After the FDA delivered bad news to ObsEva in July—saying its highly touted uterine fibroids candidate linzagolix wasn’t fit for an on-time approval—the Swiss company said it would undergo a drastic restructuring.
On Tuesday, the company detailed the cuts, saying it would terminate 70% of its staff, including chief strategy officer Katja Buhrer. ObsEva will make most of the cuts during the fourth quarter. The move will provide annual savings of $7.6 million, the company said.
Those who remain will support ObsEva’s license agreements with Organon, to develop and commercialize preterm labor treatment ebopiprant, and with Hangzhou Yuyuan to do the same with in vitro drug nolasiban. ObsEva’s deal for the troubled fertility treatment extends only to China, but the company in July said that it could be expanded.
“These measures, along with our previously announced debt restructuring, are important steps as we focus our efforts toward advancing our license agreements and assessing the potential for further nolasiban development,” ObsEva CEO Brian O’Callaghan said in a release.
This summer, the FDA informed ObsEva that its application for linzagolix had deficiencies that prevented the review from going forward. Ironically, the target date for approval was today. The FDA rejection came despite the drug winning approvals earlier this year in the EU and the U.K. under the brand name Yselty.
When ObsEva announced its intention to restructure after hearing the news, the company also said it was pursuing protection against debt enforcement and bankruptcy proceedings. The company has until Sept. 23 to submit an audited balance sheet as it tries to gain the ability to undertake additional restructuring under court supervision.
On Monday, ObsEva was notified by Nasdaq that it was out of compliance with its listing agreement as it had gone 30 days with its share price less than the minimum of $1. After the restructuring announcement in July, its share price tumbled from $1.61 to its current $0.20. Over the next 180 business days, ObsEva can regain compliance if its share price increases to more than $1.00 for a 10-day period.
Additionally, earlier this summer, ObsEva was told it wasn’t in compliance with its Nasdaq Global Select Market listing because it had dropped under the $10 million figure for stockholder equity. Two weeks ago, the company submitted its plan to regain compliance there.
The company also said it has assigned multiple contracts related to the development of linzagolix to Kissei Pharmaceutical. These contracts total commitments of approximately $6.2 million, ObsEva said. The company said expects to complete the transfer by the end of October.