Rare disease company Aceragen Inc. is cutting 80% of its staff months after completing its all-stock merger with Pennsylvania-based Idera Pharmaceuticals. The company said the layoffs are part of an effort to reduce operating costs.
Durham-based Aceragen announced the workforce reduction in a May 4 filing with the SEC. The company noted the board of directors reached an agreement to cull the majority of its employees on April 28. The decision to terminate the majority of employees came within weeks of the company’s disclosure it had furloughed 12 employees, about 46% of its workforce at the time. That announcement, made in its quarterly financial report, included a deferral of salaries for some of the company’s executive officers, those that exceeded $200,000, the company reported. Again, for cost cutting measures. The company noted at the time it planned to continue to review cost-saving measures.
The layoffs also impacted the C-suite. Chief Financial Officer John Kirby is no longer with the company. His role has been temporarily absorbed by Aceragen Chief Executive Officer John Taylor.
Even before the merger, Idera Pharmaceuticals did not have significant financial resources. The company reported about $24.5 million of available funds. When Aceragen and Idera announced their merger last year, the two companies said their combined finances of $27 million were expected to provide enough cash runway through the third quarter of 2023. Aceragen estimates it will incur approximately $4.5 million in restructuring charges related to severance and other costs.
The layoffs will certainly impact Aceragen’s ongoing clinical programs for its lead assets, ACG-701 and ACG-801. The company planned to initiate a Phase II trial assessing ACG-701 in cystic fibrosis in the fourth quarter of 2022. The trial, which was expected to be funded in part by the Cystic Fibrosis Foundation, was going to evaluate ACG-701 as a potential treatment for acute pulmonary exacerbations associated with cystic fibrosis. Data from that study was expected in the second quarter of 2023.
ACG-701 is a sodium fusidate-based therapy. Sodium fusidate has been used as a treatment for this indication in Europe and Australia for more than 50 years. However, it has never been approved in the United States, the company noted. ACG-701 has been granted Orphan, Fast Track, and Qualified Infectious Disease Product status by the FDA.
In addition to acute pulmonary exacerbations associated with cystic fibrosis, Aceragen is also developing ACG-701 in a Phase II trial as a potential treatment for melioidosis, an infectious disease also known as Whitmore’s disease. That study, dubbed TERRA, is underway. Data is expected in the second quarter of 2023. If approved for this indication, ACG-701 is anticipated to be eligible for a priority review voucher and a national stockpiling contract, Aceragen said. The TERRA study is supported by $51 million in funding from the Defense Threat Reduction Agency.
Aceragen’s other lead asset is ACG-801, an investigational biologic enzyme replacement therapy being developed for the treatment of Farber disease, a lysosomal storage disorder. Aceragen anticipated initiating the ADVANCE clinical trial in the first quarter of 2023. However, the FDA placed a clinical hold on that study due to manufacturing and quality issues. Aceragen said it filed a response to the regulatory agency in March and anticipates the hold to soon be lifted. But, whether or not that trial will be able to begin will depend on finances. Although the ADVANCE study is being partially funded by Raleigh-based NovaQuest Capital Management, Aceragen said the trial can only proceed if it secures enough financing to continue operations.
Layoffs within the life sciences have been on the increase since the start of 2023. However, Research Triangle Park has largely been spared the mass layoffs seen elsewhere. Last month, Enzyvant Therapeutics closed its facility in Cary, N.C., according to a N.C. WARN notice. The closure will impact 20 employees. Enzyvant, a subsidiary of Japan-based Sumitomo Pharma, merged with multiple companies under the umbrella of its parent company to form Sumitomo Pharma America. Also in April, Taysha Gene Therapies nixed plans for a new manufacturing site in Research Triangle Park employing approximately 200 people. That company is looking for buyers for its North Carolina site.
