Avalanche Biotech CEO Resigns Amidst Clinical Data Questions and Stock Plummeting
Published: Jul 24, 2015
July 24, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Menlo Park, Calif.-based Avalanche Biotechnologies announced yesterday that its chief executive officer and president, Thomas Chalberg, Jr., resigned, effective immediately. Hans Hull, formerly senior vice president of business operations, has been appointed as interim chief executive and president. Chalberg will stay on as a consultant and member of the company’s Scientific Advisory Board.
The company recently took a beating after questions arose regarding Avalanche’s Phase II trial design for AVA-101, a drug for wet age-related macular degeneration. The company indicated that the Phase IIa study met its 12-month primary endpoint, that the drug was well tolerated and had a favorable safety profile. Patients also showed improved best corrected visual acuity (BCVA) compared to the control group. It also demonstrated a positive trend in response rate.
However, during a June 15 conference call with analysts, questions arose regarding the study’s secondary efficacy endpoints, specifically related to visual acuity, the number of rescue injections and measurements of retinal thickness.
There were also doubts about the study’s design and that it did not show a statistically significant difference between the control arm and the AVA-101 patients.
At stake was a potential development deal between Avalanche and Regeneron Pharmaceuticals, Inc. (REGN) for the rights to AVA-101. The two companies announced on May 5 a collaboration to develop drugs for ophthalmologic diseases, and as part of the deal, Regeneron has a time-limited right to first negotiation for AVA-101.
Avalanche stock took a dive after the news on the clinical trial. Shares traded for $41.40 on June 12 and plunged to $17.05 on June 16. Shares are currently trading for $14.92.
“After nine years since co-founding the Company and serving as CEO, I am proud of the progress we’ve made,” said Chalberg in a statement yesterday. “I am ready to turn over the reins to a new leader, and look forward to supporting the Company in a new role going forward. I am deeply thankful for the opportunity to work alongside such an incredibly talented group of colleagues on behalf of the millions of patients suffering from blinding and sight-threatening diseases.”
The company’s board of directors appointed independent directors John McLaughlin and Paul Wachter to head a committee to search for a permanent chief executive and additional directors. It also indicated that co-founder Mitchell Finer would return as a consultant with the title of Distinguished Research Fellow.
Company stock has received an average recommendation of “Buy” from eight ratings firms, according to AnalystRatings.net. Piper Jaffray, on June 17 rated it as “Overweight” and cited a price target of $52. Chardan Capital upgraded to “Sell-Neutral” on June 23 and gave a price target of $20. Cowen and Company gave an “Outperform” with a price target of $55.