Frequency falters after phase 2 fail, axing 2 assets and 55% of staff

Frequency’s phase 2b trial failed to hit any of the study goals, prompting the biotech to drop development of the asset. It also means that Frequency has decided to discontinue another earlier asset that was being tested in the same indication, as well as let go of more than half its team.

The company’s phase 2b clinical trial assessed FX-322, an injection for acquired sensorineural hearing loss (SNHL). However, the biotech’s asset failed to meet the trial’s main efficacy goal, with no significant improvement in speech perception reported among patients receiving FX-322 compared to placebo after 90 days.

The data, which was shared today, also failed to find measurable improvement in any of the study’s secondary endpoints. Earlier FX-322 studies were designed to understand patient etiologies and severities where a hearing signal could be observed and assess potential safety risks.  

Frequency’s stock has cratered since the data was released, stumbling from $3.93 per share at market close Friday to ¢70 as of 10:30 a.m. E.T. today.   

Based on the data, the Massachusetts company is axing not only FX-322's development but also a second candidate for SNHL, dubbed FX-345, which was in a phase 1b trial.

Having scrapped the hearing assets, the regenerative medicine company is turning the focus to its only other pipeline product, a preclinical candidate that aims to boost remyelination—or generate new myelin sheaths around axons in the central nervous system—in patients with multiple sclerosis. The biotech hopes to launch a clinical trial in the first quarter of 2024.

In connection with the data flop and discontinuations, Frequency has also succumbed to the layoff wave overtaking the biotech sector. Frequency is immediately cutting its workforce by 55%. The reduction is meant to extend the company's runway into 2025 and allow it to finish its first MS clinical trial.

The layoffs will be staggered and completed by April 30, according to Securities and Exchange Commission documents. The staff cuts are estimated to cost $4 million, primarily due to severance and related expenses.

As of December 31, 2022, Frequency had cash, cash equivalents and marketable securities of $83.1 million (excluding restricted cash) or $68.9 million net of debt, according to SEC documents. Frequency will be exploring strategic financing alternatives, according to today’s company release, though further details were not shared.    

Amid all this, Frequency’s CEO David Lucchino has fallen ill with bacterial meningitis and is on temporary medical leave after being hospitalized. The leader is expected to make a full recovery and return soon, but in the meantime, Chief Scientific Officer Chris Loose, Ph.D., has stepped up as interim CEO.