Delcath Lays Off One-Third of Staff

The misery continues at Delcath Systems Inc.

Less than a month after U.S. Food and Drug Administration (FDA) officials rejected the firm’s drug-device treatment combo for eye cancer, Delcath canned 21 of its 60 employees, or 33 percent of its workforce, to “increase operating efficiencies.” The layoffs are expected to trim about $10 million from annual operating costs, and will help Delcath’s “ability to initiate the strategic objectives currently under evaluation,” the company said in a statement.

Delcath’s rapid descent began in the spring, when an FDA advisory panel took serious issue with pivotal data for its Melblez Kit, a drug-device combo product designed to treat eye cancer that has spread to the liver. Noting that 7 percent of patients died of adverse effects like liver failure and gastrointestinal bleeding, the panel unanimously recommended the therapy be rejected. The decision prompted company executives to ax 20 percent of their workforce in June.

The FDA heeded the panel’s advice, formally rejecting the Melblez Kit last month and asking the company to conduct more clinical trials to prove the treatment is safe and effective based on overall survival, and that benefits outweigh the risks. With an approval date likely years away now, the company summarily fired CEO Eamonn Hobbs and appointed two of its executive vice presidents to serve as co-presidents and co-CEOs: Jennifer Simpson, Ph.D., M.S.N., C.R.N.P., who also serves as global head of business operations; and Graham Miao, Ph.D., M.S., MBA, who also is chief financial officer. Both will retain their current titles and job responsibilities during their stint as co-CEOs.

In addition, the company appointed Gabriel Leung as board chairman. He has been a board member since 2011 and brings more than 20 years experience in the oncology pharmaceuticals marketplace to Delcath. He replaced Dr. Harold Koplewicz as chairman, who remains a member of the Board of Directors.  

The board also has appointed a Transition Committee to assist management with the leadership transition and search for Hobbs’ permanent replacement. The committee is comprised of current board members Douglas Watson and Roger Stoll, as well as Koplewicz and Leung.

“The Delcath Board of Directors believes these actions are in the best interests of the company and its shareholders. I look forward to working with the senior management team and the Board Transition Committee as we evaluate our strategy and develop our implementation plan,” Leung said in a statement.

The Company believes that these actions will help preserve the Company’s ability to initiate the strategic objectives currently under evaluation. Most of the savings are expected to come from marketing, administrative expenses and research and development. As of September, 30 2013, the Company estimates cash and cash equivalents of approximately $28 million.