Zosano Pharma has been unable to sufficiently answer outstanding questions that led the FDA to turn down the regulatory submission for its migraine treatment, so now, running low on cash, the drug delivery biotech is turning to cost-saving measures that have already shaved headcount by nearly one third.
When Investment Rhymes with Canada
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Fremont, California-based Zosano disclosed the corporate restructuring in its report of fourth quarter and full-year 2021 financial results, which posted after the market close Thursday.
The lead product candidate of Zosano, M207, is a proprietary formulation of the migraine drug zolmitriptan that is delivered via microneedles on a skin patch. Zolmitriptan is an old, generic drug available in oral and nasal spray forms. With its skin patch system, Zosano aims to offer rapid absorption that enables the drug to work more quickly and last longer.
In 2020, the FDA turned down the Fremont, California-based biotech’s application seeking approval of M207, citing inconsistent drug exposure levels across clinical studies. The FDA also asked for more product quality validation data. Zosano resubmitted its application in January of this year. A month later, the FDA sent a letter informing the company that its responses were inadequate. According to the annual report, the regulator added that it could not begin to review the M207 application until Zosano’s responses to the outstanding questions are complete.
“There is no guarantee that we will be able to adequately address the issues raised to the FDA’s satisfaction,” Zosano said in the annual report. “If we do not successfully develop, receive approval for, and commercialize our product candidates, our business will be adversely affected.”
Zosano is already adversely affected. An expense reduction begun this March has cut about 31% of its staff. As of the filing of the annual report Thursday, the company said it employed 31 people, 21 of which work in preclinical research and development. The report also states that the company has hired SierraConstellation partners to explore options that could include a sale of assets or a joint venture or partnership. As of the end of 2021, Zosano reported a cash position of about $11 million. The company raised $15.4 million in a February securities offering, but cash woes remain. In the annual report, Zosano said the company does not have enough money to last one year.
“We are in discussions with the FDA to determine if there is a viable option to pursue approval of M207 using the currently available clinical data.” Steven Lo, Zosano president and CEO said in a prepared statement. “ In addition, we are actively evaluating financial and strategic alternatives in collaboration with external advisors, with a goal of maximizing value. We believe our proprietary transdermal microneedle patch technology offers potential therapeutic and practical benefits to patients.”
Zosano is not the only biotech that disclosed belt-tightening measures this week. Here’s a look at some of the others:
—Athenex announced plans for a “significant cost reduction plan” aiming to slash expenses by more than 50%. The cost-cutting plan comes a little more than one year after the FDA rejected the company’s oral version of chemotherapy, asking the company to conduct another Phase 3 study. Buffalo, New York-based Athenex reported having $35.2 million in cash and cash equivalents as of the end of 2021.
—Gene therapy developer Passage Bio announced plans to cut its staff by 13% in an effort to reduce expenses and extend its cash runway into the second quarter of 2024. The Philadelphia-based company said it will focus on programs being developed under a partnership with the University of Pennsylvania’s Gene Therapy Program, as well as its three lead clinical-stage programs for rare neurological disorders. Passage Bio reported a cash position of $128.9 million at the end of last year.
—Epilepsy and seizure medications developer Ovid Therapeutics is trimming its workforce by about 20%. The New York-based biotech said it expects the cuts will extend the company’s cash beyond 2024. Ovid’s former lead program, a prospective treatment for Angelman syndrome, failed a key study in 2020. But the biotech landed $196 million last year by selling to Takeda Pharmaceutical rights to a partnered epilepsy program. Ovid put some of that cash to work in January, acquiring from AstraZeneca rights to preclinical small molecules in development for treatment-resistant forms of epilepsy. The company’s reported having $187.8 million in cash at the end of 2021.
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