Tengion said the restructuring plan will allow the company to fund its lead development programs through key milestones next year while also cutting its spending. The company is laying off 30 — more than half its staff — to cut its workforce to 22, split between Tengion’s East Norriton, Pennsylvania headquarters and its R&D operations in North Carolina. Most of Tengion’s R&D has operated from Winston-Salem, North Carolina since the company was spun out of the Wake Forest Institute for Regenerative Medicine and going forward, R&D will be centralized at the North Carolina site. Included in the layoffs are vice president and chief medical officer Dr. Sunita Sheth and chief commercial officer Mark Stejbach.
David Scheer, chairman of Tengion’s board of directors, said in a statement that the restructuring should allow the company to save cash as the company looks for strategic partners who could finance further development of its regenerative medicine programs.If a partner is not found, more cuts will come.
“In the event financing is not obtained, the company could pursue additional headcount reductions and other cost cutting measures to preserve cash as well as explore the sale of selected assets to generate additional funds,” Tengion said in its quarterly report.
Tengion, which counts medical device giant Medtronic (NYSE:MDT) among its investors, is in phase 1 clinical trials for its Neo-Urinary Conduit, which is being studied in bladder cancer patients who have had their bladder removed. Tengion’s technology is used to make a new conduit to carry urine from the body. The trial will test up to 10 patients. To date, three have enrolled and the company expects a fourth patient in the first quarter of 2012.
A kidney program remains in preclinical development and a pre-investigational new drug filing is expected in the first half of 2012. Tengion said that development of its Neo-Kidney Augment program beyond that submission depends on securing additional funding. Through the end of the third quarter, Tengion had $9.2 million in cash and equivalents, down from $11.9 million through the end of 2010.
Other personnel moves include the promotion of Chief Scientific Officer Tim Bertram, who now holds the title “President, Research and Development and Chief Scientific Officer.” Deepak Jain has been promoted to chief technology officer. Tengion is still searching for a new CEO to replace Dr. Steven Nichtberger, who resigned in June.
Tengion said it will keep a limited number of administrative employees at its leased Pennsylvania headquarters. But as Tengion continues to cut costs, the company is looking to “significantly reduce” the amount of space it currently rents.