Durham drug developer Heat Biologics said it has cut staff and also reduced executive pay in a bid to stretch its cash through the end of the year.
The company’s move Thursday follows a disappointing stock offering. Heat Biologics had hoped to raise $12.5 million this year but in March raised about half that amount, $6.8 million, in stock and warrants.
The company will likely raise more money for 2017 or seek non-dilutive financing, said Rahul Jasuja, an analyst with Noble Life Science Partners, in a research note Thursday. Non-dilutive financing does not require selling stock and could include a corporate partnership or a loan.
Heat Biologics said it cut 22 percent of its staff, cut pay for top executives and also accepted resignations from two board members. The company told the Securities and Exchange Commission that it eliminated six positions, including chief financial officer, senior director of quality systems, and legal counsel.
The cost-cutting strategy is designed to carry the company through the fourth quarter, when it expects results from a phase 2 clinical trial of its lead drug, HS-410, for the treatment of non-muscle invasive bladder cancer.
“These cost-saving measures, while incredibly difficult, enable us to achieve the topline data expected in the fourth quarter of this year,” said Heat Biologics’ spokeswoman Jennifer Almond.
In another cost-cutting move, the company is reducing the number of patients, from 18 to 8, for a phase 1 clinical trial of another drug, HS-110, as a treatment for non-small cell lung cancer.
Heat Biologics stock closed Thursday at 66 cents, down 2 cents. The stock is down 73 percent this year. Eleven months ago it was trading as high as $8.65 a share.
Heat Biologics, which now employs 19 people, has no products on the market and is developing drugs for bladder cancer and lung cancer. The company has an estimated $16 million cash and short-term investments.
In a press release the company described the executive pay adjustments a “reduction in compensation.” In regulatory filings, Heat Bilogics said three executives have agreed to defer payment on a portion of their salary from April 1 until Dec. 31, at which time payment of their full salary will resume.
CEO Jeffrey Wolf took a 25 percent cut; Melissa Price, the vice president of product development, took a 20 percent cut; and Taylor Schreiber, the chief scientific officer, agreed to a 20 percent cut.
However, Heat Biologics also disclosed it will pay $299,000 in retention bonuses, equal to three months of salary, for Price, Schreiber and Ann Rosar, newly appointed vice president of finance, as well as four other unnamed employees. To qualify the employees have to stay with Heat Biologics through the end of 2016.
That means that Price and Schreiber took a 20 percent pay cut but also stand to receive a 25 percent pay bonus.
Additionally, chief financial officer Timothy Creech left the company, as did Anil Goyal, vice president of business development. Creech will receive a severance payment of $142,500, while Goyal will be paid $85,000 in severance.