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June 15, 2016

Chiasma Eliminating 33% of Workforce

  • Chiasma will eliminate approximately 33% of its workforce—including substantially all its commercial staffers—under a restructuring it said yesterday was intended to focus its resources on continued development of Mycapssa™ (octreotide) capsules for the maintenance treatment of adult acromegaly patients.

    While Chiasma’s announcement did not spell out how many jobs would be jettisoned, the reduction is expected to total approximately 20, since the company reported the size of its workforce as 65 full-time employees as of May 1, according to the company’s most recent 10-Q regulatory filing dated May 12.

    The layoffs follow Chiasma receiving a Complete Response Letter (CRL) on April 15 for its NDA for Mycapssa capsules for the maintenance treatment of adult patients with acromegaly. Mycapssa has been granted orphan drug designation in the U.S. and the European Union for the potential treatment of acromegaly.

    During an End of Review meeting with the FDA, according to Chiasma, the agency reiterated concerns it expressed in the CRL about the single-arm, open-label Phase III clinical trial upon which the NDA was based, and said the company’s application had failed to provide substantial evidence of efficacy to warrant approval.

    In the CRL, the FDA told Chiasma it would need to furnish that evidence by conducting another clinical trial. The agency also “strongly recommended” that the company conduct a randomized, double-blind and controlled trial that enrolls patients from the U.S., and lasts long enough to ensure that control of disease activity is stable at the time point selected for the primary efficacy assessment, Chiasma said on April 18.

    “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,” Chiasma President and CEO Mark Leuchtenberger said yesterday in a statement. “We continue to believe in the potential for Mycapssa to help many patients with acromegaly and intend to continue working diligently on their behalf.”

    The company added that it expects to assess “all potential paths forward” for Mycapssa, including whether it can address FDA concerns through additional clinical analyses or data.

    Chiasma also said it plans to continue an evaluation of business priorities and additional opportunities for cost savings—though the company added it will proceed as planned with its recently launched MPOWERED™ Phase III trial comparing the safety and efficacy of Mycapssa to monthly somatostatin analog injections to support a potential Marketing Authorization Application with the European Medicines Agency.

    Chiasma said it expects to incur charges of approximately $1.4 million to $1.6 million for one-time severance and related costs in the second quarter, resulting in spending that will be substantially complete by the end of the second quarter of 2017.  An estimated additional $0.3 million to $0.4 million of one-time noncash restructuring charges related to commercial software are also expected this quarter.

    As of March 31, Chiasma said, it had $134.3 million of cash, cash equivalents, and marketable securities.

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