Genocea Biosciences has hung a "for sale" sign on its phase 3-ready herpes drug and committed to axing 40% of its staff. The moves refocus Genocea as an early-phase player in the hot neoantigen cancer vaccine sector but got short shrift from investors, who drove its stock down more than 50%.
Cambridge, Massachusetts-based Genocea looked all set to move herpes immunotherapy GEN-003 into phase 3, possibly after finding a partner for the program. Genocea cleared a path into a late-phase trial with phase 2b data that, while marred by viral shedding results, the biotech presented as sufficient to justify further development.
Now, Genocea has decided it won’t carry out the work.
Genocea took the action after accepting “a large and long phase 3 program are beyond [the company] alone,” CEO Chip Clark told Xconomy.
The decision will cost about 35 people their jobs. The sharp reduction in headcount reflects the fact Genocea no longer needs the team it put together to take GEN-003 through the clinic as it won’t spend any more money on the program.
Genocea took the actions to go all in on its neoantigen projects, none of which have made it into the clinic and, as such, were a subplot to the biotech’s narrative until this week. Clark thinks the scope of the neoantigen opportunity and its good fit to Genocea’s capabilities justify the decision.
“With our research and development efforts now focused entirely on neoantigen cancer vaccines, we believe the power of Atlas to identify the right vaccine antigens, combined with our vaccinology expertise, gives us the opportunity to create value for our shareholders by developing best-in-class vaccines for cancer patients and achieving leadership in this exciting field,” Clark said in a statement.
Shareholders disagreed. Genocea’s stock fell more than 50% in after-hours trading following the news. Concerns include the implications for Genocea’s chances of recouping any of its investment in GEN-003 and the effect the reprioritization will have on its need for more cash.
The layoffs will extend Genocea’s financial runway out to the middle of next year, by which time it will have moved its lead neoantigen candidate into the clinic but still be as much as 12 months away from generating data. That means Genocea will need to raise money before it gets data to show its neoantigen pitch works, unless a deal for GEN-003 adds significantly to its bank balance.