Tokai cuts workforce by 60% after phase 3 failure with prostate cancer drug
- 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.
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.