Celladon pulls the plug on R&D after a crushing gene therapy failure

Celladon CEO Paul Cleveland

Celladon ($CLDN) is circling the drain, suspending all research tied to its failed gene therapy and again halving its payroll as management searches for a sale and flirts with liquidation.

The San Diego company, which watched its share value evaporate after an April clinical trial failure, is laying off about 50% of its 17-person workforce. Celladon is also halting development of Mydicar, a gene therapy for heart failure that missed its goals in Phase IIb, as well as all of its preclinical programs.

The plan now is to find a merger or sale that can salvage some value, and Celladon has retained Wedbush PacGrow Healthcare to help it find a way forward. If it can't find any takers, the company is prepared to liquidate what assets it has, figuring it can return about $25 million to $30 million in cash to its shareholders.

Celladon was once among the highest profile companies in the gene therapy space, developing a treatment for the common ailment of heart failure in contrast to the rare disease R&D that has largely dominated the field. Mydicar won the FDA's breakthrough-therapy designation last year as the company worked through its Phase IIb study, with management hoping the results might be positive enough to submit to global regulators straightaway.

In the end, Mydicar failed to reduce hospitalizations, improve cardio survival rates or free patients from the need for ventricular-assist devices and heart transplants, an across-the-board failure that decimated the company's market value. Celladon's shares have fallen nearly 90% since the biotech disclosed Mydicar's data, trading at around $1.50.

Earlier this month, CEO Krisztina Zsebo resigned after a decade at Celladon, ceding the reins to former CFO Paul Cleveland as the company began its search for a buyer.

"Our board of directors has unanimously determined that seeking a merger or sale, in lieu of further development of our remaining programs and assets, gives us the best opportunity to maximize shareholder value," Cleveland said in a statement Friday. "We are aggressively pursuing that course."

- read the statement

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