Larimar Drops $95M Private Financing Plans after FDA Orders Clinical Hold on Rare Disease Therapy

On May 25th, Larimar Therapeutics announced it received a formal clinical hold notification for its Friedreich’s ataxia therapies from the FDA. Days earlier Larimar had announced a private placement financing, but it will be canceled following the news. This sent Larimar’s stock crashing 45% in after-hours trading. Although it recovered during the Wednesday session, it still closed more than 33% lower.

“While the notification of a formal clinical hold is disappointing, it does not change our previously stated clinical development strategy for CTI-1601,” said Carole Ben-Maimon, MD, President and CEO of Larimar.

CTI-1601 – Protein Replacement Therapy

Larimar Therapeutics is a Pennsylvania-based biotech focusing on treating rare diseases using its proprietary protein replacement therapy. Their lead compound CTI-1601 is a recombinant fusion protein, which consists of human frataxin bound to a cell-penetrating peptide (CPP), for the treatment of Friedreich’s ataxia (FA).

Frataxin is a protein that’s crucial for mitochondrial and muscular function. Patients lacking the protein can develop progressive nervous system damage, and movement problems, which can severely impair daily living. The CPP allows CTI-1601 to enter the cell and the mitochondria to reestablish normal functioning.

When CTI-1601 completed Phase 1 clinical trials, Larimar had announced it would raise $95 million in a private placement financing to support its clinical development. The plan was to sell over 7 million shares at around $13.43 per share, which was its closing price on May 20, 2021. Due with the clinical hold, the company announced that it wouldn’t go ahead with the financing.

The hold comes after Larimar reported that several non-human primates died during a 180-day toxicology study aimed at studying the effects of extended treatment with CTI-1601. The FDA requested a full report from the study and no additional clinical trial can begin until the agency notifies.

In a Phase 1 clinical trial, daily doses of CTI-1601 was well tolerated up to 100 mg for 13 days. No serious adverse events were reported during the trial. Two of the doses tested (50 and 100 mg) showed an increase in frataxin in buccal cells.

“Patient safety is our top priority, and we will continue with our plan to complete the NHP toxicology study, assess the data, and discuss that data with FDA to obtain their consent prior to initiating our Jive and pediatric MAD trials. Based on all of the information we have regarding CTI-1601’s safety profile to date, we continue to believe there is a path forward toward the initiation of our Jive and pediatric MAD trials,” Ben-Maimon added.

“However, due to the additional regulatory requirements that come with responding to a formal clinical hold, we believe there is a possibility that the initiation of these trials may be delayed into 2022. Regarding the termination of the previously announced private placement financing, as of March 31, 2021, we have $81.4 million in cash and investments, which provides cash runway through the first half of 2022.”

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Daniel Ojeda