An FDA request for another Phase III trial in the lead drug candidate for Neopharm Inc. has resulted in another reorganization that will cut back its work force by 42 percent and reshuffle the executive ranks.
The company announced that 15 full-time positions will be eliminated and that its chief medical officer and its executive vice president of commercial operations will leave.
Termination benefits are expected to cost the company about $600,000, but reductions in general and administration expenditures should cut expenses by $2 million below the prior year.
The changes are intended to reduce the cash burn for 2007 and 2008 and allow the company to continue into 2009 before additional financing will be needed.
The changes were announced by President and CEO Laurence Birch, who joined the company last month, becoming the fourth full-time CEO to head the company in the past three years.
As part of the restructuring, Birch also will become acting chief financial officer until a replacement is found. Other executive changes announced were: Aquilur Rahman, one of Neopharm's co-founders, will become chief scientific officer, emeritus; Jeffrey W. Sherman will step down as chief medical officer and executive vice president; and Timothy P. Walbert, executive vice president of commercial operations, will leave the company.
This is the third restructuring effort in the past year for Neopharm. A 23 percent work force reduction was announced in April 2006, and the chief scientific officer and CFO left soon afterward. In December the company laid off another 20 percent of its work force.
The latest reshuffling was precipitated by the FDA decision late March to require a new Phase III trial for cintredekin besudotox before it will consider an application for its approval in the treatment of recurrent glioblastoma multiforme (GBM). In December the drug the drug failed to meet its primary endpoint in a Phase III trial.
Neopharm stocks (NASDAQ:NEOL) rose 5 cents, or 3 percent, to $1.73.