Achaogen is eliminating about 80 employees— approximately 28% of its workforce—in a restructuring designed to cut costs and refocus the antibacterial drug developer on the commercial launch of its complicated urinary tract infections (cUTI) treatment Zemdri™ (plazomicin) and two development programs.
The company said it will reduce spending on early-stage R&D, technical operations, and general and administrative expenses—while sparing from the proverbial axe its commercial and medical affairs groups due to the U.S. launch of Zemdri on July 20.
Achaogen said that launch will be among its priorities following the restructuring, as well as its Marketing Authorization Application (MAA) filing for Zemdri in the E.U.; the development of C-Scape, a Phase I oral combination of ceftibuten, an approved third-generation cephalosporin, and clavulanate, an approved beta-lactamase inhibitor; and the development of new aminoglycoside antibiotics, now in the preclinical stage.
Earlier this year the company announced positive topline results from the Phase I trial (NCT03163550) assessing the pharmacology, dosing, and safety of C-Scape (also known as ACHN-383 and ACHN-789).
Zemdri is a once-daily aminoglycoside indicated for adults with cUTI, including pyelonephritis, caused by Escherichia coli, Klebsiella pneumoniae, Proteus mirabilis, and Enterobacter cloacae. Zemdri won FDA approval on June 25. Zemdri was developed in part with funding from the Biomedical Advanced Research and Development Authority (BARDA), under Contract No. HHSO100201000046C.
BARDA is also helping fund development of C-Scape. As of March 31, 2018, $9.6 million remained under the BARDA C-Scape contract, and up to an additional $6 million may be available under BARDA contract option, Achaogen disclosed May 4 in reporting Q1 results.
The development of the new aminoglycoside program is being supported by an up-to-$12 million award from Combating Antibiotic Resistant Bacteria Biopharmaceutical Accelerator (CARB-X), a partnership between BARDA and the U.K.’s Wellcome Trust charity established in 2016 to support the global development of novel antibacterial drugs that address multidrug-resistant (MDR) infections.
“Despite being on course for a successful launch of ZEMDRI in the U.S. and a MAA filing in the EU in the second half of this year, the environment for novel antibacterials requires us to improve our cost structure and narrow our focus to position the company for long-term success,” Achaogen CEO Blake Wise said yesterday in a statement.
Commercial Model ‘Critically Challenged’
Achaogen is the second antibacterial developer to cut back operations in recent weeks. On July 11, Novartis announced it is terminating its antibacterial research at its Novartis Institutes for Biomedical Research (NIBR) campus in Emeryville, CA, and laying off 140 employees.
“The commercial model for anti-infectives is critically challenged, and we (like many others) are left questioning whether large pharma can sustainably support the required, significant infrastructure needed to discover, develop, and commercialize anti-infectives,” Jenn Leeds, Ph.D., executive director and head of antibacterial discovery at NIBR told GEN recently.
Achaogen has estimated it will incur a one-time employee benefits and severance charge of approximately $6 million in the third quarter tied to the restructuring, which is expected to be substantially completed by October 15, according to a regulatory filing.
The elimination of the 80 positions, plus reductions in operating expenses, are expected to result in near-term quarterly operating expenses consistent with those reported for the previous two quarters, after excluding milestone payments and restructuring charges, Achaogen said.
During the first quarter, Achaogen reported on May 4, its operating expenses nearly doubled year-over-year to $45.98 million from $25.348 million in Q2 2017. The company is scheduled to report second-quarter results—and further discuss the restructuring—on August 6.
As part of the restructuring, Achaogen disclosed that it has shaken up its executive management team, with three executives set to depart the company later this year:
- Kenneth Hillan, M.B., Ch.B., President, R&D, will leave the company on October 15, but will continue to serve on the company’s board.
- CFO Tobin Schilke, CFO will leave the Company on September 30.
- CSO Lee Swem, Ph.D., will leave the Company on September 24.
Schilke will be succeeded as CFO by Zeryn Sarpangal, now chief of staff.
Achaogen has also named Liz Bhatt, now chief business officer, to the position of COO effective yesterday. She will oversee the company’s technical operations in addition to her current corporate development responsibilities.