Tokai Pharmaceuticals will eliminate approximately 60% of its workforce—about 15 jobs—by the end of the third quarter, in a cost-cutting move announced days after the company’s lead candidate galeterone failed a Phase III trial.

The layoffs, disclosed after the close of the markets on July 29, will leave Tokai with 10 full-time employees. Tokai said it expected to save approximately $4.2 million in annualized operating expenses once the job cuts take full effect.

Employees losing their jobs are being offered severance and outplacement assistance, the company said. Tokai anticipates incurring a charge of approximately $1.3 million in the third quarter related to the reduction, including severance, benefits, and related costs.

“A reduction in force is a very difficult yet necessary step in light of the recent discontinuation of the ARMOR3-SV trial of galeterone in mCRPC [metastatic castration-resistant prostate cancer],” Tokai President and CEO Jodie Morrison said in a statement.

Tokai said it shrunk its workforce to cut costs while it conducts a comprehensive evaluation of strategic options for galeterone and its pipeline.

On July 26, Tokai said galeterone failed the Phase III ARMOR3-SV trial, which compared the candidate to Xtandi® (enzalutamide) in treatment-naïve mCRPC patients whose prostate tumors express AR-V7. The company also said it was terminating the ARMOR3-SV trial.

News of the failure sent the company’s stock crashing 79%, with the closing price falling $5.20 on July 25 to $1.10 the day the trial failure was announced.

Tokai has global development and commercialization rights to galeterone, which uses the mechanistic pathways of current second-generation hormonal therapies, including abiraterone and enzalutamide, while also introducing a unique third mechanism—androgen receptor degradation, which is designed to impair the function of androgen receptors, decreasing their sensitivity to androgen activity and reducing tumor growth.