A devastating trial flop for Deciphera's gastrointestinal cancer drug Qinlock has prompted the company to undergo a painful transformation.
On Tuesday, the Massachusetts biopharma said it will cut 140 jobs, reducing its headcount by 35%. As part of the restructure, Deciphera will abandon its development of Qinlock and ovarian cancer candidate rebastinib.
The company now will focus its efforts on developing two other cancer treatments—vimseltinib, a colony-stimulating factor 1 receptor inhibitor, and DCC-3116, a first-in-class ULK kinase inhibitor.
“The decision to realign our resources and restructure our organization was difficult, but one which will allow us to focus on the critical programs that will drive our future growth,” CEO Steve Hoerter said in a statement. “We have a clear and positive path forward.”
The 18-year-old company will streamline commercial operations for Qinlock, concentrating on select markets in Europe.
The move will reduce operating expenses and extend the company’s cash runway into 2024, Deciphera said. At the end of the third quarter, Deciphera had cash, cash equivalents and marketable securities of $392 million. It said it will recognize a cash charge of $32 million from its workforce reduction and the discontinuation of the development of its two drugs.
The restructuring comes less than a month after the company revealed that Qinlock failed to outperform Pfizer’s Sutent in slowing tumor progression or death in gastrointestinal stromal tumor (GIST) patients previously treated with Novartis’ Gleevec. The news triggered a 70% drop in Deciphera’s stock price.
A successful trial would have added $1.37 billion to Qinlock’s peak sales estimate, SVB Leerink wrote. Instead, the drug’s existing fourth-line indication carries only an $81 million peak sales estimate.
In May of this year, Qinlock became Deciphera’s first drug to gain an FDA approval.
With the restructuring, the company moves its focus to a phase 3 study of vimseltinib, an oral treatment for tenosynovial giant cell tumor. The trial will begin before the end of the year.
As for DCC-3116, that med is being investigated in combination with trametinib, otherwise known as Novartis' Mekinist, in an ongoing phase 1 study. Deciphera also is targeting other oncology drugs in combination with DCC-3116.
The company will continue to explore new product development using its switch-control inhibitor approach.
Deciphera still has a chance to thrive, according to analysts at Jefferies, who warned investors not to dismiss the stripped-down company.
“We continue to see potential opportunity for Qinlock and vimseltinib to offer upside from here,” the analysts wrote.