Cempra cuts 2/3 of workers, stock falls 21% after drug falls short in study
Chapel Hill, N.C. — Clinical-stage drug maker Cempra saw its stock price fall 21 percent after it cut 67 percent of its workforce and reported earnings that missed analyst expectations, according to the financial results released Tuesday.
For the quarter ended Dec. 31, Cempra reported a net loss of $31.4 million, or 60 cents per share. During the same period in 2015, the company reported a net loss of $21.2 million, or 48 cents per share. The results were worse than the net loss of 57 cents per share that analysts were expecting.
Research and development expense in the fourth quarter of 2016 was $21 million, an increase of five percent compared to the same quarter in 2015, due to costs related to pre-approval manufacturing of solithromycin.
General and administrative expense was $18.2 million, a 174 percent increase compared to the quarter ended Dec. 31, 2015, driven primarily by pre-commercialization costs, increased headcount as the company was preparing for potential commercialization of solithromycin and severance related to the retirement of former Chief Executive Officer Prabhavathi Fernandes.
Chapel Hill-based Cempra, which has no drugs on the market, announced yet another setback on Tuesday. Its solithromycin drug rejected by the Food and Drug Administration in December came up short in another study, not to treat pneumonia this time, but to treat gonorrhea.
Cempra said its phase 3 study looked at 262 patients to see how a dose of oral solithromycin fared in treating the sexually transmitted bacterial infection, gonorrhea. In the end, the data showed the drug was not more effective than the treatment combination of two already approved antibiotics: a ceftriaxone injection and oral azithromycin.
Following this news, the company announced it cut 91 employees, trimming its workforce from 136 to 45 employees. Cempra attributes the cuts to the failure of its pneumonia treatment to reach U.S. Food and Drug Administration approval in December.
The FDA rejected both the oral and intravenous forms of Cempra’s flagship drug, likely to result in a lengthy delay for any approval of solithromycin to treat pneumonia in adults. Shares fell more than 60 percent following the news in December.
The FDA said it was concerned over potential liver injury from the drug, saying that the size of the safety database was limited to 920 patients who received solithromycin, “too small to adequately characterize the nature and frequency of serious hepatic adverse effects.” Cempra will need to undertake a study of around 9,000 patients in order to see whether the drug is harming patients’ livers.
Earlier this month, Cempra stock showed its best ever one-day percentage gain after the company’s pill to treat acute bacterial skin infections cleared a late-stage study, inching the company one step closer to getting its first drug to market.
For the year ended Dec. 31, Cempra reported a net loss of $118.0 million, or $2.34 per share, compared to a net loss of $91.1 million, or $2.09 per share, last year.
General and administrative expense for the year was $53.5 million, a 134 percent increase compared to the year ended Dec. 31, 2015, driven primarily by pre-commercialization costs and increased headcount as the company was preparing for the potential commercial launch of solithromycin.
The company said it expects to reduce second half 2017 expenses by more than 70 percent compared to the second half of 2016 in order to conserve financial resources. Cempra said it is evaluating its existing pipeline and potential business development opportunities.
As of Dec. 31, 2016, Cempra had cash and equivalents of $231.6 million and 52.4 million shares outstanding.
Shares were trading around $3.30 Tuesday morning, down 21 percent.
Note: This story is from the North Carolina Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism
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