Cell Therapeutics has cut at least 75 jobs to conserve its diminishing cash reserves following a clinical failure of its experimental lung-cancer drug.
Cell Therapeutics, one of Seattle’s leading biotech companies, has cut 75 jobs to conserve its diminishing cash reserves following a clinical failure of its experimental lung-cancer drug.
The cuts, all in Seattle, affect more than one-quarter of the company’s workforce in the U.S., but the company’s 125 European employees are not affected, said company spokeswoman Susan Callahan. The company is left with 327 employees.
According to a filing with the Washington Department of Employment Security, the layoff is effective August 3.
The layoffs were made across all departments, with the greatest impact in drug discovery research and business operations, said Callahan. The company said in a filing with the Securities and Exchange Commission that it expects to pay out $1.4 million in the third quarter for severance-related expenses for employees, an average of nearly $19,000 per employee.
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Callahan said the company made the move to reduce its cash spending rate. The company is preparing to file a new drug application later this year in which it will ask the Food and Drug Administration to approve its drug Xyotax for treatment of lung cancer.
In a statement, the company said the cuts were “an unfortunate part” of its plan to ensure the company’s long-term stability. Cell Therapeutics has one marketed product for cancer, Trisenox, but it has never turned a profit in its 14-year history.
The layoff at Cell Therapeutics is the latest in a string of job cuts at Seattle’s top biotech companies. Corixa cut 160 jobs in December when it got rid of its money-losing lymphoma drug, Bexxar. NeoRx laid off 21 of its 50 employees last month. Xcyte Therapies went through two rounds of layoffs this spring – axing a total of 38 employees.
Until the last few months, Cell Therapeutics was one company that had been riding relatively high, seeing its stock rise higher than $10 a share early in the year in anticipation that Xyotax could be a blockbuster success. The drug is designed to bind a chemotherapy ingredient with a polymer to make it less toxic in the bloodstream. That was supposed to reduce the chemotherapy compound’s nasty side effects and allow physicians to give more cycles of therapy.
When the results of a 400-patient clinical trial came out March 7, after months of anticipation from investors, the company said Xyotax and a conventional chemotherapy drug failed to extend lives any longer than a standard chemotherapy combination. The company’s stock fell 48 percent, to $5.25 the day of the news.
Cell Therapeutics has been sliding ever since the March 7 announcement, down to a 52-week low today of $2.61 at the close. Cell Therapeutics has invested more than $140 million in the Xyotax clinical development program to date.
The company lost $39 million in the first quarter and had $73 million in cash left at the end of March. Without being specific, Cell Therapeutics CEO James Bianco said on a conference call with investors last month that the company planned to reduce its cash spending rate to $8 million a month.
Bianco said on the call that the company will look at selling its other cancer drug, Trisenox, or selling partnership rights to other cancer drugs.
Luke Timmerman: 206-515-5644 or firstname.lastname@example.org