- Achaogen will eliminate 80 positions, or about 28% of the entire company, in a restructuring plan announced Thursday that will shift the company's focus away from early-stage research.
- The South San Francisco-based company also announced multiple exits from its C-suite: its president, chief financial officer and chief scientific officer are all departing in coming months.
- Achaogen will shift resources from early-stage research to the U.S. launch and business surrounding its first FDA-approved drug, a daily intravenous antibiotic branded as Zemdri.
Achaogen launched Zemdri (plazomicin) for sale just a week ago. Now, the company is announcing sizable layoffs and big change among its leadership. While its stock has faltered in the past year — falling more than 60% from last summer — these changes will only raise more questions as to the company's direction.
A month ago, the Food and Drug Administration partially approved Achaogen's once-daily intravenous antibiotic Zemdri. While the drug got the go-ahead for certain urinary tract infections, it was not approved for bloodstream infections.
Investment bank Leerink predicted revenue of roughly $160 million for Zemdri's use in urinary tract infections by 2025, less than its estimate of an additional $250 million if it was approved for bloodstream infections. Investors responded poorly to the limited approval, sending shares down 20%.
Achaogen CEO Blake Wise said in a statement he was "saddened to announce a restructuring that broadly impacts the organization, including high caliber partners on the executive team."
Among management, chief scientific officer Lee Swem will leave Sept. 24 and chief financial officer Tobin Schilke will leave Sept. 30. Kenneth Hillan, who serves as president and head of research, will exit Oct. 15.
The company named internal replacements for chief financial officer and chief operating officer.
In its restructuring plan, Achaogen will reduce spending on early-stage R&D, technical operations and general expenses. By eliminating 80 positions, Wise said the company will narrow its focus and improve its cost structure. Achaogen anticipates taking a one-time, $6 million expense for severances in the third quarter from the shake-up.
Clearly bracing for uncertainty ahead, the biotech expects "substantial losses" in its future. Notably, it has taken net losses every year since its founding in 2002, according to an SEC filing for the first quarter of 2018. As of March, executives predicted they can fund the business for at least one year with the company's current assets.
Achaogen said its commercial and medical affairs team will not be affected. Along with a stronger focus on marketing Zemdri, which the company has also filed for European approval, Achaogen emphasized the development of C-Scape, an orally-administered beta-lactam/beta-lactamase inhibitor combination now in Phase 1 testing. The three other drugs in Achaogen's pipeline are all preclinical.
Achaogen plans to further discuss the changes and restructuring during its second quarter earnings call on Aug. 6.