Tokai Pharma Axes 60% of Workforce After Phase III Prostate Cancer Trial Failure
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON — Following the failure of its Phase III trial of its prostate cancer drug galeterone, Boston-based Tokai Pharmaceuticals (TKAI) is terminating its workforce by 60 percent as part of a plan to reduce operating expenses and conduct an evaluation of options for the future of the experimental drug and the company’s pipeline.
The terminations will leave Tokai with 10 employees, the company said Friday, three days after it announced the failure of its ARMOR3-SV clinical trial, which compared galeterone to enzalutamide in treatment-naïve metastatic castration-resistant prostate cancer (mCRPC) patients whose prostate tumors express AR-V7.
Jodie Morrison, Tokai’s president and chief executive officer, said the workforce reduction is a “difficult yet necessary step” for the company to take in the wake of the trial’s failure. On July 26, the company announced the ARMOR3-SV clinical trial was unlikely to meet its primary endpoint of demonstrating that its own prostate drug galeterone was unable to do a better job than Medivation’s Xtandi (enzalutamide) in preventing the spread of prostate cancer whose tumors express AR-V7. The data monitoring committee, which made the recommendation to terminate the trial, did not cite any safety concerns regarding the drug. Galeterone is Tokai’s only drug currently in clinical trials, according to the company’s website.
While Tokai discontinued the ARMOR3-SV clinical trial, it said on July 29 that it intends to evaluate its ongoing Phase II ARMOR2 trial in mCRPC patients with acquired resistance to enzalutamide, and the planned study in patients who rapidly progress on either enzalutamide or abiraterone acetate.
Galeterone, which was Tokai’s lead drug, is an oral small molecule that was something of a combination of two popular prostate drugs on the market—Janssen’s Zytiga (abiraterone) and Xtandi (enzalutamide). Additionally, Tokai said the drug introduces a third mechanism—androgen receptor degradation— that “impairs the function of androgen receptors, decreasing their sensitivity to androgen activity and reducing tumor growth.” It was through this triple threat pill that Tokai hoped to make a big splash in the prostate cancer market, but fell short, which brings up questions as to the future health of the company.
Sales of Xtandi, co-developed by the Bay Area’s Medivation (MDVN) and Japan-based Astellas Pharma (ALPMY), grew 73 percent in the U.S. in 2015 and 116 percent globally. Zytiga earned Janssen and parent company Johnson & Johnson (JNJ) about $2.2 billion in 2015, a 10 percent jump over 2014 sales.
In its statement, Tokai anticipated the 60 percent staff reduction to result in approximately $4.2 million in reduced annualized operating expense with a charge of $1.3 million for severance and outplacement assistance to be incurred during the third quarter. The company expects the workforce reduction to be complete by the end of the third quarter of 2016.
Tokai expects the reduction in force to start once the plan is fully implemented. The company also expects to incur a charge in the third quarter of 2016 of approximately $1.3 million related to the reduction, including severance, benefits and related costs.
Shares of Tokai plunged July 26 following the announcement of the galeterone’s failure, falling from $5.20 per share to $1.64. Shares continued to slide over the remainder of the week, hitting a low of $1.02 per share. The stock rallied a bit in after hours trading Friday and increased to $1.26 per share.