Frosty funding forecast forces Finch to stop phase 3 trial, lay off 95% of staff and seek buyers for assets

Finch Therapeutics is throwing in the towel. Shortly after getting its phase 3 clinical trial back on track, the microbiome biotech has decided to stop the study and seek to offload assets in the face of a frosty funding forecast and slow enrollment.

The Massachusetts-based biotech has endured a tough few years amid concerns that its therapeutics, which are made from stool samples, could infect patients with COVID-19. Finch looked to have finally resolved the problems late last year, enabling it to restart a phase 3 Clostridium difficile trial, but has now stopped the CP101 study and outlined plans to lay off 95% of its staff in light of a long list of issues. 

Finch told investors the actions reflect its “outlook for securing additional capital or partnerships to help fund the CP101 program through important milestones, slower than anticipated enrollment in the PRISM4 trial, the harmful impact of ongoing unauthorized use of the company’s intellectual property and broader sector trends.” 

With the scrapping of the CP101 study marking the end of Finch’s R&D ambitions, the skeleton crew left to run the biotech after the layoffs will focus on “realizing the value of its intellectual property estate and other assets.” The biotech’s list of assets include CP101, preclinical programs in ulcerative colitis, Crohn’s disease and autism spectrum disorder, and more than 70 patents. 

Finch’s problems date back to the start of the pandemic. Seeing a risk that stool samples used to make CP101 could carry COVID-19, the FDA put a clinical hold on Finch and required new testing protocols for materials donated after December 2019. Finch began dosing participants in its phase 3 trial in November 2021 only for the FDA to later request additional information about its SARS-CoV-2 screening protocols.

The request turned 2022 into another lost year for Finch. With the key study in limbo, Finch made two rounds of layoffs and pulled back from other programs to preserve its cash. Dosing restarted in October, offering the biotech a rare positive moment amid a sea of setbacks including the loss of a Takeda deal.

With the top-line phase 3 data due in the first half of 2024 and its cash runway forecast to run into the second quarter of 2024, Finch faced a fraught funding situation as enrollment resumed. In November, the biotech revealed it was evaluating possible modifications to the clinical trial in a bid to bring forward the data drop and conserve its cash.