Fibrocell Science says it is ending development of azficel-T and will eliminate about half its workforce—24 jobs tied to support of manufacturing and related operations for the company’s onetime lead product candidate, which failed a Phase II trial 3 weeks ago.

The number of employees being reduced was disclosed in a regulatory filing today—a day after Fibrocell announced the workforce reduction and a wind-down of azficel-T operations, and plans to seek a buyer for the drug candidate.

The idled employees were “primarily in the areas of manufacturing and quality operations, representing approximately 50% of the Company's employee base,” Fibrocell stated.

Fibrocess added that the workforce reduction was announced, and “substantially” completed, yesterday.

“The Company expects to incur one-time termination costs in connection with the reduction in workforce ranging from approximately $0.3 to $0.4 million, which includes severance, benefits, and related costs, for the quarter ended June 30, 2016. These termination costs will be paid in the third and fourth quarters of 2016,” Fibrocell added.

Fibrocell also expects to incur—but said it cannot estimate at present—additional cash expenses in the third and fourth quarters related to the wind-down of its azficel-T operations.

Azficel-T missed its primary endpoints compared with placebo in a Phase II clinical trial assessing the candidate for the treatment of vocal cord scarring resulting in chronic or severe dysphonia, Fibrocell said on June 8.

The Phase II study was a double-blind, randomized, placebo-controlled trial designed to test the safety and efficacy of azficel-T injections. Primary efficacy endpoints were assessed at 4 months after last treatment on three different scales: Voice Handicap Index, Mucosal Wave Grade, and GRBAS (grade, roughness, breathiness, asthenia and strain). According to Fibrocell, no unexpected safety findings were reported and the treatment was well tolerated.

Following the trial failure, Fibrocell said it will focus efforts and resources on its portfolio of gene therapy candidates being developed with Intrexon. That portfolio includes FCX-007 for the treatment of recessive dystrophic epidermolysis bullosa (RDEB), FCX-013 for the treatment of linear scleroderma, and genetically modified fibroblasts for the treatment of arthritis and related conditions.

“Earlier this month, we initiated adult patient recruitment in our Phase I/II clinical trial for FCX-007 and expect to enroll the first subject shortly,” Fibrocell Chairman and CEO David Pernock said in a statement. “We are uniquely positioned to leverage our versatile autologous fibroblast technology with our collaborator Intrexon’s genetic engineering expertise to be a leader in developing cell-based gene therapies.”

In January, the companies launched an additional collaboration to include developing genetically modified fibroblasts to treat chronic inflammatory and degenerative diseases of the joint, including arthritis and related conditions.

Fibrocell said its wind-down of azficel-T operations will generate “significant” cost savings and reduce its monthly cash burn for the remainder of 2016 to an average of approximately $1.6 million, compared with a year-to-date monthly average of $2.2 million.

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