TetraLogic Pharmaceuticals has retained a financial advisor to assist in an evaluation of strategic alternatives, capping a month in which it revealed the failure of a drug candidate in a clinical trial, followed by plans to lay off two-thirds of its workforce by next month. The company has hired Houlihan Lokey Capital “to provide financial advisory, restructuring, and investment banking services in connection with analyzing and considering a wide range of transactional and strategic alternatives,” the company disclosed yesterday in a Form 8-K regulatory filing.
The filing came seven days after the company disclosed that its board of directors authorized the elimination of 19 jobs—about two-thirds of what was a 29-person staff at the start of this year. Most of the layoffs are expected to be completed by the end of February, resulting in a 10-person workforce, TetraLogic said.
According to TetraLogic, the layoffs are expected to result in a one-time restructuring charge of approximately $2.2 million in the first quarter of fiscal 2016. The company said that charge may increase later in the year depending on potential facility-related charges and other write-downs that have not yet been finalized.
The restructuring charge is associated with the payment of one-time termination benefits expected to be paid in cash. The company said it expected that $600,000 will be paid during the first quarter of fiscal 2016 and the remainder over 18 months beginning in April.
Among the people whose jobs were eliminated were the company’s CSO, G. Glenn BegleyMBBS, Ph.D., FRACP, and COO/CMO Lesley Russell, MBChB, MRCP. Their positions will be terminated effective April 19, subject to separation agreements that will pay them severance benefits, TetraLogic said in a January 22 filing.
The layoffs were disclosed two weeks after TetraLogic said that its drug candidate birinapant failed a Phase II study in which it was co-administered with azacitidine in first-line higher risk patients suffering from myelodysplastic syndromes (MDS).
Birinapant missed its primary endpoint in the study by not demonstrating any clinical benefit over a placebo in response rate after four months of therapy. TetraLogic said January 6 it terminated the trial following an interim analysis of the first 62 patients randomized in the study.