ARYx Therapeutics last night confirmed terminating the employment of all its remaining staff and officers and establishing consulting agreements for each employee, as it tries to stay afloat while awaiting FDA’s decision on a submitted Phase III study protocol for lead compound naronapride (STI-7505), via the SPA procedure. FDA’s response to ARYx’s SPA was originally due in the first week of November, but the agency has now informed the firm it will not provide its response until the first quarter of 2011.
Herein lies the problem for ARYx, which doesn’t have enough cash and cash equivalents to fund its operations into 2011. The firm has, over the course of this year, been evaluating how to best optimize its assets, and admits that the most significant interest has been shown in naronapride, a serotonin type 4 (5HT4) agonist that has completed Phase II development for the treatment of chronic idiopathic constipation, gastroesophageal reflux disease, and functional dyspepsia.
In April, clarification by FDA of the clinical development requirements for the drug led ARYx’ investors to encourage it to look for additional funding to continue developing naronapride in-house. However, the firm admits that securing any financing will not be possible until FDA responds to the submitted SPA with an acceptable development path. Moreover, it adds, even if the FDA response is positive, it still can’t guarantee that financing will be forthcoming.
ARYx problems are compounded by the fact that it is due to make scheduled payments on its existing secured debt obligations at the start of 2011. The firm says holders of its secured debt have indicated a willingness to defer principal payments for a period of time, although no final agreements have been signed. In addition, certain current and new investors have indicated a willingness to potentially fund ARYx’ minimal operations through to the date of FDA's response to the SPA.
Keeping its staff on through consultancy agreements will allow ARYx to continue its dialogue with FDA and at least tick over operationally. “While these decisions are very difficult, we believe it is important to do everything possible to allow ARYx the time to complete this important FDA interaction,” comments Paul Goddard, Ph.D., chairman and CEO.
“Our efforts over 2010 convinced us that the most significant value from our product candidates could be achieved through the continued internal development of naronapride. The substantial funding we sought would allow us to complete the first of two planned pivotal Phase III clinical trials for naronapride, at which time we would either seek a partner for the continued development of naronapride or look to raise additional funding to complete the development of the compound."