Westphal's Verastem slashes staff in the wake of a clinical trial flop

Two weeks after Verastem was forced to acknowledge that its lead cancer drug had flopped badly in a clinical study for mesothelioma, founder and Executive Chairman Christoph Westphal has brought out the ax and chopped half the staff. Verastem ($VSTM) acknowledged the move after the markets closed on Thursday, hours after word of the cuts began buzzing throughout the Boston biotech hub.

In a statement, the company confirmed the word on the street, announcing that 20 staffers had been terminated. News of the trial failure in late September had put the biotech's shares into meltdown mode, losing more than 60% of its value in minutes.

Verastem was left with a reported $132 million in cash at the end of the first half, which is being reserved for work on the rest of the company's pipeline activities. Its market cap has now shrunk to $72 million in a turbulent market.

Westphal founded Verastem and took it public in a successful IPO three years ago, helping further establish a reputation for financial acumen in the industry that hasn't translated into clinical success. His big coup came with the $720 million sale of Sirtris to GlaxoSmithKline ($GSK), which later shuttered the operation and laid off the staff.

"This is an extremely painful decision that will impact many of our passionate and talented colleagues, and their families," said Verastem CEO Robert Forrester in a statement.

- here's the release