Gemphire Therapeutics Inc (NASDAQ:GEMP) stock slumped on Tuesday following its announcement that its board of directors approved a reduction in its workforce by one-third that included letting go of the chief financial officer to cut costs and conserve its cash resources.
The decision to cut the workforce was made after the US Food and Drug Administration (FDA) asked for more pre-clinical data to schedule an end-of-Phase 2 meeting for the drug gemcabene to target dyslipidemia indications which would be aimed at elevated plasma cholesterol, triglycerides (TGs), or both, or a low HDL cholesterol level that contributes to the development of atherosclerosis.
The workforce reduction as of September 18, 2018, includes five employees representing about 33% of the company’s workforce. Two of the five employees include Jeffrey Mathiesen, the company’s chief financial officer, and Lee Golden, its chief medical officer.
"The workforce reduction is a necessary action to conserve capital. We remain confident in the potential value of gemcabene as a breakthrough therapy for dyslipidemia and are committed to working with the FDA to complete the necessary steps to lift the partial clinical hold,” said Gemphire CEO Steven Gullans.
Shares of Gemphire fell almost 5.7% to $2.16, having earlier dropped to a session low at $2. The stock had once traded at a 52-week high of $11.43.
As a result of the workforce reduction, the company expects to record severance related charges totaling approximately $1.4 million, which includes one-time cash severance payments of $0.5 million, a non-cash charge of approximately $0.9 million related to the accelerated vesting of outstanding stock options for certain affected employees and $26,300 for continued health insurance coverage.
Gemphire is a clinical-stage biopharmaceutical company that is committed to helping patients with cardiometabolic disorders. The company is based in Livonia, Michigan.