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August 20, 2019 Bioscience Notebook

Melinta CEO, chairman resign; Branford biotech wins another $3.8M for anthrax detection tech

PHOTO | Contributed John H. Johnson
By Natalie Missakian

Melinta Therapeutics CEO and President John Johnson is stepping down after just nine months on the job.

Under Johnson, Melinta cut 20 percent of its workforce last year, closed its flagship New Haven office and another in North Carolina, and shelved its Elm City-based discovery research program in an effort to save at least $50 million annually. The company is now headquartered in Morristown, N.J. 

The New Haven-born antibiotics maker announced recently that Johnson voluntarily resigned “due to changes in the company’s circumstances and in order to pursue other opportunities.” The company said board chairman Kevin Ferro is also leaving voluntarily and will be replaced by current board member David Gill. 

Melinta offered no details about the changes in the company’s circumstances and did not respond to a request for additional comment. 

Johnson, an industry veteran who online trade publication Endpoints News last year dubbed a “turnaround artist” for troubled biotechs, took over for outgoing CEO Dan Wechsler last fall. Wechsler also parted ways with the company after less than a year. 

Johnson will stay on as acting CEO for at least a month to assist with the transition to a permanent successor and will remain a “strategic advisor” for at least six months, the company said.

The latest shakeup follows a turbulent year for Melinta, which struggled to launch its newly approved antibiotic Baxdela to treat serious skin infections, namely those caused by MRSA (methicillin-resistant staphylococcus aureus).  The company has cited headwinds in the antibiotics market, considered one of the toughest in the pharmaceutical industry. 

Although it reported increased sales and a $4 million jump in second-quarter revenue compared to a year ago ($16 million versus $12 million in 2018), the company said in a second-quarter earnings announcement that it continues to struggle to meet its obligations to creditors. 

"We are encouraged with the progress we have made toward our financial stewardship goals and product sales revenue growth,” Chief Financial Officer Peter Milligan said in a statement. “However, we continue to face significant risk relative to near-term compliance with the company’s financial commitments and covenants under its credit and convertible notes facilities.”

Milligan said Melinta is “working diligently to negotiate with our creditors to navigate a path forward.”

* * *

The federal government has awarded Branford’s Tangen Biosciences another $3.8 million as part of a 3.5-year contract to develop a rapid, portable test to detect anthrax. 

The U.S. Department of Health & Human Services Biomedical Advanced Research and Development Authority (BARDA) contracted with the medical technology company in 2017 to develop a “field-deployable anthrax diagnostic assay.”

Tangen has developed a hand-held, battery-operated molecular diagnostics device it calls TangenDx to detect disease-causing organisms. The company touts the device as faster, cheaper and more sensitive than existing technologies. 

Tangen said it delivered a TangenDx instrument with a sensitive anthrax test to BARDA in February under the first phase of the contract, valued at $3.2 million. The second phase, valued at $3.8 million, will develop a test for drug resistance.

The contract is part of the federal government’s “biodefense strategy,” which aims to counter biological threats, according to the HHS website.

This kind of technology can be crucial during an anthrax attack since it can help health care professionals quickly determine who’s been infected, helping to guide triage decisions and patient care, BARDA says.

Under the second phase of the contract, which began in July, Tangen is developing a direct blood test for up to 32 drug resistance markers or organisms. 

“The ability to rapidly identify antimicrobial resistance without first culturing blood is a needed tool in the fight against rising antibiotic-resistant infectious microbes,” said Tangen Chief Scientific Officer John Davidson, MD, in a statement. 

* * *

New Haven’s ReNetX Bio said last week it had dosed its first patient in the inaugural human trial of a drug that aims to reverse the damage from spinal-cord injuries.

The drug, AXER-204, allows neurons in the brain to regrow by inhibiting factors that prevent them from regenerating after injury. This allows the body to make new neural connections through rewiring, according to ReNetX. 

“Given the promising results seen in preclinical studies, it is our hope that AXER-204 will become the first therapeutic shown to restore function and reverse damage in spinal cord injury and other [central nervous system] disease,” ReNetX President and Chief Scientific Officer George Maynard said in a statement.

The Phase 1 study is expected to enroll 24 patients and will evaluate the drug’s safety, tolerability, and its absorption and distribution throughout the body. 

The company was founded by Stephen Strittmatter, MD, a professor of neurology at Yale.

* * *

New Haven’s BioXcel Therapeutics Inc. (BTI) said Tuesday it had been awarded a $150,000 planning grant from the U.S. Department of Defense to study the potential of its drug BXCL501 to treat alcohol and substance-abuse disorder linked to post-traumatic stress disorder and traumatic brain injury.

BXCL501 is a thin film version of an older drug, dexmedetomidine, that has been redesigned to dissolve under the tongue. BioXcel has already announced promising results from a trial of the drug for the treatment of  acute agitation in schizophrenia patients.

Those results suggest the drug could also help with hyperarousal and high sympathetic nervous system activity in people being treated for alcohol and substance abuse stemming from PTSD, BTI said.

Currently, the standard treatment is exposure therapy, where patients are encouraged to gradually confront anxiety-producing situations, thoughts and emotions. But that can lead to distressing symptoms such as elevated heart rate, increased blood pressure, sweating, palpitations, irritability and others.

“Unfortunately, a number of veterans have described how these recurrent hyperarousal symptoms often result in even more alcohol and substance abuse, discontinuation from exposure treatment and disengagement from providers and health care,” BTI advisor Jeff Sabados, a former Navy SEAL, said in a statement.

BTI said it will use the grant to develop a study to see if using the drug before, during or after exposure therapy can help with those symptoms.

The study will be led by John Krystal, MD, chief of psychiatry at Yale-New Haven Hospital and director of clinical neurosciences at the National Center for PTSD. 

“BXCL501’s unique properties and mechanism of action make it a potentially promising choice for further clinical evaluation in this area of high unmet medical need,” said Krystal in a statement.

* * *

In other news, BioXcel reported higher second-quarter losses compared to a year ago as it expanded research and development activities and carried out new clinical trials.

BTI said it lost $8.5 million, or 54 cents a share, for the period ended June 30, compared to $3 million (19 cents a share) for the same period in 2018. 

Wall Street analysts expected a loss of 52 cents a share, according to Zacks Investment Research.

R&D expenses were $6.5 million for the quarter, up from $1.8 million during the same period in 2018. BioXcel attributed the increase to clinical trial and manufacturing costs and higher personnel expenses and professional fees associated with its two lead drug candidates, one that treats acute agitation and another targeting prostate and pancreatic cancer. 

General and administrative expenses came in at $2.1 million, up from $1.5 million a year ago, due mainly to additional payroll expenses, fees and costs associated with operating as a public company, BioXcel said. 

The company ended the quarter with $30 million in cash, which it said was sufficient to fund operations through mid-2020.

* * *

New Haven’s newest publicly traded biotech Trevi Therapeutics Inc., which debuted on the Nasdaq in May, posted second-quarter losses of $7.3 million, up from $4.9 million a year ago.

The 63 cents-a-share loss missed Wall Street expectations. Analysts had predicted a loss of 41 cents a share, according to Zacks Investment Research. 

Trevi attributed the higher losses principally to stepped up R&D spending on two clinical trials for its lead drug, nalbuphine ER. The company is conducting two separate trials on the drug for the treatment of chronic itching and chronic cough, respectively. 

R&D expenses rose to $5.5 million, up from $3.4 million a year ago. General and administrative expenses increased to $1.9 million, from $900,000 a year ago, the company said.

Trevi ended the quarter with $71.4 million in cash, which it said was sufficient to fund operations through the end of 2020.  

* * *

Rare-disease drug developer Achillion Pharmaceuticals Inc., which has a large research presence in New Haven, said it lost $19.4 million, or 14 cents a share, during the second quarter, compared to $17.2 million (12 cents a share) during the same period a year ago. 

The loss was in line with analysts’ expectations, according to Zacks Investment Research.

Achillion develops drugs that inhibit Factor D, an immune system enzyme that plays a role in some immune-related disorders. 

The company, which moved its headquarters to Bluebell, Pa. this year, said it spent $15.9 million on R&D during the quarter, a $4.9 million year-over-year increase. It attributed the jump mostly to increased clinical trial costs as well as higher manufacturing costs, offset by lower discovery research costs.

G&A expenses were $5.1 million, down from $7.5 million a year ago, due to lower personnel costs and non-cash, stock-based compensation stemming from last year’s exit of the company’s former CEO, Achillion said. 

Cash on hand was $241.3 million as of June 30. Achillion expects to finish 2019 with roughly $185 million. 

Contact Natalie Missakian at news@newhavenbiz.com

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