Nuvation to cut workforce by 35% as it scraps lead drug program

Dive Brief:

• Nuvation Bio, a New York-based biotechnology company, intends to lay off a little more than a third of its employees and cut other costs in response to recent setbacks for its most advanced drug program.
• Nuvation, which focuses on cancer research, said the program is being discontinued because of an “internal risk-benefit analysis” that raised doubts about its viability. The Food and Drug Administration had paused parts of a few clinical studies testing the drug against various tumor types, after one study found a “safety signal” in a form of eye inflammation known as uveitis.
• The FDA asked Nuvation to create a plan to address this safety concern, but, according to the company, such a plan would be “difficult to craft … without significant further research.” The company said it will now concentrate resources around a less advanced program called NUV-868, in addition to its small molecule drugmaking platform. Nuvation estimates the expected cost savings should extend its cash runway through 2028.

Dive Insight:

Nuvation’s founder, David Hung, is a biotech industry veteran perhaps best known for creating Medivation, the company that developed the prostate cancer drug Xtandi and later sold to Pfizer for $14 billion. So, when Hung formed Nuvation in 2018, the startup and its slate of experimental cancer drugs quickly attracted attention from a variety of deep-pocketed investors.

In 2019, Nuvation raised $275 million through a Series A fundraising round that was led by Omega Funds and saw participation from Aisling Capital, ECOR1 Capital and Perceptive Advisors, among others. A year later, Nuvation raised another half a billion dollars by going public through a reverse merger with Panacea Acquisition Corp., a “blank check” company sponsored by EcoR1 Capital.

By the end of March 2022, Nuvation had $106 million in cash and cash equivalents and just north of $630 million in marketable securities. In May, while reporting first quarter earnings, the company said its lead program, dubbed NUV-442, was on track to hit multiple milestones this year.

But nearly four months later, the program is now set for termination.

Nuvation had been testing NUV-442 — either alone, or in combination with chemotherapy or Xtandi — across several cancer types, including breast, prostate, solid tumors and a kind of brain tumor called a glioma. In late June, the company disclosed that it had stopped enrolling new study participants after certain patients who received its drug experienced uveitis.

Nuvation, after an analysis of the program that factored in FDA feedback, appears to have concluded that addressing this safety concern presents too great of a challenge.

“Given that the etiology of uveitis associated with NUV-422 is not understood and that its development appears unpredictable, the company believes that it would be difficult to craft an effective mitigation plan without significant further research,” Nuvation said in a statement Monday.

Shares of the biotech were down more than 7% late Monday morning, to trade near $2.50 apiece.

In a regulatory filing, Nuvation said the newly announced layoffs would affect 30 employees, and that the workforce reduction would lower annual operating expenses by approximately $11.8 million. Meanwhile, the larger restructuring would, by the company’s estimates, incur aggregate charges of almost $6 million, which would be mostly recorded in the third quarter.

Moving forward, Nuvation says it will prioritize NUV-868, which targets a type of cancer-linked protein called BET. The company said enrollment is ongoing in an early-stage study testing the drug alone, though there are plans for other studies testing it in combination with active ingredients in Xtandi and AstraZeneca’s Lynparza.

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