The layoffs at Memphis-based GTx Inc., announced Tuesday, Oct. 1, came with the resignation of the drug manufacturing company’s chief financial officer and pay cuts for GTx’s top three leaders.
Mark Mosteller announced his resignation as vice president, chief financial officer and treasurer on Sept. 27, the same day a committee of the company’s board of directors announced the plans for the workforce reduction.
Mosteller, who has been a senior officer of GTx for more than 12 years, leaves at the end of the calendar year.
The same compensation committee of the board of directors also announced salary reductions effective Oct. 1 for CEO Mitchell S. Steiner, President and Chief Operating Officer Marc S. Hanover and Vice President and Chief Scientific Officer James T. Dalton.
Steiner takes a $113,000 cut in his $565,110 base salary while Hanover’s $491,646 base pay is cut by $98,329. Dalton’s base pay goes from $430,560 to $375,000.
Steiner and Hanover are also not eligible for retention cash bonuses the compensation committee granted other employees or retention equity awards. The bonuses and awards are part of an effort by the company to keep the employees it deemed “essential” as GTx charts a course through what started as a promising year.
Much of that promise centered on enobosarm, the most advanced of the experimental drugs and products GTx is developing. The drug is an experimental treatment aimed at preventing and treating muscle wasting in those with non-small cell lung cancer.
In January, the Food and Drug Administration announced it was reviewing enobosarm in a fast-track program. The fast track means a faster approval of drugs that treat conditions or diseases for which there are few other therapies. It also means more meetings and correspondence with regulators as well as a faster review from the FDA if the trials go well and the drug developer then seeks approval for widespread use in the U.S.
The drug’s goal is to allow patients to better tolerate chemotherapy treatments for a longer period of time. Non-small cell lung cancer accounts for 85 percent of all lung cancers.
As the year began, GTx’s market research suggested peak U.S. sales for enobosarm could be in the neighborhood of $750 million.
But in August, enobosarm did not meet its goals in two late-stage clinical trials.
The specific goals in the trials were for lean body mass and physical function and, when enobosarm missed the goals, GTx stocks plunged in response.
That set the stage for the layoffs and pay cuts that followed.
The company expects to complete the downsizing, which will impact 53 “non-executive employees,” by Oct. 31, according to a filing Tuesday with the Securities and Exchange Commission.
The company said affected employees will be eligible to receive “specified severance payments” based on level and years of service with the company, and the continuation of group health insurance coverage through Oct. 31, 2013.
As GTx determines its next move with enobosarm, it is also developing Capesaris, a hormonal therapy to treat men with metastatic castration resistant prostate cancer.
Last year, the company sold rights and assets related to Fareston, a drug for the treatment of metastatic breast cancer in postmenopausal women.
The company’s work with Capesaris demonstrates the sudden peaks and valleys that are part of the terrain for companies developing experimental drugs. If the drugs make it through trials and are approved for widespread use they can generate large sales figures for the makers and their investors that easily eclipse the large amounts invested in the development of the drugs. But if they don’t make it through trials or encounter other obstacles and the company is publicly traded, as GTx is, it is reflected quickly in stock prices, which can lead to a swift reaction by the company to assure investors.
GTx began discussions with the Food and Drug Administration in April 2012 about resuming trials on Capesaris. Just months earlier, FDA regulators had ordered GTx to stop clinical trials on the drug citing an increased risk of blood clots. GTX wanted to resume trials with lower doses of the drug and instead of using it as a primary treatment, use Capesaris as a secondary treatment.
Daily News reporter Jennifer Johnson Backer contributed to this story.