Realm Therapeutics Slashes Staff and Explores Potential Sale as the Company Conducts a Strategic Review

Following a trial failure with its atopic dermatitis treatment, Malvern, Penn.-based Realm Therapeutics has opted to discontinue all of its drug development programs and is considering a potential sale of the company.

This morning, Realm announced it hired MTS Health Partners, L.P. to act as an advisor in relation to a strategic review that could include the potential sale of the company. Shares of Realm are up more than 6 percent following the announcement.

As the company undertakes the strategic review, Realm said it has implemented “cost-cutting measures” that includes a “significant reduction in headcount” in order to preserve capital reserves. As of the end of August, Realm had cash and cash equivalents of $21.3 million

Alex Martin, Realm’s chief executive officer, pointed to the recent failure of the company’s atopic dermatitis study and said the results showed “a statistically significant efficacy signal in a sub-population treated with the higher dose formulation.” However, the overall study failed, which led Realm Therapeutics to its decision to discontinue all drug development programs based on the company’s proprietary technology.

Martin was referring to the Phase II trial with PR022. The data, released last month, showed “no difference from vehicle in the primary endpoint of percent change in Eczema Area Severity Index (EASI) versus baseline.” A topical gel formulation of high concentration hypochlorous acid (HOCl), PR022 was associated with down-modulation of key cytokines IL-4, IL-13 and TARC, as well as cytokines associated with itch, including IL-31 and TSLP. If the drug had passed through Phase II and Phase III, it had been seen as a potential drug to contend with Pfizer’s Eucrisa (crisaborole) in the atopic dermatitis space.

Martin said company leadership hired MTS Health Partners to advise the company as it explores potential strategic operations as Realm seeks to “maximize the value of our assets including the growing Vashe Wound care royalty stream and our FDA 510(k)-cleared anti-itch hydrogel, which was formerly marketed as Aurstat.” Martin said the company previously developed and sold businesses focused on “supermarket retail and endoscope decontamination,” which were both based on the company’s proprietary HOCl technology. Martin did not rule out in-licensing or acquiring additional assets to increase shareholder value. He also suggested the company could take a “broader corporate transaction,” although he did not provide any indication of what that could be in the company’s statement.

In March, the company also saw the failure of another therapy. Realm said its Phase II allergic conjunctivitis drug PRO13 failed to meet endpoints. Realm halted further development of the PR013 program following that failure.

Following this announcement, Realm said it is now considered to be in an “offer period” and any parties with a potential interest in making a proposal should contact MTS Health Partners.

Shares of Realm Therapeutics closed at $4 on Friday. In March, shares were trading at $47.50. The allergic conjunctivitis failure sent shares crashing to $34.50. The stock climbed back to $40 per share, before the failure of the atopic dermatitis treatment.