Chiasma slashes staff as problems persist
- Waltham, MA-based Chiasma is laying off 44% of its workers as part of a restructuring program the company announced in June. This comes after a 33% reduction earlier this summer. In the last three months, Chiasma has laid off 60% of its workforce. Chiasma now has a skeletal staff of 25 workers.
- Chiasma has faced a number of setbacks in gaining regulatory approval for its lead candidate, Mycapssa (ocreotide), which is in development as maintenance therapy for individuals with acromegaly. In August 2014, Roche, Chiasma's original partner for developing and commercializing Mycapssa, pulled out of the relationship. In April, Chiasma received a Complete Response Letter from the Food and Drug Administration saying that its phase 3 data was insufficient to support approval of Mycpassa.
- The expected cost of the lay-offs ranges from $800,000 to $1 million, including severance; however, Chiasma has estimated that it will save $7 million dollars after the planned reduction. All of the money will go towards gaining approval of Mycapssa.
At this point, it's an all-out, last-ditch effort to get Mycapssa approved. In order to do that, CEO Mark Leuchtenberger and his management team will need to complete the MPOWERED Phase 3 trial comparing the safety and efficacy of Mycapssa to monthly somatostatin analog injections.
Chiasma designed and initiated MPOWRED in response to FDA demands for a double-blind, controlled study rather than the single-arm Phase 3 study Chiasma used when it submitted its dossier to the FDA in April.
Since the original de-partnering from Roche, Chiasma has raised money in the private equity markets, in addition to floating a $102 million IPO last July. The company had $115.6 million in cash, cash equivalents and marketable securities as of the end of June.
Existing capital will be used to fund the trial and another round of regulatory submissions, in addition to compensating remaining employees, which work across clinical, regulatory, and general and administrative departments.
“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," said Mark Leuchtenberger, president and chief executive officer of Chiasma.
The biotehc's stock has tanked over the last year. Chiasma traded as high as $29 per share during the last 52-weeks, but is now lingering under $3 apiece.
- Chiasma Statement