Satsuma Pharmaceuticals is hunkering down while searching for a savior. After opting against trying to commercialize a migraine candidate itself, the biotech has outlined plans to lay off 36% of its employees to eke out its cash ahead of a planned strategic transaction.
The STS101 candidate, a dry-powder formulation of long-approved migraine drug dihydroergotamine, has flunked two phase 3 clinical trials in recent years. In the second study, which delivered data late last year, the biotech used a second-generation nasal spray and higher dose to try to improve on the results of the first trial. The changes failed to yield a treatment capable of beating placebo.
Satsuma responded to the blow by dropping plans to invest in commercializing STS101 itself and starting to “explore alternatives to maximize value for shareholders, while minimizing cash expenditures.” Later, further analysis of the data persuaded the biotech it has the evidence to support FDA approval.
Throughout the process, Satsuma maintained its head count, ending last year with the same number of full-time employees, 25, as it had in the weeks before it learnt of the second phase 3 failure. Now, with a deal yet to materialize, the biotech has decided it is time to start handing out pink slips to nine workers in the bid to slow the rate at which it burns through the $52.5 million it had at the end of last year.
“While it’s difficult to part company with committed employees who have made significant contributions to Satsuma and its STS101 development efforts, given the challenging environment we face, it’s imperative that we optimally position Satsuma and STS101 to maximize potential value for our stockholders,” Satsuma CEO John Kollins said in a statement.
Believing STS101 could be “an attractive addition to the portfolio of an established pharmaceutical company,” Satsuma filed for approval of the candidate in the U.S. earlier this month. The biotech sees a “compelling rationale, with regulatory precedents,” for including a portion of efficacy results from the failed phase 3 trial in the STS101 prescribing information.
Although the study missed its co-primary endpoints, which looked at pain and symptom relief two hours after treatment, Satsuma sees results from secondary endpoints as evidence that STS101 can improve outcomes. The secondary endpoints looked at time to freedom from pain, use of rescue medication and more.
Shares in Satsuma rose 5% in premarket trading Wednesday to 88 cents.