Some biotechs feel forced to lay off staff as part of necessary financial belt-tightening. Others do it to signal that the end is nigh. In the case of Oncorus, it looks like the second option.
The RNA-focused company is reducing its head count by 55 people, “representing substantially all of Oncorus’ workforce,” according to a postmarket release Thursday. All desks are expected to be clear by August.
Heading out the door will also be CEO Ted Ashburn, M.D., Ph.D., Chief Operating Officer Stephen Harbin and Chief Medical Officer John Goldberg, M.D. Ashburn will remain on the company’s board of directors, however, while interim Chief Financial Officer Alexander Nolte will retain his position.
The board made the drastic decision in response to “challenges associated with raising additional capital and pursuing strategic alternatives to secure additional funding, including current market conditions.”
With the company hollowed out at all levels, it’s hard to envisage how the biotech will continue as a going concern, and Oncorus admitted as much in the release.
“Despite cost-savings measures associated with the workforce reduction, the company anticipates that its existing cash and projected cash flows will not be sufficient to meet its working capital and operational needs beyond the third quarter of 2023,” Oncorus said. “The company cannot currently provide any assurance that it will be able to secure sufficient liquidity to fund its operations beyond that date.”
The biotech included the boilerplate industry wording about being open to “all available strategic options” to maximize shareholder value. But ultimately, if a transaction can’t be secured, the company will face bankruptcy and an “orderly wind down.”
Things started to go wrong back in November 2022, when Oncorus canned its herpes simplex virus drug ahead of a planned phase 1 readout from a study in combination with Keytruda in solid tumors. The pipeline contraction came with a head count reduction of 20%, with remaining employees solely focused on developing a self-amplifying RNA candidate dubbed ONCR-021.
As of its latest earnings report last week, the company had still been planning to make an IND submission for the candidate in mid-2023 “subject to receipt of additional funding.” The idea was to enter the drug in trials for non-small cell lung cancer, renal cell carcinoma, melanoma and hepatocellular carcinoma.
But money has been running low. Oncorus was already predicting that the $45 million in cash and equivalents it ended March with would only last until the third quarter of the year.
Oncorus is far from the only biotech to find itself in such dire straits in 2023. Despite a flurry of dealmaking injecting some much-needed energy into the sector in recent months, we’ve already seen Sorrento Therapeutics and Athenex file for bankruptcy, Talaris Therapeutics let go of 95% of its employees, and Vedere Bio II and Vyant Bio begin winding down operations.