Two Gemphire Execs Caught in Layoffs After Clinical Trial Setbacks

Xconomy Detroit/Ann Arbor — 

Gemphire Therapeutics is laying off five, including two executives, as the company grapples with clinical trial setbacks for its lead drug candidate.

Chief Financial Officer Jeffrey Mathieson and Chief Medical Officer Lee Golden have left Livonia, MI-based Gemphire (NASDAQ: GEMP), though the company says Mathieson agreed to consult with the company on financial and accounting matters for eight months. President and CEO Steve Gullans took on Gemphire’s financial duties as of Sept. 18, the company said. Gemphire added that the layoffs will help the company conserve cash as it works to gather the information the FDA needs in order lift the partial clinical hold on its drug, gemcabene.

Shares of Gemcabene dipped nearly 3 percent to $2.22 Tuesday morning.

Gemphire has been testing gemcabene as a treatment for dyslipidemia, high levels of lipids in the blood that can lead to the buildup of plaque in the walls of the arteries. The company has also been testing the drug as a treatment for nonalcoholic fatty liver disease, and its more serious form, nonalcoholic steatohepatitis.

Gemcabene is in a class of drugs that bind to peroxisome proliferation-activated receptors (PPAR) that regulate genes governing the storage of fats, glucose metabolism, and inflammatory responses. Since 2004, the FDA has subjected drugs in this class to partial clinical holds due to preclinical data suggesting that these drugs cause cancer in rodents, Gemphire says in its securities filings. Gemphire has conducted a two-year animal study assessing these risks—the FDA’s requirement for lifting partial clinical holds on PPAR drugs. But Gemphire said in its second quarter financial report that the FDA is asking the company to provide more data from yet another preclinical study.

The additional preclinical data aren’t expected until the second quarter of next year. Gemphire can’t plan for a Phase 3 study in dyslipidemia until it submits the data and gets the partial clinical hold lifted. Dyslipidemia appears to be the only path forward for the drug. Last month, an independent board monitoring Gemphire’s Phase 2 clinical trial in non-alcoholic fatty liver disease recommended that the study be terminated after an early look at the study data suggested the company’s drug was not working. The review found that the first three patients treated in the study showed an increase in liver fat, suggesting that their disease was worsening rather than improving. Other patients enrolled in the study were taken off the Gemphire drug.

The layoffs are expected to cost Gemphire approximately $1.4 million, which includes severance payments, stock options, and continued health insurance coverage. Most of those charges will be recorded in the fourth quarter of this year, Gemphire said.

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