Celladon halves its workforce to conserve cash after gene therapy meltdown

Celladon CEO Krisztina Zsebo

Reeling after the Phase IIb failure of its "breakthrough" gene therapy for heart failure, Celladon ($CLDN) is slashing its budget and payroll, vowing to find a way forward that preserves value for its investors.

Last month, the company disclosed that its top prospect, Mydicar, failed to reduce hospitalizations, improve cardio survival rates or free patients from the need for ventricular-assist devices and heart transplants, an across-the-board failure that decimated the company's market value.

Now the San Diego biotech is scrimping to stay alive, reducing its 34-person staff by 50% this quarter in an effort to save cash. Celladon is also backing out of a pair of manufacturing agreements with Novasep and Lonza--no longer needed now that Mydicar isn't headed for Phase III--and the company is walking away from a loan agreement under which it would have taken on $15 million in debt.

Celladon closed the quarter with $70.6 million in cash and equivalents, enough to keep the doors open as management evaluates its pipeline and looks into "strategic alternatives to maximize value for our stockholders," the company said in a regulatory filing. The company has already nixed an ongoing Phase I trial testing Mydicar in conjunction with a heart device and is now weighing what to do with a preclinical stem cell program to treat heart attack and an early-stage small-molecule drug with the same target as Mydicar.

"We are in the process of conducting an extensive review of the (Mydicar) data in the attempt to better understand the observed negative outcome," CEO Krisztina Zsebo said in a statement. "Meanwhile, we are conserving our cash resources and are assessing our other previously planned clinical trials and development programs. We are also evaluating our strategic options in order to determine the best path forward to maximize shareholder value."

To Celladon's credit, throughout the Mydicar debacle, management has been up front with the public, bucking a trend in biotech and declining to mine for positive results in its failed trial or spin the setback as a success.

- read the filing

Special Report: FierceBiotech's 2012 Fierce 15 - Celladon

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