Small cap biotech Ardelyx, which has seen a series of setbacks and spooked investors in recent years, is cutting its workforce by nearly one-third as it looks to sharpen its focus on its phase 3 candidates.
The $227 million market cap company has, like many biotechs before it, undertaken a “strategic review” and decided that it needs to swing the ax on 28% of its staffers, leaving it with 76 employees.
It hopes this will help it run into 2018, along with other “cost-saving activities,” including “a delay in the development of a number of earlier-stage programs,” as it looks to its late-stage pipeline, and potential milestone payments, in the immediate future.
These phase 3 programs include its irritable bowel syndrome (IBS) candidate tenapanor, which the company is prepping for its first NDA in patients with IBS-C (constipation) for next year.
Tenapanor is also gearing up for a new test this year as a treatment for hyperphosphatemia in patients with end-stage renal disease on dialysis.
Tenapanor, which is designed to clear excess sodium from the gastrointestinal tract, has not had the best history, however, as the drug has flunked one trial and is showing a high adverse event rate in other.
In May of 2015, it posted data showing tenapanor failed to hit the primary endpoint among 154 patients with Stage 3 chronic kidney disease and Type 2 diabetes, failing to significantly decrease the urinary albumin-creatinine ratio compared to placebo.
Just before this, the drug met its main efficacy goal in a Phase 2b trial on dialysis patients with dangerously high phosphate levels, but not without charting alarming rates of diarrhea compared to placebo.
It did also hit the target in a phase 2b study of the drug for IBS, but investors were rattled by signs that the drug triggered serious diarrhea in many patients and led to a rout, with shares plunging 30% when the data were posted.
AstraZeneca signed a $272 million partnership pact on the drug back in 2012, but two years ago pulled out of the deal, giving rights back to Ardelyx after one too many setbacks (at a cost of $25 million to the biotech).
Ardelyx had also been working with Sanofi on preclinical treatments that target NaP2b, a phosphate transporter. Under that deal, signed in 2014, the biotech was eligible for up to $198 million, plus tiered royalties on any approved products.
But this went sour too when the French Big Pharma backed out of its collaboration, returning a handful of candidate treatments for high phosphates in patients with kidney disease. Both AZ and Sanofi had helped the company get off its $60 million IPO back in 2014.
Ardelyx announced new data back in May of this year that its med had hit its primary endpoint, and most of its secondary endpoints, in a late-stage test of its IBS-C drug, but investors were spooked as its shares spiraled downward premarket.
The top-line results from the T3MPO-1 trial, the first of two phase 3 tests in IBS-C in more than 600 patients, hit its primary endpoint, showing that a greater proportion of tenapanor-treated patients compared to placebo-treated patients (27% vs. 18.7%) had at least a 30% reduction in abdominal pain.
It also hit seven of the eight secondary endpoints, missing the target in bowel movement rates, and there were some AE issues with tenapanor as compared with a dummy treatment, seeing higher rates of diarrhea (14.6% vs. 1.7%) and slightly more for nausea (2.6% vs. 1.7%).
Diarrhea caused 5.9% of tenapanor patients to pull out of the trial, compared to just 0.6% for the placebo group. But the company’s shares were down a major 38% in early trading on the news, potentially on the still higher-than-placebo rates of diarrhea, given its past problems in the area.
The biotech is also working on RDX7675 for hyperkalemia (a condition marked by high potassium levels in the blood) but said that, as it looks to focus on tenapanor tests, Ardelyx has “adjusted the timing for the RDX7675 onset-of-action study results and currently expects to report data following the T3MPO-2 [one of its IBS-C trials] results in the fourth quarter of 2017.”
The staffing cuts will cost $800,000 this year but should start saving it money in the longer term. It said in the statement that it would also “continue to evaluate all pathways, both internal and external, to maintain a strong balance sheet and ensure it has the necessary resources to fund its operations.”
As of the end of June, the biotech had cash equivalents and short-term investments of $148.7 million, with a net loss of $28.6 million for the quarter.