After facing delays in clinical trials of its Celacade treatment for heart failure, Vasogen Inc unveiled plans to lay off 85 per cent of its workforce and said it would suspend funding of studies for Celacade, as it shifts focus to a new area of drugs.
This plan re-focuses Vasogen's resources on the development of its VP series of drugs while the company seeks alternatives to fund further development of the Celacade System, the company's technology for the treatment of chronic heart failure. As a result of the workforce reduction and implementation of strategic restructuring plans, Vasogen expects to have approximately two years of cash resources.
As previously reported, Vasogen has encountered significant delays with the FDA regarding the design of ACCAIM II, a clinical trial to support an application for US market approval of Celacade for the treatment of patients with NYHA class II heart failure. Given these delays, Vasogen's current lack of access to capital, and the uncertainty surrounding the FDA's continued opposition to a relatively small trial utilizing a Bayesian statistical design, the company has placed on hold plans to fund ACCLAIM II. The company will, however, continue to work with the FDA towards finalising the design of ACCLAIM II, and will evaluate potential strategic alternatives to fund such a study. In addition, subsequent to the recent receipt of a much lower than anticipated revenue forecast for Celacade from its European marketing partner, Grupo Ferrer, Vasogen plans to discontinue operational and financial support for European commercialisation and is exploring alternative strategies with Ferrer. Ferrer's sales forecast was impacted by the uncertainty surrounding ACCLAIM II.
"We cannot financially justify maintaining our existing infrastructure in light of the regulatory challenges facing ACCLAIM II and the revenue forecast received from Ferrer. That said, the science underlying Celacade remains strong and we continue to believe that the rationale for its therapeutic use in the treatment of certain heart failure patients was evident in the subgroup analysis from the ACCLAIM trial. For these reasons, we plan to explore opportunities to support the further development of Celacade in the US and continue working with Ferrer to evaluate alternative strategies to support the commercialization of Celacade in Europe," said, Chris Waddick, president and CEO, Vasogen. "This has been a challenging process, but through the measures announced, we believe that we have a plan that allows us to conserve our financial resources, while executing a strategy focused on rebuilding shareholder value. We are deeply grateful for the contributions of the many talented and dedicated employees whose positions are impacted by this restructuring, and thank them for all their hard work."
The company will incur cash expenditures of approximately $2.6 million during the second quarter related to the restructuring.
Vasogen has also retained JMP Securities to assist it in exploring other potential strategic alternatives with the goal of enhancing shareholder value.