Freeline Therapeutics staffers could be forgiven for starting to dread quarterly financial results. Three months after disclosing plans to cut ties to 30 employees, the gene therapy biotech has outlined another round of layoffs and the narrowing of its pipeline focus in its fourth-quarter results.
In August, Freeline said that, with its cash set to run out in the second half of 2023, it was looking into how to streamline its operations. The thinking led to the sale of a subsidiary, which employed 55 people, and a round of layoffs forecast to bring the biotech’s head count down to around 100 by the end of last year. The company disclosed the changes as part of its third-quarter results in November.
Freeline quickly inhaled the breathing room created by the restructuring. With the original changes only extending its cash runway into 2024, the biotech used its fourth-quarter results to reveal another round of layoffs. The changes will reduce Freeline’s workforce by nearly 30%, shrinking its head count to 65.
The biotech is reducing its head count in conjunction with the prioritization of its pipeline. Development of FLT190, a Fabry disease gene therapy, is on pause as Freeline goes all in on its Gaucher disease type 1 candidate FLT201. Initial phase 1/2 data on the Gaucher gene therapy candidate, including safety results and enzyme activity, are due in the third quarter.
Freeline’s extended cash runway lasts into the second quarter of 2024. With the biotech’s stock trading below 50 cents, its ability to raise additional cash from investors is constrained. Encouraging phase 1/2 data may go some way to alleviating that problem, or persuade a potential biopharma buyer that Freeline, with its market cap of $30 million, is worth a flutter.
News of the latest layoffs at Freeline emerged at the same time as Tonix Pharmaceuticals provided more evidence of the constrained circumstances that biotechs find themselves in. Tonix ended December with $120 million and told investors last month that it expected its money to fund operations “into the fourth quarter of 2023, but not beyond.”
With the cash clock ticking, Tonix is stopping enrolling new patients in a phase 2 study in fibromyalgia-type long COVID and delaying the start of a post-traumatic stress disorder trial. The changes leave Tonix focused on late- and midphase trials of fibromyalgia, depression, migraine and cocaine intoxication.
This year, the biotech expects to post interim phase 2 data in depression and migraine and top-line phase 3 results in fibromyalgia. Tonix’s stock closed at $0.58 yesterday, but the stream of data drops gives it a shot at redemption.