UPDATE: Kaleido confirms layoffs, halts planned phase 2 and appears to have ended COVID-19 program

Kaleido Biosciences confirmed it has shrunk its workforce. The Flagship Pioneering-incubated biotech also halted work on a planned phase 2 trial in chronic obstructive pulmonary disease and terminated its agreement with the COPD Foundation, announced just five months ago.

CEO Dan Menichella confirmed the layoffs in an emailed statement to Fierce Biotech. Stoppage of the phase 2 asset, dubbed KB109, was disclosed after this story was originally published. The trial was slated to happen in the first half of this year, the company said during its third quarter 2021 earnings call Nov. 1. 

The company had also tested KB109 in patients with mild-to-moderate COVID-19, but Kaleido has been mum on details of that program since saying in August that additional data was expected by November. It appears that work is over, too, especially after FDA ire last fall. The COVID-19 indication disappeared from the company's pipeline sometime between Sept. 13 and Oct. 6, 2021, based on web archives of the page.

The FDA issued a warning letter to Kaleido in August after an inspection in the spring. The company had claimed it was testing KB109 in patients with COVID-19 for nutritional purposes, so Kaleido didn’t file for an investigational new drug application. But the agency deemed the biotech was testing it as a drug in two clinical investigations and said Kaleido had failed to comply with regulatory requirements in the August letter.

The company is still moving forward with a different midstage study in ulcerative colitis with a different drug, KB295. That trial will begin in the first half of this year, Menichella said in his statement.

RELATED: After JPM, biotechs still scrambling for IPOs as Kaleido, Cirius file amid government shutdown

The company will run out of cash at some point in the second quarter, the biotech said in its latest earnings call in November 2021. The microbiome-focused biotech lost nearly 8% of its value Friday, with shares dipping to $1.74 apiece amid a steady stock performance decline in the past 12 months. The company's shares were worth nearly $17 this time last year. 

"We have taken steps to right-size the company and re-align resources to optimize our future success," said Menichella, who is also president. The company declined to provide further details. 

Business Insider first reported the company laid off 30% of its workforce, which stood at about 82 employees last year. 

The company didn't have much cash on hand at the end of the third quarter, with $55.7 million as of Nov. 1, 2021, which was just enough to get into the second quarter of this year. The layoffs could signal cash preservation measures. There are no public Securities and Exchange Commission filings about the reported layoffs. 

RELATED: MaaT wraps up cancer microbiome trial early to power into phase 2/3 this year

The news comes just weeks after Johnson & Johnson's Janssen Biotech expanded its research collaboration with Kaleido to go after treatments for atopic, immune and metabolic conditions. 

It is unclear which positions are impacted. In recent months, Kaleido beefed up its C-suite with the addition of Chief Medical Officer Alison Long, Ph.D. Long has five regulatory approvals on her resume and previously was interim CMO at Freeline Therapeutics.

Kaleido is founded on the idea that the microbiome—home to bacteria, viruses, archaea and fungi—is an untapped therapeutic area.

Prior to going public in 2019, the Flagship-founded startup raised $101 million in a series C. The company currently has seven open positions listed on its website, including associate general counsel. 

Editor's note: This story was updated at 6:25 p.m. ET Jan. 28, 2022, to include details about a halted phase 2 program, updated stock price and COVID-19 work.