SoCal's Celladon Slashes 50% of Workforce to Conserve Capital After Gene Therapy Fails

SoCal's Celladon Slashes 50% of Workforce to Conserve Capital After Gene Therapy Fails
May 15, 2015
By Alex Keown, Breaking News Staff

SAN DIEGO -- Celladon Corporation will slash approximately 50 percent of its staff to reduce operating expenses and cash reserves after the failure of its gene-therapy for cardiovascular disease, the company announced this morning as part of its quarterly report.

The company currently employs 34 full-time staff members and is hoping the reduction in staff will help save the company as it attempts to preserve value and recover from the critical hit it took when the cardiovascular gene therapy Mydicar failed to reduce hospitalizations and improve survival of cardio patients during a late stage trial.

The layoffs were expected: Celladon revealed in April that it would institute sweeping cost-cutting measures in an attempt to recover from the drug’s failures. In April Celladon’s announced that its Phase IIb CUPID2 trial evaluating the cardiovascular gene therapy agent Mydicar failed to meet its primary and secondary endpoints. Mydicar was already granted both "breakthrough" and "fast-track" status by the U.S. Food and Drug Administration (FDA).

But in the Phase IIb trial CUPID2, Mydicar failed to show a significant treatment effect when compared to placebo. Mydicar is designed to restore levels of an enzyme called Serca2, which is critical for the heart’s ability to contract. Depletion of the enzyme is known to play a key role in the progression of heart failure, Celladon said.

Following the drug’s failure, the company said it was both surprised and disappointed in the trial’s outcomes. Company officials said they would analyze the data in order to better grasp what happened. Still, the company had to make several moves to mitigate losses from the drug, including ceasing two development agreements with other pharmaceutical companies.

Celladon ended its development and manufacturing agreement with Novasep after Mydicar failed to meet its endpoints in the late-stage study.

Celladon determined production of Mydicar was not warranted at Novasep’s facility. Additionally, Celladon ended a manufacturing agreement with Lonza Biologics, Inc.

"We are in the process of conducting an extensive review of the CUPID2 data in the attempt to better understand the observed negative outcome. Meanwhile, we are conserving our cash resources and are assessing our other previously planned clinical trials and development programs. We are also evaluating our strategic options in order to determine the best path forward to maximize shareholder value," Krisztina Zsebo, Celladon’s chief executive officer, said in a statement.

Celladon ended the painful quarter with $70.6 million in cash, cash equivalents and investments, the company said.

Since its April announcement regarding the failure of Mydicar, Celladon’s stock has not recovered. Before the late April announcement Celladon’s stock was trading at about $14.60 per share, but today the stock is trading at $2.35 per share.

Mydicar’s failings caused more concern than just for investors in Celladon. Investors looked with wary eyes at other gene-therapy companies such as Spark Therapeutics, bluebird bio , Avalanche Biotechnologies , Applied Genetic Technologies Corporation and Uniqure NV (QURE), said analysts.

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