Catalyst to ax 30% of workforce in wake of FDA trial demands

Small biotech Catalyst Pharmaceuticals ($CPRX) is having to tighten its belt and cut nearly a third of its staff in order to retain enough cash to undertake new studies for its key drug Firdapse.  

This comes after the FDA three months’ ago slapped a Refuse to File letter on Catalyst’s rare disease drug and then last month told the biotech it would have to do more trials before it could it be considered for an approval.

Firdapse, which has seen a “Breakthrough” designation and been given orphan status, is designed to treat Lambert-Eaton myasthenic syndrome (LEMS)--a rare neuromuscular disease that gradually robs patients of their mobility.

In one Phase III trial on 38 LEMS sufferers, the treatment met its co-primary endpoints of improving physician-rated and patient-reported symptoms of the disease--significantly beating out placebo while proving safe and well-tolerated.

But one late-stage study by the Coral Gables, FL-headquartered biotech was deemed “not sufficiently complete” by the FDA in February this year, leading to its CLR and a major tanking of its shares.

The FDA said in late April that in order for it to resubmit a New Drug Application for Firdapse, it will also need to submit positive results from an “additional adequate and well-controlled study in patients with LEMS.”

The FDA has told the biotech that it is open to “discuss a study design that could efficiently accomplish the requirement with a small, short-term study.” But it gets worse, as the regulator also wants several more “short-term toxicology studies,” which the biotech said in a statement are expected to start soon.

This will further delay any market entry for the drug, and add significant extra costs to its R&D program. Hence the decision today--seen as inevitable by some analysts for the past few weeks--that it will cut 30% of its small workforce, mainly from its commercial team, as part of Catalyst’s “ongoing efforts to conserve cash” for the new and costly trials.

Patrick McEnany, its chairman and CEO, said: “I would like to express my sincere appreciation to those employees affected by this difficult but necessary action. This is a loss to our Catalyst family of talented and dedicated individuals who have worked with integrity and passion towards improving the lives of people living with rare diseases.

“The decision to reduce the company's workforce has been extremely difficult, but we believe that it is a necessary step to better align our resources and enable us to achieve our goal of bringing Firdapse to market for patients with LEMS and CMS.”

The biotech signed off its release saying: “Further, and while there can be no assurance, Catalyst continues to believe that its currently available resources will be sufficient to complete the development of and refile an NDA for Firdapse for LEMS and CMS.” At last count, the company had around $52 million at its disposal.

BioMarin ($BMRN) has marketed the drug in Europe since 2009, and, in out-licensing Firdapse to Catalyst in 2012, took a $5 million stake in the biotech.