Chapel Hill pharmaceutical company Cempra is cutting its workforce from 136 to 45 employees as it deals with fall out from regulatory problems with one its drugs.
On Tuesday, Cempra reported a net loss of $118 million in 2016, up from a $91.1 million loss in 2015. Revenue was also down in the past year, falling 34.1 percent from $27.3 million to $18 million.
Shares of Cempra have plummeted during its last fiscal quarter, falling 77.4 percent since Nov. 1, as the company reported that in December the Food and Drug Administration declined to approve its experimental antibiotic, Solithera, which is aimed at treating pneumonia.
The FDA said the drug posed the risk of liver damage to patients, but did not reject the drug outright. Rather, the agency issued a Complete Response Letter in which it called for Cempra to conduct an additional clinical trial to determine the drug’s safety. Such a study could be both costly and time-consuming.
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The company said that as a result of the FDA’s action, it would cut 67 percent of its employees in an attempt to preserve cash assets of $225 million.
Solithera also came up short in another Phase 3 study, according to the Cempra. The drug did not prove to be more effective in treating gonorrhea than two already approved antibiotics.
Cempra, which was founded in 2006, currently has no drugs on the market.
The company added that restructuring of the company would lead to decreases in research and corporate expenses in 2017, with an expected reduction in expenses of more than 70 percent in the second half of 2017.
Cempra’s pipeline is heavily leveraged on the success of Solithera, but recently received positive trial results for its fusidic acid drug CEM-102, which is branded as TAKSTA. That drug treats acute bacterial skin infections.
Cempra plans to meet with the FDA to discuss the next steps required to bring fusidic acid to patients in the United States.
"We have made substantial progress in recent weeks to clarify our existing clinical programs, including positive phase 3 results with fusidic acid, further define the next steps to advance solithromycin, and take significant cost-reduction actions to preserve our sizable cash resources as we evaluate the best investments, including potential external opportunities, to deliver value to patients and shareholders," David Zaccardelli, acting chief executive officer of Cempra, said in a statement.
Zaccardelli has been the interim CEO since December, when the company announced the retirement of former CEO and founder Prabhavathi Fernandes.
Cempra’s shares closed at $3.40, down 80 cents.