Axcella reduces workforce by 85%, prioritizes long Covid drug research

After missing its primary goal in Phase IIa trials for its long Covid drug, Axcella Health announced Wednesday that it’s cutting 85% of its workforce, has hired a bank to explore strategic alternatives, and is reshuffling its pipeline.

Bob Crane

As part of the restructuring, CFO Bob Crane and chief people officer Virginia Dean are leaving the biotech, and the company is now exploring “a range of strategic alternatives to maximize shareholder value,” including working with an investment bank — often a sign that it will sell itself or seek last-resort financing.

Its main drug candidate is called AXA1125, which the company has been studying in the liver disease NASH as well as for a long Covid therapy. It will now put all of its bets on long Covid, with the hope that signals it saw in NASH trials could provide some level of benefit to long Covid patients.

Virginia Dean

The company said it only has the capital to keep the lights on into the first quarter of 2023, based on earnings from August.

AXA1125 missed the primary endpoints in its Phase IIa trial: phosphocreatine recovery rate after moderate exercise. But the company said it saw promising clinical signs from the drug with patients’ mental and physical fatigue and would push it forward into Phase III.

There is currently no treatment for long Covid, a disease where chronic fatigue is a common indicator. Axcella cited reports from a recent Congressional subcommittee on long Covid that detailed the impacts of the disease on people and the economy: one million Americans have been pushed out of work, and the disease contributed to approximately $1 trillion in lost earnings and $529 billion in increased medical spending.

Its NASH trial, a Phase IIb study, found that the drug was associated with reduced liver stiffness. Liver stiffness is associated with a Covid-19 infection and can continue even after the initial infection period in long Covid, resulting in long-term damage, according to a study based on patients at Massachusetts General Hospital between 2019 and 2022.

Margaret Koziel

“We believe AXA1125 could be an important first line agent for the large and unserved patient populations with Long COVID Fatigue and NASH, and with our current capital constraints, we are realigning our efforts to best preserve the value of our programs and platform,” Axcella CMO Margaret Koziel said in a statement.

Axcella is one of only a dozen or so small biotechs looking at the condition, including Tonix Pharmaceuticals. Companies like Atea and PureTech Health stopped looking into the mysterious condition after failed trials.

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