Chiasma rocked by new FDA demands

Chiasma photo: Ouria Tadmor

The FDA is demanding a further trial for the Israeli drug developer's Mycapssa acromegaly (giantism) treatment.

Last week, Israeli drug development company Chiasma, Inc. (NASDAQ:CHMA) reported its financial results for the second quarter, including an update concerning its contacts with the US Food and Drug Administration (FDA) regarding the continued development of acromegaly (giantism) drug Mycapssa. Chiasma reported that the FDA continues demanding another large-scale, controlled trial in order to approve the drug for marketing in the US.

Chiasma's share responded to the report with a further slump, completing an 83% drop since its NASDAQ offering last year. Chiasma underwent a significant crisis in April, when the FDA surprised the company by declining to approve this drug for marketing based on a trial carried out by the company, which did not include a control group. As a result, Chiasma's share plummeted 63% on one day. The company is currently traded at a market cap of $68.2 million.

"The FDA reiterated its view that Chiasma had not provided substantial evidence of efficacy to warrant approval of Mycapssa, as well as its strong recommendation that the company conduct a randomized, double-blind and controlled trial that enrolls patients from the United States and is of sufficiently long duration," Chiasma said. In the meanwhile, the company continues enrolling patients for a trial initiated in March 2016, aimed at supporting marketing authorization in Europe.

Chiasma began trading on NASDAQ one year ago, based on the trial it had conducted and its confidence that the trial would most likely lead to approval. It raised $101 million, at an after-money market cap of $367 million, in an offering that was oversubscribed.

Chiasma had undergone another crisis in the past, when drug company Roche, which acquired the drug development rights, returned them to Chiasma after the end of a single-arm trial. However, Chiasma had convinced the market that the cancellation had been due to Roche's own considerations and does not follow from any problems with the drug. After the FDA refused to approve the treatment, Chiasma had to axe one third of its employees, about 20 people.

According to company statements, in the second quarter of 2016 it invested $14.8 million in research and development and $5.4 million in marketing and general expenses. The company spent $6.5 million on its restructuring plan and additional $4.7 million on penalty payments to subcontractors who were to produce the drug. Company losses totaled $26.7 million.

The company has $134 million in cash, sufficient to maintain its current operations for a long time (according to the company's report, until the end of 2017), but apparently not for the trial requested by the FDA. Chiasma said that it is examining further layoffs.

Published by Globes [online], Israel business news - - on August 14, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Chiasma photo: Ouria Tadmor
Chiasma photo: Ouria Tadmor
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