LAYOFFS AT GTX
Memphis firm pares 53 employees in move to save cash
The Memphis biotech firm is “paring down” by 53 employees to conserve cash following failed drug trials.
Memphis biotechnology firm GTx Inc. on Tuesday notified 53 employees — 60 percent of its workforce — that they will be laid off as the company moves to conserve cash following failed drug trials announced in August.
“Until we have more clarity about what we need to do, we’re paring down the company and conserving cash so we can move forward once we have regulatory clarity,” said Henry Doggrell, GTx vice president and chief legal officer.
The layoffs will leave GTx with about 35 employees, who will be consolidated at the firm’s Toyota Center headquarters Downtown, Doggrell said.
On Aug. 19, GTx announced that key “phase 3” clinical trials of enobosarm — testing its ability to prevent and treat muscle wasting in lung cancer patients — failed to meet the benchmarks set with the U. S. Food and Drug Administration. The company’s stock price on the Nasdaq market sank by about two-thirds on that news and closed Tuesday at $1.88, down 7 percent.
The layoffs will cost the com- pany a one-time charge of $1.3 million in its fourth quarter, according to an “8-K” form filed Tuesday with the Securities and Exchange Commission.
Ranging from research scientists to finance and quality control workers, they will receive severance payments based on years of service, group health insurance coverage through Oct. 31 and stock option leeway.
GTx reported that its vice president, chief financial officer and treasurer, Mark. E. Mosteller, will resign, effective Dec. 31.
Beginning Tuesday, the firm reduced chief executive officer Mitchell Steiner’s salary by 20 percent, to $452,088; president and chief operating officer Marc Hanover’s salary by about 20 percent, to $ 393,317, and vice president and chief scientific officer James T. Dalton’s salary
by about 13 percent, to $375,000.
The firm also will offer cash bonuses, stock options and extended health coverage benefits to retain “essential employees” through at least next May 31, according to the filing.
Echoing the company’s earlier statements, Doggrell said GTx will seek guidance from the FDA and European regulators about further tests or oth- er steps to win approval for enobosarm, which showed some positive benefits in previous tests.
The firm also will continue with “phase 2” trials of a different dosage of enobosarm for breast cancer patients and another drug being developed, Capesarias, targeting advanced prostate cancer.
“It all depends on what we learn from the FDA and what we have to do, and frankly, whether we’re successful in maybe getting a partnership with another pharmaceutical company,” Doggrell said.