Aastrom Scraps Phase 3 Study, Cuts Workforce in Half

The Ann Arbor-based biotech company Aastrom Biosciences (Nasdaq: ASTMannounced this week that it’s halting its REVIVE-CLI Phase 3 clinical study of the company’s multicell therapy for patients with critical limb ischemia (CLI). The company also slashed its workforce in half in a reorganization of its R&D operation.

About a year ago, Aastrom raised $40 million from Eastern Capital in part to push the Phase 3 study forward. At the time, then-CEO Tim Mayleben told Xconomy, “In our industry, it’s not so much about stocks and shareholders as it is hitting milestones. From that perspective, we’re really solid.”

What a difference a year makes. Mayleben stepped down as CEO in December and was replaced by an interim CEO for a few months before Nick Colangelo took over three weeks ago. Colangelo had this to say about the company’s latest moves: “For a company of our size, what is the fastest route to commercialization? Essentially, we’re aligning our corporate structure to go with our new strategy, which is to focus on [the Phase 2b study of ixmyelocel-T to treat a cardiovascular condition known as dilated cardiomyopathy (DCM)] and other rare disease indications, and smaller clinical studies with potentially faster paths to commercialization.”

Colangelo admits enrollment in the 600-patient REVIVE-CLI Phase 3 study was slow, so the company chose to focus on the much smaller Phase 2b DCM study instead. The DCM study requires 108 patients in 30 centers, and Colangelo says he expects enrollment to be complete by the end of the year.

The news has, not surprisingly, caused Aastrom’s stock prices to fall. As of 4 p.m. yesterday, shares were at $0 .70 each, the lowest they’ve been in a year. Aastrom’s stock opened this week at $1.21 per share. Last April 24, the company’s shares traded as high as $2.72 per, a 52-week peak.

Colangelo says one reason the company took “quick and decisive” action in restructuring was to reduce the rate at which is was burning through cash. He says he expects the company to have cash on hand through the third quarter of 2013, and that the company is working on additional financing.

Despite this week’s shakeups, Colangelo remains optimistic about Aastrom’s future. “It’s a very well-run company, and the technology has as much potential as anything I’ve seen,” he adds.

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