Axcella announces corporate restructuring, will reduce workforce by 85%

Axcella Therapeutics announced a repositioning of its strategy to focus on Long COVID and realize value from its platform and current programs. The company has initiated a process to explore a range of strategic alternatives to maximize shareholder value and is working with an investment bank to act as a strategic advisor for this process. As part of this repositioning, and to align with its current capital constraints, the company is announcing a series of organizational and program updates, including a reprioritization of its programs for Long COVID Fatigue and Nonalcoholic Steatohepatitis and a restructuring of operations to support its streamlined set of priorities. Axcella will reprioritize its efforts to focus on the significant unmet need and opportunity presented by Long COVID. Axcella’s Phase 2a clinical trial results demonstrate the potential of AXA1125 to play an important role in treating patients suffering from Long COVID. Axcella’s Phase 2a trial has been the only controlled trial to demonstrate statistically and clinically relevant improvement in fatigue in patients with Long COVID. Axcella is engaged in ongoing and productive reviews with regulators in the U.S. and Europe, and the company is aiming to advance its Long COVID Fatigue program into a potential registration trial. Axcella will be discontinuing its ongoing Phase 2b clinical trial of AXA1125 in NASH, while keeping the option to revisit this program should resource availability change. In September, Axcella reported positive data from a preplanned interim analysis from their trial of AXA1125 in NASH. At 24 weeks, there were statistically significant and clinically relevant improvements in the liver stiffness measurement (LSM) compared to placebo in the high dose arm for all subjects and statistically significant improvements in other non-invasive tests of liver fat and stiffness. Axcella’s pre-clinical and clinical trial data for NASH demonstrated relevant activity and established a notable safety record for AXA1125, which the company applied to its clinical trial for Long COVID Fatigue. Axcella is realigning the organization to correspond to this shift in strategy and reprioritization of its programs, reducing its workforce by 85 percent, retaining certain employees to execute the strategic process. Among the departing employees are Bob Crane, Chief Financial Officer, and Virginia Dean, Chief People Officer. Axcella reached an agreement with SLR Investment Corp. to paydown the debt obligations of the previous agreement. With respect to the company’s plans, no assurances can be made as to whether a strategic transaction will be recommended by the Board of Directors, and the Company does not intend to discuss developments with respect to the evaluation process unless a transaction is approved, or disclosure otherwise becomes appropriate.