Chelsea Therapeutics International, biopharmaceutical development company, reports that all corporate officers and members of its board of directors volunteered to receive a 25% reduction in compensation until data from its ongoing phase III study of Northera (droxidopa) is available.
The voluntary compensation reductions lead a broader cost containment effort by Chelsea that includes additional compensation savings; suspending performance bonuses until its lead drug candidate, Northera, is approved in the U.S.; further cutbacks in program expense; and the anticipated transition of patients in its on-going open-label safety study of Northera, Study 304, to a more cost-effective access program.
"Everyone at Chelsea shares in the disappointment that Northera was not approved by the FDA earlier this year," commented Dr. Simon Pedder, president and CEO of Chelsea Therapeutics. "The measures we are taking now to reduce expenses reflect both our personal and professional commitment to patients, shareholders and the success of our Northera program. In the coming months, we will be working hard to achieve resolution with the FDA as swiftly as possible regarding our intended path toward regulatory approval, complete Northera Study 306B and return shareholder value to our stockholders. We continue to anticipate results of a modified Study 306B to be available during the first quarter of 2013 allowing for a planned resubmission of our Northera NDA by the end of that quarter and potential FDA action date late in the third quarter of next year."
Effective July 1, 2012, the corporate officers and directors of Chelsea Therapeutics will take a voluntary 25% reduction in salary and fees. In addition, at least 35% of Chelsea's non-executive staff across select functional areas that do not critically support a timely NDA filing and approval for Northera are expected to temporarily transition to part-time status with a corresponding decrease in salary. Chelsea plans to further reduce compensation expense by suspending performance bonuses for all employees, including officers, for 2012 and until Northera is granted marketing approval in the U.S.
These savings, combined with broader cost containment initiatives, including the planned transition of patients from safety study 304 to an alternate access program, are expected to generate savings of over $6 million in the next 12 months. The savings would allow the Chelsea Therapeutics to implement additional 306B enrollment initiatives while still achieving a net reduction of $4 million in expenses that would extend the company's cash runway into the third quarter of 2013. Including a potential increase in 306B recruitment and enrollment expense, Chelsea estimates a $1.0 million reduction in 2012 operating expenses compared to earlier estimates, bringing the total operating expenses for 2012 to the $43 million to $47 million range. The company maintains its prior cash guidance of approximately $18 million to $20 million at year-end.