Dive Brief:
- Small Boston-based Tokai Pharmaceuticals will lay off 60% of its workforce, announcing the news days after its lead prostate cancer drug galeterone failed in a Phase 3 study last week.
- Tokai stock plunged by nearly 80% last week after releasing the galeterone data. Once the job cuts are completed, Tokai will employ only 10 full-time staff as it undergoes a "comprehensive evaluation of strategic options for galeterone and its pipeline."
- Tokai CEO Jodie Morrison said the layoffs were necessary given the clinical failure of galeterone. Tokai has about $44 million in cash on hand and will save an estimated $4.2 million in lower annual operating expenses. The lay-offs are expected to be completed at some point in the third quarter.
Dive Insight:
Last week, Tokai said it would abandon its clinical study testing the efficacy of galeterone, which was in development for use in men with treatment-naïve metastatic castration-resistant prostrate cancer (mCRPC) whose tumors express a certain mutation.
A data monitoring committee found galeterone would likely not meet its primary endpoint, leading to Tokay's decision. Galeterone was being compared to Medivation's Xtandi in the ability to lengthen progression-free survival times.
Galeterone's failure is a significant blow to the company and puts presure on its financial situation. Tokai spent roughly $10 million in the first three months of the year and would rapidly deplete its cash holdings of $44 million at that place.
Tokai still believes it can continue testing galeterone in men with metastatic castration-resistant prostrate cancer (mCRPC), whose cancer has become resistant to Medivation's top-selling drug, Xtandi. Xtandi is approved for treatment of mCRPC and associated with a high response rate. Nonetheless, some patients develop resistance during treatment.
But that will require a reset and Tokai is cutting down to a skeleton staff to keep itself running for the near future.