Israeli drug development company Chiasma, Inc. (NASDAQ:CHMA) has announced a corporate restructuring plan, which involves laying off 33% of its staff., after the FDA rejected its marketing application for its flagship drug.
The company did not disclose numbers but said it would focus on the continued development of Mycapssa (octreotide) capsules for the treatment of adult acromegaly and that the layoffs encompass "substantially all of its commercial personnel." This suggests that the downsizing will mainly hit its Waltham, Massachusetts headquarters rather than its Jerusalem R&D center. The company reportedly has 65 employees meaning that more than 20 will be fired.
Chiasma said that it would incur charges of $1.4 - $1.6 million for one-time severance and related costs in the second quarter of 2016.
The restructuring follows the company’s notification by the US Food and Drug Administration (FDA) regarding certain aspects of the single-arm, open-label Phase III clinical trial for Mycapassa and the FDA’s belief that the company’s application had failed to provide substantial evidence of efficacy to warrant approval.
Chiasma CEO Mark Leuchtenberger said, “We believe this reduction in staffing and spending is the appropriate action to preserve shareholder value at this time since it is unlikely we will be able to commercially launch Mycapssa in the near term. I would like to thank the high-caliber individuals affected by this plan for their tireless efforts and contributions to the organization. We continue to believe in the potential for Mycapssa to help many patients with acromegaly and intend to continue working diligently on their behalf.”
Chiasma is proceeding as planned with its recently initiated MPOWERED™ Phase III trial comparing the safety and efficacy of Mycapssa to monthly somatostatin analog injections to support a potential Marketing Authorization Application (MAA) with the European Medicines Agency (EMA).
Chiasma was floated on Nasdaq in July 2015 at a valuation of $450 million and raised $102 million. The market at which it drug is aimed is estimated to be worth $700 million, and is currently dominated by Novartis.
Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2016
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