FibroGen's cost-cutting search spurs 104 layoffs while ImmuneID also restructures

FibroGen had teased painful cost-cutting measures less than a month ago after flunking a late-stage lung disease trial. Now, the full extent of the difficult decisions is coming into focus.

The company announced that it was laying off 32% of its staff, or 104 employees, as it tries to financially rebound and clinically retool following a phase 3 flop. FibroGen is bracing for up to $15 million in expenses related to the layoffs, stemming from severance pay and benefits. Most of the restructuring is scheduled to occur during this quarter, with the majority expected to be completed by the first quarter of 2024. These cuts are projected to save the company up to $35 million annually and will contribute to extending the cash runway until 2026.

“The Company would like to extend its tremendous gratitude to these employees, not only for their contributions to the strong workforce and culture at FibroGen, but to their large part in the progress we have made, and continue to make, in science and the biotechnology industry,” the company said in a July 19 filing with the Securities and Exchange Commission.

Layoffs seemed on the horizon after two recent phase 3 failures for pamrevlumab forced the company to consider a “significant cost reduction effort in the U.S.” The company didn’t elaborate at the time, but a spokesperson said it’d be working through these decisions in the “coming weeks.”

Pamrevlumab started off June poorly, failing to improve function in patients with non-ambulatory Duchenne muscular dystrophy in a phase 3 trial. A few weeks later, the drug flopped on the primary endpoint in another phase 3 trial as a treatment for idiopathic pulmonary fibrosis. In May, approved med Evrenzo failed to show value as an anemia treatment in patients with myelodysplastic syndromes. Astellas has ownership of the drug in Europe and Japan, and, while FibroGen has received a green light in China, regulators in the U.S. have not budged.

Across the country in Massachusetts, a smaller biotech is also restructuring. Some employees at Arch Ventures Partners-backed ImmuneID took to LinkedIn to disclose they’d been laid off, which the company described in a statement as “corporate restructuring designed to align and extend current cash resources.” The news was first reported by Endpoints News.

The cost cutting is to help afford clinical development of a lead asset to treat systemic sclerosis. ImmuneID said it’s also on the hunt for partnerships to “advance the therapeutic modality.”