Achaogen wields ax on R&D, C-suite as antibiotic launch gets underway

The impact of Achaogen’s narrower-than-expected label for antibiotic Zemdri is now apparent: The biotech has slashed 28% of its staff and all but two R&D programs.

While most biotechs would be ramping up headcount at this point, Achaogen has been hit hard by the FDA’s decision to approve Zemdri (plazomicin) for complicated urinary tract infections (cUTIs) only and not bloodstream infections. 

Faced with truncated sales potential for its first and only product, Achaogen says it is eliminating 80 staff positions—mainly in R&D but extending across the organization other than launch-critical functions such as commercial and medical affairs. And that includes a raft of senior executives.

Most notably, President of R&D Kenneth Hillan M.B., Ch.B., will leave his post in October but keep a seat on the board, while Chief Scientific Officer Lee Swem, Ph.D., and Chief Financial Officer Tobin Schilke are also due to exit the company before the end of September. Zeryn Sarpangal, currently chief of staff, will take over the CFO role while Chief Business Officer Liz Bhatt becomes chief operating officer.

Blake Wise, who replaced Hillan as CEO of Achaogen last December, said that despite the launch of Zemdri and an expected filing in Europe before the end of the year "the environment for novel antibacterials requires us to improve our cost structure and narrow our focus to position the company for long-term success."

The company has said it still hopes to seek approval for bloodstream infections and has asked for a meeting with the FDA to see how it can address the deficiencies in its marketing application for that use.

Regardless, it’s another disappointing day for antibiotics R&D, coming after Novartis’ decision to exit the category earlier this month, following in the footsteps of companies like AstraZeneca, Roche, Bristol-Myers Squibb and Eli Lilly.

Achaogen is trimming back its pipeline to two already-funded projects, namely C-Scape (ceftibuten/clavulanate), an oral beta-lactam/beta-lactamase inhibitor combination in phase 1, and a preclinical program looking for new aminoglycoside antibiotics.

That means discovery activities for multidrug resistant Gram-negative pathogens, which included both small molecules and therapeutic antibodies, have been axed.

The restructuring program is scheduled to compete by Oct. 15 and cost around $6 million in severance and other charges. The company had cash reserves of around $95 million at the end of the first quarter, down from $145 million at the end of 2017 and reflecting the costs associated with the late-stage development and filing of Zemdri

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