Rare disease biotech Orphazyme is laying off two-thirds of its staff, a move that comes 10 days after the FDA turned down the company’s lead drug candidate.

Copenhagen-based Orphazyme isn’t giving up on the drug, arimoclomol. In announcing the layoffs Monday, Orphazyme said the corporate restructuring saves cash and allows the company to focus its remaining resources on securing regulatory approval for the drug in Europe and assessing the drug’s future prospects in the U.S.

Orphazyme did not specify the breakdown of the layoffs, but in anticipation of FDA approval of arimoclomol the company had been adding workers tasked with preparing for and executing a commercial launch. At the end of last year, Orphazyme employed 141, up from 85 employees at the end of 2019, according to the company’s annual reports. Last year’s headcount included 33 in pre-commercial and commercial roles. Those workers, along with some in other departments, are likely the ones whose jobs were cut.

Arimoclomol is intended to treat disease by leveraging “heat shock” proteins, which are produced by the body to protect against cellular toxicity from misfolded proteins, protein aggregation, and lysosomal dysfunction. The Orphazyme drug is designed to cross the blood-brain barrier and selectively amplify heat shock proteins. The lead disease target is Niemann-Pick disease type C, a type of lysosomal storage disorder that involves problems with the body’s ability to process and recycle fats. The disease leads to tissue damage, including brain tissue. Symptoms include difficulty swallowing, problems with speech and cognition, and loss of motor coordination. The disease has no cure and typically becomes fatal by the time patients reach their 20s.

The main goal of a 50-patient Phase 2/3 clinical trial was to assess the disease’s progression according to a scale that has five measures of Neimann-Pick disease type C. The improvement in clinical trials was not enough to make the clinical trial a success. Statistical significance was achieved only when excluding three patients who have rare genetic mutations predictive of an early onset and rapid progression of Neimann-Pick type C, Orphazyme said in regulatory filings.

According to Orphazyme, the FDA’s rejection letter asked for more data to substantiate the company’s interpretation of the results from the five-domain assessment scale, in particular the measure of swallowing. The agency also asked for more data, beyond the single Phase 2/3 study, to support the drug’s risk-benefit assessment.

On Monday, Orphazyme announced 36-month data during the Parseghian Scientific Conference for Neimann-Pick Disease Type C Research showing the durability of arimoclomol . Those results showed that patients continued to show benefit, according to the same five-domain scale that was used to assess the drug in Phase 2/3 testing. A total of 33 patients have completed up to 36 months of treatment. Adverse events in this open-label study were comparable to what was observed in the double-blind clinical trial.

The corporate shakeup is not a surprise. In the announcement of the FDA rejection, Orphazyme CEO Christophe Bourdon said the company will need to “reduce our costs substantially and freeze all company efforts not related to clinical and regulatory activities to support approval for [Neimann-Pick disease type C].”

The Committee for Medicinal Products for Human Use is expected to issue an opinion on the drug in the fourth quarter of this year. A European Medicines Agency decision could follow in the first quarter of next year.

In addition to the staff layoffs, three Orphazyme board members are stepping down. The company said that Rémi Droller, Martijn Kleijwegt, and Anders Hedegaard will resign effective June 30 and will not be replaced. The remaining board will have six members. Orphazyme said that it expects its cash position by the end of the year will be 50 million Danish krone, down from a projected 350 million Danish krone.

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