UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 2015
VITAL THERAPIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36201 | 56-2358443 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 15010 Avenue of Science, Suite 200 San Diego, CA |
92128 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (858) 673-6840
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.05. Costs Associated with Exit or Disposal Activities.
As previously announced on August 21, 2015, Vital Therapies, Inc.'s (the "Company") VTI-208 clinical trial did not meet its primary and secondary endpoints. In light of these results, on August 31, 2015, the Company's Board of Directors approved a staff reduction plan in order to reduce operating expenses and conserve cash resources. The plan is expected to include a workforce reduction in force of 32 people. The staff reduction plan is expected to be completed by the end of 2015.
The Company has offered severance benefits to the affected employees, including cash severance payments, limited reimbursement of medical insurance premiums, outplacement services, and an extension of the post-termination option exercise period for the vested portion of the affected employees' outstanding stock options. Each affected employee's eligibility for the severance benefits is contingent upon such employee's execution (and no revocation) of a separation agreement, which includes a general release of claims against the Company.
The Company currently expects to recognize approximately $1.2 million in costs associated with the staff reduction plan in the third quarter of 2015, including $0.9 million in cash charges consisting of severance payments and the benefits specified above. These cash restructuring charges are expected to be paid in the third and fourth quarters of 2015. Non-cash, stock-based compensation costs for the extension of the post-termination option exercise period are estimated to be approximately $0.3 million and will be recognized in the third quarter of 2015.
A copy of a press release regarding the above-referenced matters is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No.
Description
99.1
Press Release dated September 3, 2015.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements relating to the staff reduction plan, including the future charges expected to be incurred in connection therewith, and related statements. Forward-looking statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by such forward-looking statements. Accordingly, these forward-looking statements do not constitute guarantees of future performance and you are cautioned not to place undue reliance on these forward-looking statements. Risks and uncertainties include, but are not limited to, possible changes in the amount of charges associated with the staff reduction plan, including that the Company may incur unanticipated charges and expenses or make cash payments that are not currently contemplated; the Company's ability to reduce its operating expenses and conserve cash; the risk that further analysis of the VTI-208 data does not support and/or contradicts our preliminary findings; the risk that the VTI-208 data will not support a proposed new clinical trial; the risk that the FDA does not approve a new clinical trial plan; delays in meeting with FDA or completing those meetings; the success or failure of a new clinical trial, if any; the uncertainties inherent in Vital Therapies' clinical and development programs, including, without limitation, Vital Therapies' ability to adequately demonstrate the safety and efficacy of the ELAD System, future clinical results, which may not support further development of the ELAD System, and challenges related to conducting pivotal clinical trials, including, but not limited to, the impact of VTI-208, failure to achieve favorable results in clinical trials, the successful opening and the continued participation of clinical sites and their ongoing adherence to protocols, assumptions regarding enrollment rates, timing and availability of subjects meeting inclusion and exclusion criteria, changes to protocols or regulatory requirements, the ability to comply with and meet applicable laws and regulations, and unexpected adverse events or safety issues; the ability to obtain regulatory approval for the ELAD System; and the sufficiency of funding. There can be no assurance that data from any of our clinical trials will be sufficient to support an application for marketing in any country or that any such application will ever be approved. These and other risks regarding our business are described in detail in our Securities and Exchange Commission filings, including in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. These forward-looking statements speak only as of the date hereof and Vital Therapies, Inc. disclaims any obligation to update these statements except as may be required by law.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VITAL THERAPIES, INC.
(Registrant) |
||
| September 3, 2015
(Date) |
/s/ MICHAEL V. SWANSON
Michael V. Swanson Chief Financial Officer |
EXHIBIT INDEX
|
Exhibit No. |
Description |
|
99.1 |
Press Release dated September 3, 2015. |
EXHIBIT 99.1
SAN DIEGO, Sept. 3, 2015 (GLOBE NEWSWIRE) -- Vital Therapies, Inc. (Nasdaq:VTL), a biotherapeutic company developing ELAD®, a cell-based therapy targeting the treatment of liver failure, today announced a workforce reduction of approximately 30% and plans to institute across the board expense reductions to conserve capital. The Company expects to record personnel-related severance charges of $1.2 million, primarily in the quarter ending September 30, 2015.
"As we evaluate our next steps, it is necessary to conserve cash while we continue our analysis of the VTI-208 clinical trial data to possibly support the design and implementation of a new clinical trial to confirm what we believe to be promising pre-defined subset and post hoc analyses," said Terry Winters, Ph.D., Chief Executive Officer and Co-Chairman of Vital Therapies. "This has been a difficult process, but I want to thank each and every one of our departing employees for their hard work, passion and dedication. We will not forget their contributions and we wish them well."
The Company continues to analyze the entire VTI-208 data set in order to determine the potential next steps in clinical development. In particular, the company is exploring the design of a new phase 3 clinical trial, which may limit subjects based on both Model for End-Stage Liver Disease (MELD) score and age. The Company will provide periodic updates on material developments.
With other cost savings, such as the termination of the VTI-210 and 212 clinical trials and reductions in across the board expenses, the Company has extended its anticipated cash runway, and is evaluating whether current cash will be sufficient to fund all or a major part of a possible new phase 3 clinical trial. Sufficiency of current resources will depend on a number of variables, including but not limited to, the extent to which the Company can successfully further reduce other expenses, trial design and size, and enrollment rates. The Company will provide periodic updates on material developments.
About Vital Therapies, Inc.
Vital Therapies, Inc. is a biotherapeutic company developing a cell-based therapy targeting the treatment of liver failure. The Company's ELAD System, is an extracorporeal human allogeneic cellular liver therapy. Vital Therapies, Inc. is based in San Diego, California. Vital Therapies® and ELAD® are trademarks of Vital Therapies, Inc.
About VTI-208 and VTI-208E
VTI-208 is a phase 3 randomized, controlled, open-label trial, evaluating the ELAD System in subjects with alcohol-induced liver decompensation (AILD). The primary endpoint is overall survival through at least 91 days assessed using the Kaplan Meier statistical method, and the secondary endpoint is proportion of survivors at study days 28 and 91. The trial enrolled 203 subjects over 22 months with 96 subjects randomized to the treated group and 107 randomized to the control group. VTI-208E is an extension study which assesses subject outcomes for five years after enrollment in VTI-208. Efficacy and safety data from the VTI-208 clinical trial, incorporating VTI-208E survival data through July 30, 2015, disclosed on August 21, 2015 reported the trial failed to reach its primary or secondary endpoints.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements relating to the workforce reduction, including the future charges expected to be incurred in connection therewith, other cost reduction plans our continuing analyses of the data from the VTI-208 clinical trial, including exploratory subset analyses, our plans to restructure our clinical development program, including a potential new trial and potential inclusion and exclusion criteria and study design, and related statements. Forward-looking statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by such forward-looking statements. Accordingly, these forward-looking statements do not constitute guarantees of future performance and you are cautioned not to place undue reliance on these forward-looking statements. Risks and uncertainties include, but are not limited to, possible changes in the amount of charges associated with the workforce reduction including that the Company may incur unanticipated charges and expenses or make cash payments that are not currently contemplated; the Company's ability to reduce its operating expenses and conserve cash; the risk that further analysis of the VTI-208 data does not support and/or contradicts our preliminary findings; the risk that the VTI-208 data will not support a proposed new clinical trial; the risk that the FDA does not approve a new clinical trial plan; delays in meeting with FDA or completing those meetings, the success or failure of a new clinical trial, if any; and the uncertainties inherent in Vital Therapies' clinical and development programs, including, without limitation, Vital Therapies' ability to adequately demonstrate the safety and efficacy of the ELAD System, future clinical results, which may not support further development of the ELAD System, and challenges related to conducting pivotal clinical trials, including, but not limited to, the impact of VTI-208, failure to achieve favorable results in clinical trials, the successful opening and the continued participation of clinical sites and their ongoing adherence to protocols, assumptions regarding enrollment rates, timing and availability of subjects meeting inclusion and exclusion criteria, changes to protocols or regulatory requirements, the ability to comply with and meet applicable laws and regulations, and unexpected adverse events or safety issues; the ability to obtain regulatory approval for the ELAD System; and the sufficiency of funding and our cash resources. There can be no assurance that data from any of our clinical trials will be sufficient to support an application for marketing in any country or that any such application will ever be approved. These and other risks regarding our business are described in detail in our Securities and Exchange Commission filings, including in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015. These forward-looking statements speak only as of the date hereof and Vital Therapies, Inc. disclaims any obligation to update these statements except as may be required by law.
CONTACT: Vital Therapies, Inc.
Al Kildani
Vice President, Investor Relations and Business Development
858-673-6840
akildani@vitaltherapies.com