Facing skepticism from analysts about whether it has the resources to take its rare disease drug to market, Applied Therapeutics is laying off almost half of the biotech's workforce to conserve its remaining cash.
Last week, the New York-based company finally received the official minutes from a meeting with the FDA back in September to agree on a path forward for govorestat. The drug is designed to treat Charcot-Marie-Tooth sorbitol dehydrogenase deficiency (CMT-SORD), a rare subtype of CMT that causes progressive, debilitating muscle weakness and sensory loss.
But, rather than finalize the regulatory submission plan for the drug as had been expected, Applied Tx suggested last week that another meeting with the FDA would be required first.
With $11.9 million left in the bank as of the end of September, William Blair analysts queried at the time whether the biotech had the resources to conduct an expected fresh phase 3 study and ultimately get govorestat to market.
Those same questions appear to have been weighing on Applied Tx’s board, which announced this morning that it has “initiated a process to explore strategic alternatives for the company.” These options range from a merger or acquisition to a joint venture, a licensing deal “or other strategic transactions.”
While the board considers which path to take, it is implementing various “cost-containment and cash conservation measures,” including laying off about 46% of the biotech’s staff. Applied Tx entered the year with 35 full-time employees, of whom 18 were primarily engaged in R&D activities.
“Our commitment to bringing govorestat to patients with rare diseases remains unwavering,” Applied Tx interim CEO and Chief Financial Officer Les Funtleyder reaffirmed in the Nov. 20 release.
“To further advance this mission while maximizing value for shareholders, the board has initiated a process to explore strategic alternatives designed to preserve our cash runway and ensure that we pursue the optimal path forward for all stakeholders,” Funtleyder added.
Applied Tx has also been eyeing up govorestat’s potential to treat a rare inherited metabolic disorder called galactosemia. Last week, Funtleyder mentioned that a separate meeting with the FDA was already in the calendar before year-end to discuss govorestat as a galactosemia treatment.
But that certainty seems to have slipped, with the company now saying that—having “recently accepted written feedback from the FDA in connection with its planned meeting”—Applied Tx is now “evaluating the feedback with its advisors as it assesses next steps for the development of govorestat for the treatment of classic galactosemia.”
“The company may pursue additional discussions with the FDA regarding a potential phase 3 trial design at a later date,” it added.
The FDA previously rejected a new drug application for the drug in children with the disorder last year, while also reprimanding the biotech for the deletion of electronic data by a third-party vendor and the mishandling of a dosing error that led to some patients initially receiving lower levels of govorestat than intended.
That application itself was based on a failed phase 3 trial from 2023, but Applied Tx had held out hope that it still had the data needed for the rare disease approval.