A week after microcap Tokai ($TKAI) saw its shares plummet after the failure of its key Phase III prostate cancer candidate galeterone, the biotech has unsurprisingly announced major cuts across its company.
In total, Tokai will cull its workforce by around 60% to a total of 10 “full-time equivalent employees,” according to its statement, with this bloodletting expected to be complete by the end of the third quarter.
The Boston, MA-based company posted data last week showing that its experimental cancer med galeterone was likely not to best Astellas/Medivation’s ($MDVN) Xtandi (enzalutamide) in a Phase III trial.
On the recommendation of its data monitoring committee, which said it would be a flop, the biotech discontinued that pivotal trial due to disappointing data. Tokai shares tumbled by about 70% on the news last week.
The company had other studies lined up, including its ARMOR2 expansion in metastatic castration-resistant prostate cancer (mCRPC) for patients with acquired resistance to Xtandi, and also a planned test in patients who rapidly progress on either Xtandi or Janssen’s ($JNJ) prostate cancer drug Zytiga (abiraterone acetate). The future of these trials is, however, uncertain.
In a brief statement, the biotech said: “This workforce reduction is designed to reduce operating expenses while the company conducts a comprehensive evaluation of strategic options for galeterone and its pipeline. Affected employees are being offered severance and outplacement assistance.”
The biotech hopes to save $4.2 million as a result of the cuts, although it will absorb a third-quarter charge of $1.3 million in severance costs for its former staffers.
“A reduction in force is a very difficult yet necessary step in light of the recent discontinuation of the ARMOR3-SV trial of galeterone in mCRPC,” said Jodie Morrison, president and CEO of Tokai.
“I would like to personally express my appreciation to each of the employees impacted by this decision for their commitment to the development of galeterone, as well as for their meaningful contributions to a program that has expanded the dialogue among the medical and patient communities about AR-V7 and advanced prostate cancer treatment options.”
- check out the biotech’s statement
Microcap Tokai tumbles on discontinued pivotal trial