Novartis-backed biotech Ophthotech is to make swingeing cuts to its staff as it reels from two pivotal late-stage failures for its experimental eye drug Fovista (pegpleranib) when used with Novartis’ marketed eye med Lucentis (ranibizumab).
In an amended SEC form originally posted in mid-December, days after the trial flop, the biotech said it was to “implement a reduction in personnel to focus on an updated business plan.”
This will see the ax fall on around 80% of its workforce, with the cuts expected to be “substantially complete” over the next two quarters.
The biotech said it will pay out around $14.4 million of pre-tax charges over the first half of the year, mainly due to severance packages.
But it believes it will save around $25 million to $30 million starting in Q3 as a result of the cuts.
This comes a month after Ophthotech saw its share price decimated after it announced that its big hope, and what much of its financing has been centered around in recent years, failed to help wet AMD patients see better when used with Novartis’ blockbuster VEGF med Lucentis.
In fact, the two phase 3 pivotal trials showed that adding its med Fovista with Lucentis failed to be significantly better than using Lucentis alone in more than 1,200 patients when it came to improving visual acuity over one year.
This is the reverse of the positive midstage test that saw it best Lucentis as a monotherapy, when Fovista was also used alongside Novartis’ aging med, around four years ago.
On premarket trading when the news was released, the biotech was hit hard, down 80% from nearly $39 a share to under $8.
Last Friday, before the Martin Luther King Jr. holiday, it was trading at just $4.86 a share, with a market cap of $171 million. Compare this to the $1.5 billion it enjoyed just over a month ago before the failures were announced.
This was also a knock for Novartis, which paid Ophthotech $200 million upfront, with a total of $1 billion in biobucks lined up, for ex-U.S. rights to its anti-PDGF candidate back in 2014.
In September, the biotech also had bad news when Regeneron saw a midstage combo failure with anti-PDGF beta rinucumab used with Eylea, failing also to beat Eylea monotherapy.
There is another phase 3 test, expected to report mid-2017, that sees Fovista and Eylea with Roche's VEGF cancer med Avastin (bevacizumab) used together in a combo trial.