Aussie biotech hit by double blow as failed trials trigger mass redundancies

Melbourne-based biotechnology company Cynata Therapeutics has announced the redundancy of all employee positions, including those of CEO and Managing Director, following the failure of its Phase 2 graft versus host disease (GvHD) clinical trial to achieve its efficacy endpoints.

The announcement comes shortly after a significant decline in the company’s share price in mid-June, when the ASX-listed biotech disclosed that its third-party funded knee osteoarthritis clinical trial had failed to deliver the anticipated results.

Dr Geoff Brooke, Chair of Cynata’s Board, said “This has been an extremely difficult period for the Company and its shareholders, and more broadly we recognise the impact this has had on all our stakeholders. I extend my thanks and appreciation to the staff who have worked tirelessly for many years on the development of the Cymerus technology, and I wish each of them the very best for the future.

“The disappointing clinical trial results do not reflect the professionalism and diligence that the Cynata team has displayed. I would also like to thank all of our shareholders who have supported the Company, some for a long period of time. The Board remains committed to pursuing all available opportunities and taking the actions necessary to position the Company for future success.”

GvHD is a serious complication that can occur following a bone marrow transplant, where transplanted immune cells attack the recipient’s tissues. Cynata said the Phase 2 trial results were “especially unexpected”, given the company’s previously reported Phase 1 data.

However, the company was unable to replicate the conditions of the earlier study, which focused on patients who had failed to respond to steroid treatment. The Phase 2 trial design was further complicated by the availability of Novartis’ JAK inhibitor Jakavi (ruxolitinib) which is available for patients with steroid-resistant GvHD.

The study enrolled high-risk, newly diagnosed patients with acute GvHD. None of the participants were receiving Jakavi at the beginning of the trial, as the treatment was only approved for patients with steroid-resistant disease. However, patients can meet the criteria for steroid resistance relatively quickly, typically within five to seven days.

During the trial, investigators were able to commence Jakavi if patients failed to improve or their condition deteriorated, which occurred in a significant number of cases. Under standard clinical trial protocols, patients who received second-line treatment were classified as trial failures. Cynata noted that, in at least some cases, rux may have been administered before the company’s stem cell therapy had sufficient time to demonstrate an effect.

The company will now be managed by the Board of Directors, with a reduction in Board membership. Dr Darryl Maher has resigned as a Director, while Dr Kilian Kelly will continue as a Non-Executive Director without remuneration. All remaining Board members have agreed to waive their Director fees effective immediately.

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