Corgentech Inc. is cutting its work force by about 45 percent, following two disappointing Phase III trials of its investigational drug E2F Decoy and the early termination of a partnership with Bristol-Myers Squibb Co.
As a result of staff reductions and other operational cuts, the company said it plans to see annual cash savings of about $6.7 million, which will be used to develop next-generation drug candidates. Complete financial guidance will be released, along with first-quarter earnings, next week, but South San Francisco-based Corgentech said it expected to incur restructuring charges of $1.3 million in the second quarter, and looks to have a total of 70 employees as of June 30.
As of Dec. 31, the company had cash, cash equivalents and investments of about $115 million.
Corgentech announced last month it was discontinuing development for E2F Decoy (edifoligide), after the product failed to reach primary and secondary endpoints in the PREVENT IV trial evaluating E2F Decoy in preventing vein graft failure following coronary artery bypass graft surgery. The primary endpoint was the reduction of graft failure between the treated and placebo groups. Graft failure was described as a graft blockage of 75 percent or greater, as measured by quantitative coronary angiography at one year.
That prompted New York-based BMS to end a development deal that could have been worth as much as $250 million to Corgentech. That news, plus the failed trial data, caused Corgentech's shares to plunge 51.7 percent March 30, losing $2.60 to close at $2.43. (See BioWorld Today, March 31, 2005.)
The failed PREVENT IV trial was reported only a few months after the company released results from an earlier Phase III trial called PREVENT III, in which E2F Decoy also failed to show a benefit when compared to placebo. That trial evaluated the product in the rate of vein graft failure in peripheral artery bypass patients through one year following surgery. After that news hit Wall Street, Corgentech's shares (NASDAQ:CGTK) dropped 59.2 percent, or $11.29, to close at $7.71. (See BioWorld Today, Dec. 7, 2004.)
E2F Decoy is designed to prevent the implanted vein from accumulating smooth muscle cells that collect cholesterol, and instead force the graft to thicken in a way that causes it to resemble an artery.