Achaogen is making its second set of cuts in under four months. The latest restructuring is intended to slash up to 40% of Achaogen’s expenses, enabling the antibiotic company to hunker down and search for an exit.
Going into 2018, Achaogen was heading toward a PDUFA decision for its antibiotic plazomicin with its stock trading above $10 a share. In May, the FDA approved plazomicin in one indication but rejected it in another. Those FDA decisions, while partly validating the work on plazomicin, sent Achaogen into a slide that has culminated with CEO Blake Wise putting the company up for sale.
The decision to initiate a strategic review that could lead to the sale of Achaogen is one of two pieces of news put out by Achaogen ahead of the publication of quarterly sales data on plazomicin, now sold as Zemdri.
Achaogen also used the statement to reveal it is making further cuts to its organization to reduce its operating expenses by 35% to 40%. The restructuring, which is expected to be complete by the end of 2018, follows shortly after Achaogen made deep cuts to its R&D department, jettisoning 80 staff including its CSO and president of research.
The R&D cuts disclosed in July left Achaogen focused on the commercialization of Zemdri and the development of C-Scape, an oral antibiotic combination designed to treat patients with complicated urinary tract infections.
Achaogen’s ability to bankroll these activities has been hamstrung by the downward spiral of its stock price. Faced with such an unfavorable equity financing situation, Achaogen borrowed $25 million from Silicon Valley Bank last week. The debt financing adds to the $100 million in cash and short-term investments Achaogen had at the end of June.
Shares in Achaogen traded down by more than 12% following news of the restructuring.