MINYANVILLE ORIGINAL Simon Pedder, the CEO at Chelsea Therapeutics International
(CHTP), is out and the board is being shaken up as the biotech company plans
significant job cuts and weighs its options. The moves come after the clinical-stage drug company stumbled badly this year in its attempt to win market approval for its lead product, Northera.
In March, the Food and Drug Administration said it won’t approve Northera for low blood pressure in Parkinson’s patients because agency officials aren’t convinced the drug works. (See Chelsea Therapeutics' Shares Fall on FDA Rejection of Drug
.) Then last week, Chelsea said
the FDA may require a whole new trial to consider approval of Northera. That news sent the shares plummeting.
Through Monday, the stock has lost more than three-quarters of its value this year. The shares fell another 5% to $1.18 early Tuesday following the news of a reorganization and possible sale.
“The board plans to explore and evaluate all available strategic options to determine the best path forward in the long-term strategic interests of the company and its stockholders,” new chairman Michael Weiser says in a statement.
Clearly, the board was feeling heat from investors. On Friday, one of Chelsea’s largest shareholders, Josiah Austin of Dallas, made a letter to the board
and Pedder public through a securities filing
“Over the past year, I have informally shared my concerns with a number of you with no apparent change in direction or focus,” Austin says in his letter. “As a result, and in light of the continuing deterioration in the company's performance, I am convinced that the board and management should begin exploring alternative approaches to maximize shareholder value. I would welcome the opportunity to sit down with management and the board to discuss steps that can and should be taken now to enhance shareholder value, including an infusion of fresh perspective on the board to invigorate the company and its consideration of alternatives.”
Pedder, the founder, president, and CEO of Chelsea, resigned from the company and the board. He’s replaced by Joseph Oliveto, formerly the vice president of operations, on an interim basis. The company’s vice president of marketing and sales, Keith Schmidt, is also leaving.
Weiser replaces former chairman Kevan Clemens, who remains as a director. Two other directors -- Norman Hardman and Johnson Y.N. Lau -- are leaving the board.
Chelsea “expects to significantly reduce the company’s headcount, retaining only those employees necessary to gain marketing authorization of Northera,” according to a statement. Those job cuts will take place in the third quarter and are aimed at shaving at least $3.5 million in annual salaries. The company announced
$6 million in cost cuts last month.
The company will stop enrolling patients in an ongoing clinical trial of Northera and will look at other study designs in hopes of satisfying the FDA. Weiser says the board is committed to continued testing of Northera.
The drug aims to treat neurogenic orthostatic hypotension, or NOH, in patients with neurological conditions such as Parkinson’s disease. NOH is common in these patients, causing fainting, dizziness, fatigue, and blurred vision.
No positions in stocks mentioned.
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