Devimistat

Rafael has pressed reset, curtailing early-stage R&D efforts in a new strategy to stay afloat Rafael Holdings is laying off staff and cutting short early-stage R&D efforts that were touted as the company’s main focus less than a year ago, all in the name of saving cash and seeking out other investment, acquisition or in-licensing opportunities. The New Jersey-based umbrella company continues to invest in drug developer Cornerstone Pharmaceuticals, formerly known as Rafael Pharmaceuticals, a cancer metabolism-based biotech that developed Rafael’s former lead prospect devimistat before running into phase 3 failures last year. Now, Rafael Holdings’ board has decided to curtail early-stage development efforts altogether, including pre-clinical research at another of its subsidiaries, Barer Institute. A spokesperson for Rafael told Fierce Biotech that "under 10" employees would be made redundant. Rafael expects to incur severance charges of about $500,000, according to Nov. 9 filings with the Securities and Exchange Commission.  "We would like to acknowledge our R&D colleagues and scientific advisors and thank them for their dedication to our programs,” Rafael Holdings CEO Bill Conkling said in a post-market release Nov. 15. The former Novartis leader holds a track record of bringing oncology drugs to market, joining Rafael last spring, initially as chief commercial and business officer. Conkling moved to Rafael at the same time as former CEO Ameet Mallik. Then, in late November, both leaders were set to depart following the phase 3 failures of devimistat in pancreatic cancer and acute myeloid leukemia. However, Rafael later had a change of heart, tapping Conkling to helm the biotech in February as Mallik departed. The clinical failures derailed Rafael’s plans to become a commercial-stage oncology company and prompted other C-suite departures, including Chief Compliance and Ethics Officer Melissa Lozner.     At the time, the remaining execs were tasked with revitalizing Rafael by focusing on its early-stage pipeline. Now, the company will once again pivot in efforts to stay afloat amid biotech’s challenging market. "We believe that our strong balance sheet affords us the opportunity to focus on strategic business development efforts at a time of substantive dislocation in the biotech sector with the goal of acquiring, in-licensing or investing in later-stage assets with the potential to achieve meaningful clinical milestones, which if successful, could improve the lives of patients and increase value for our shareholders," Conkling said in the release. As of July 31, Rafael Holdings had $63.2 million in cash, cash equivalents and marketable securities. The company pulled in an additional $33 million from a real estate sale that included an 800-car parking garage in August.      

In the months since Rafael Holdings’ lead drug flunked two Phase III trials — in metastatic pancreatic cancer and acute myeloid leukemia — the little biotech has vowed to carry on with an early-stage pipeline. But the execs in charge are now cutting that off, too. Rafael will curtail its early-stage efforts , including preclinical research, the company disclosed, in a move to reduce spending and focus on finding clinical-stage programs from outside that it could potentially invest in, acquire or in-license. UPDATED: Rafael Holdings guts its top leadership, including short-tenured CEO, as cancer fiasco spurs a shakeup The company wrote in an SEC filing that the move is expected to “ incur severance charges in the amount of approximately $0.5 million,” but didn’t specify how many employees may be laid off. Shares on NYSE $RFL traded up slightly after hours to pass the $2 mark, a fraction of its peak last summer, when it was trading close to $63. Ameet Mallik Rafael Holdings had placed high hopes on devimistat, which was originally developed through its subsidiary Rafael Pharmaceuticals. The drug was designed to target enzymes in cancer cells’ mitochondria, thereby cutting off their energy. In fact, it was so promising that Rafael Holdings wooed Ameet Mallik from Novartis Oncology to become CEO. Bill Conkling The disappointing Phase III results, announced a year ago, triggered a major shakeup at the top of the company. As Mallik returned the reins to founder Howard Jonas, Rafael Holdings bid farewell to a number of top execs, including then-chief commercial and business officer Bill Conkling — before later announcing that Conkling will actually remain with the company and take up the CEO role. Under Conkling, Rafael has sold a building in New Jersey, complete with a garage, for $33 million in cash. That added to its reserves of about $63 million as of July 31. Small biotech whiffs badly in PhIII pancreatic cancer study, prompting halt of another late-stage trial In a statement, Conkling said the “strong balance sheet affords us the opportunity to focus on strategic business development efforts at a time of substantive dislocation in the biotech sector,” with an eye on programs that are near clinical milestones. Rafael Pharmaceuticals, meanwhile, is still developing devimistat for several rare cancer types under a new name, Cornerstone Pharmaceuticals.