Struggling Chiasma Chops 33% of Workforce After FDA Drug Rejection

June 15, 2016
By Alex Keown, BioSpace.com Breaking News Staff

WALTHAM, Mass. – Chiasma, Inc. is undergoing a drastic corporate restructuring that includes the slashing of one-third of its workforce in an effort to preserve capital for the continued development of its experimental acromegaly treatment Mycapssa was rejected by U.S. regulatory authorities.

The workforce reduction will include nearly all of Chiasma’s commercial personnel, the company said in a statement this morning. Commercial personnel were selected for termination due to the company’s issues in getting Mycapssa approved by the U.S. Food and Drug Administration. In April the FDA sent Massachusetts-based Chiasma a Complete Response Letter regarding the oral drug Mycapssa (octreotide), 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.

Mycapssa was granted orphan designation in the United States and the European Union for the potential treatment of acromegaly. 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. Leuchtenberger said the company continues to believe in the viability of Mycapssa as a treatment for acromegaly and said the company will continue to “work diligently” on their behalf. Chiasma said it will explore all potential paths forward in pursuing approval of Mycapssa, which includes submission of additional clinical data to the FDA. In addition to terminating 33 percent of its staff, Chiasma said it will continue to evaluate its operations and priorities for other cost-savings measures.

“We believe this reduction in staffing and spending is the appropriate action to preserve shareholder value at this time since it is unlikely we will be able to commercially launch Mycapssa in the near term,” Mark Leuchtenberger, president and chief executive officer of Chiasma, said in a statement.

Chiasma said the terminations are likely to cause the company to incur charges of approximately $1.4 million to $1.6 million for severance and other related costs during the second quarter. Additional costs could add another $300,000 to $400,000, Chiasma said. As of March 31 Chiasma had $134.3 million of cash, cash equivalents and marketable securities.

Although Chiasma has run into a roadblock with the FDA, the company will move forward with its recently initiated Phase III trial comparing the safety and efficacy of Mycapssa to monthly somatostatin analog injections to support a potential Marketing Authorization Application with the European Medicines Agency.

Shares of Chiasma fell more than 8 percent Thursday, closing at $2.57 per share. That follows a fall of more than 75 percent in April after the FDA issued its Complete Response Letter.