Selecta Biosciences is laying off more than one-third of its workforce. The cuts come as Selecta seeks to eke out its cash reserves and advance a gout drug that disappointed investors in phase 2.
Going into the phase 2 readout, Selecta envisioned running a pivotal phase 3 clinical trial in parallel to a head-to-head study that would pit its combination product SEL-212 against Horizon Pharma’s gout drug Krystexxa. However, Selecta changed its plans after getting a look at data from a phase 2 trial of SEL-212 in October.
Selecta now plans to start the head-to-head clinical trial in the first quarter of 2019 and post interim six-month data before the end of the year. Those data will inform the phase 3, which is now due to get underway in the fourth quarter of 2019.
The revised development plan and investor response to the phase 2 data pose problems for Selecta. The Massachusetts-based biotech ended September with $50.5 million in cash and equivalents, a sum it thinks is too small to fund the planned head-to-head clinical trial. And with the phase 2 data taking a chunk out of Selecta’s stock, its ability to raise cash to fund the work is diminished.
Carsten Brunn, the former Bayer executive who took over as Selecta CEO last month, responded to the situation by taking an ax to the biotech’s headcount. Selecta started 2019 by laying off 17 staff with immediate effect, leaving it with a headcount of 45. The cuts will cost around $488,000 but are forecast to reduce Selecta’s annual cash burn by 19%.
Selecta still faces a looming cash crunch, though, and the latest update did little to help its situation. Shares in Selecta traded down 21% on the day of the layoffs, meaning the stock is now down more than 80% from the highs it hit in the run-up to the midphase readout in October.
The biotech will need money to execute its 2019 clinical development plan. Selecta thinks SEL-212, which consists of pegadricase administered with synthetic vaccine particles encapsulating rapamycin, can improve on Horizon’s Krystexxa. But cross-trial comparisons of the two drugs left investors with doubts about whether SEL-212 is better at maintaining serum uric acid below target levels.
With its focus on running a head-to-head trial to dispel those doubts, Selecta is deprioritizing its SEL-403 phase 1 cancer program. The program has been on hold since one of the first four patients it enrolled died.