Following a 90% drop in share price due to an FDA rejection and a warning letter over Applied Therapeutics’ conduct during a clinical trial, the biotech’s CEO has stepped aside.
Applied Therapeutics CEO Shoshana Shendelman has stepped down after a month of bad news, including an FDA rejection and a warning letter over the biotech’s conduct during a clinical trial. In addition, Applied is reevaluating its regulatory applications for lead asset govorestat and pushing back planned filings for the drug.
“While we think the management turnover was a necessary step in beginning to rebuild the company’s reputation and credibility in the eyes of investors, Applied’s business update makes it increasingly unclear when it could begin generating revenue,” wrote William Blair on Monday morning.
Shendelman was one of the company’s founders. She will also resign her role as board chair. Taking her place on an interim basis is CFO Les Funtleyder, who will serve in both roles for the moment.
“While we complete the important work to best position govorestat, we are focused on execution and ensuring the highest standards of integrity and quality,” Funtleyder said in a statement. He took over the CFO role last year but has served on Applied’s board of directors since 2016.
Applied has also brought on John Johnson as chair. He has previously held leadership roles at Johnson & Johnson, Eli Lilly and Pfizer.
The leadership change comes a few weeks after Applied was hit with a double dose of bad news. At the end of November, the biotech’s rare disease drug govorestat was rejected by the FDA. The agency cited deficiencies in the application, which sought approval for the drug to be used to treat classic galactosemia.
Then a few days later, the FDA sent a warning letter to Applied regarding “issues” with the biotech’s conduct during the clinical trial for govorestat. The agency flagged concerns with electronic data capture, objectionable conditions and significant findings documented during an inspection conducted in the spring. The FDA took the unusual step of making the letter public.
Meanwhile, Applied’s shares have nose dived from over $10 a month ago, to just 88 cents at close on Friday. The fall represents a 90% decline.
As for govorestat, Applied provided an update that said it was still evaluating the FDA’s complete response letter rejecting the drug. While Applied had previously said it would seek a meeting with the agency immediately, the latest update says the new leadership will evaluate next steps on whether to request that sit down.
But Applied is moving to withdraw the marketing authorization application to the European Medicines Agency for govorestat “as more time is needed to acquire further data to support,” according to the release.
The company will also reevaluate an ongoing program for govorestat in sorbitol dehydrogenase (SORD) deficiency and discuss next steps with the FDA. Applied had been planning to request an accelerated review in the indication. That application had been expected in the first quarter of 2025, but Applied now says it will be submitted after that point.
William Blair noted that while bringing the FDA in to discuss the SORD application could buoy its chances of approval, it does delay the submission.
Applied also has a short cash runway of $98.9 million as of September 30, the analyst firm noted. That means the company is at “increased financial risk.” The stock will likely remain in the red for the foreseeable future until a more concrete path to revenue is presented, William Blair said.
