Hit with a pair of pipeline setbacks recently, Chelsea Therapeutics ($CHTP) has opted to reduce worker pay and cut compensation for its top brass to extend its cash runway and fuel development of its experimental drug Northera, for which the FDA denied approval in March as a treatment for symptomatic neurogenic orthostatic hypotension.
Chelsea executives and board members opted to take a 25% pay cut until the arrival of data from a late-stage study of Northera, expected in the first quarter of 2013, when the company aims to resubmit the drug for FDA approval. And at least 35% of rank-and-file workers are getting temporarily knocked down to part-time status with a reduction in their salaries.
With the addition of a cost-saving strategy for the company's ongoing Northera study, the measures are expected to shave $6 million from the company's expenses over the next 12 months, and give the developer enough cash to last until the third quarter of 2013. By then, the Charlotte, NC-based company hopes to get word from the FDA on its next submission for approval of Northera.
Chelsea's best hope for reversing its slump appears to be gaining U.S. approval of Northera, which combats a rapid drop in blood pressure that leads to dizziness for about 180,000 patients. Last month the company abandoned development of a rheumatoid arthritis drug that flunked a Phase II clinical trial, perhaps increasing the importance of the hypotension drug.
"Everyone at Chelsea shares in the disappointment that Northera was not approved by the FDA earlier this year," company CEO Simon Pedder stated. "The measures we are taking now to reduce expenses reflect both our personal and professional commitment to patients, shareholders and the success of our Northera program."