Firm will pay $0.4 million in restructuring charges during the second quarter.
Genaera is implementing a number of cost-cutting actions so that it can continue development over the next 12 months for its MSI-1436 type 2 diabetes and obesity program and the MEDI-528 asthma program, being developed by its partner MedImmune.
Genaera will initiate a voluntary 10% reduction in executive base compensation effective June 1 and a voluntary forfeiture of cash incentives to executives, including salary increases and discretionary bonus awards, for 2008. There will also be a 34% reduction in employees by June 30, which will cost the firm approximately $0.4 million in restructuring charges during the second quarter.
MSI-1436 is a centrally and peripherally acting appetite suppressant and the first highly selective inhibitor of protein tyrosine phosphatase 1B (PTP-1B). PTP-1B controls the function of both the leptin and insulin pathways.
“Over the next year we expect to announce data from two Phase I studies of MSI-1436, including data demonstrating proof-of-concept,” reports Jack Armstrong, president and CEO. “Additionally, we will work to progress alternative formulations of MSI-1436 in order to increase the partnering potential of the program. In the same time period, we anticipate the release of additional data from MedImmune’s Phase II studies of MEDI-528 for the treatment of asthma and a decision to advance this program to the pivotal-study stage.
“The actions announced today balance the financial requirements of the company and the dilution sensitivity of our stockholders,” Armstrong continues. “This strategy allows us time to reach critical milestones and provide data that we believe will significantly enhance the overall value of Genaera.”
Ganaera says that as of March 31 it had cash, cash equivalents, and short-term investments of approximately $17.1 million. The firm believes this capital will fund operations through the second quarter of 2009.