August 16, 2016
By Alex Keown, BioSpace.com Breaking News Staff
WALTHAM, Mass. – Beleaguered Chiasma, Inc. continues its struggles to reduce operating expenses under its recent restructuring program announced in June. Now the company is further reducing its workforce by 44 percent, the company announced this morning.
Although no deadline for the layoffs was provided, Chiasma said the terminations should be completed within this financial quarter. In total, the company will have eliminated more than 60 percent of its workforce since it announced the restructuring two months ago. Chiasma said the company expects to incur expenses of $800,000 to $1 million as a result of the most recent round of layoffs. The layoffs, which follow a 33 percent cut in employment in June, will come primarily from the company’s research and general and administrative areas, the company said. The previous workforce reduction primarily impacted the company’s commercial personnel. Chiasma said the total layoffs will provide about $7 million in savings that can be used to further its goal of having its lead product approved by regulatory agencies.
“While this decision is extremely difficult, we believe it is the prudent course of action as we seek to conserve our cash and continue our dialogue with the U.S. Food and Drug Administration (FDA) regarding development of Mycapssa,” Mark Leuchtenberger, president and chief executive officer of Chiasma, said in a statement this morning.
The finances the company expects to save will continue to be used to pursue all potential paths to gaining regulatory approval of its oral drug Mycapssa (octreotide) for the treatment of adults with acromegaly. In April, the Food and Drug Administration sent Massachusetts-based Chiasma a Complete Response Letter, saying regulators did not believe the company’s application had provided substantial evidence of efficacy to warrant approval. The FDA advised the company to conduct another clinical trial in order to overcome this deficiency.
The FDA’s ruling was something Chiasma leadership has disagreed with and in May said they would continue to pursue regulatory approval and could possibly undergo a dispute resolution with the FDA.
Mycapssa was granted orphan designation in the United States and the European Union for the potential treatment of acromegaly.Chiasma said it will explore all potential paths forward in pursuing approval of Mycapssa, which includes submission of additional clinical data to the FDA. Part of that new data could come from a recently initiated Phase III trial comparing the safety and efficacy of Mycapssa to monthly somatostatin analog injections. That trial was initiated to support a potential Marketing Authorization Application with the European Medicines Agency.
With the layoffs, Chiasma said it will retain a core team of fewer than 25 executive, clinical, regulatory and general and administrative personnel.
Shares of Chiasma are falling in early trading, hitting a morning low of $2.86 per share. Since the company announced its restructuring plan, shares of Chiasma have dropped from $3.35 per share. In April though, before the FDA rejected Mycapssa, shares of Chiasma were trading $12.72. The stock was at a 12-month high in September of 2015 when it was trading for $28.64 per share.
As of June 30, Chiasma had $115.6 million of cash, cash equivalents and marketable securities.
