalents and investments at the end of the quarter, dated March 31, totaled $174.8 million compared to $124.9 million as of December 31, 2016.