Maxim Pharmaceuticals Inc. laid off nearly half its work force as part of a restructuring plan to reduce its cash burn rate.
The move follows negative Phase III data released in September from a confirmatory trial of Ceplene (histamine dihydrochloride) in advanced malignant melanoma patients. Findings showed that use of the investigational drug in combination with interleukin-2 for advanced malignant melanoma patients with liver metastases failed to demonstrate an improvement in overall patient survival. That news cut shares of the San Diego-based company nearly in half in a single day of trading. (See BioWorld Today, Sept. 21, 2004.)
Since then, the firm has been named as defendant in class-action lawsuits.
The company said the restructuring is intended to conserve resources as it focuses on pursuing regulatory submissions seeking approval of Ceplene for acute myeloid leukemia patients in complete remission. Maxim plans to continue to seek a pharmaceutical partner for the sales and marketing of Ceplene.
The company also expects to allocate funding, at the now-slowed rate, to other activities such as its apoptosis modulator discovery program, from which it expects to advance one compound into the clinic. It also plans to continue investigations into the use of Ceplene for hepatitis C and renal-cell carcinoma. The new burn rate should provide sufficient funds to support planned activities for about two years.
The work force reduction is across all departments and programs. All individuals affected by the restructuring, which includes two officers, will be eligible for a severance package that includes pay, benefits continuation and outplacement services. The layoffs included Chief Financial Officer Anthony Altig and Chief Scientific Officer Kurt Gehlsen. It had 96 employees as of its last reported count.
CEO Larry Stambaugh voluntarily reduced his salary for the current fiscal year, and John Prunty, the company's treasurer and controller, will be promoted to the position of vice president of finance and chief financial officer.
On Monday, Maxim's stock (NASDAQ:MAXM) gained 4 cents to close at $2.39.