After clinical hold, Yumanity to cut 60% of workforce by April and hunt for a buyer

Yumanity Therapeutics is cutting 60% of its workforce by April, while not-so-subtly asking for buyers as the neurodegenerative-focused biotech's early promise begins to fade.

The company is exploring “potential strategic alternatives” including an acquisition, merger or sale of assets, according to a Thursday release. The news comes less than a month after the FDA placed a partial hold on a multi-dose clinical trial testing the biotech's lead treatment for Parkinson’s disease. The agency did, however, allow the company’s single dose trial to continue. 

Yumanity’s lead drug, YTX-7739, is being tested for a number of conditions, including Parkinson’s and glioblastoma multiforme, with the former farthest along in trials. The drug works to inhibit stearoyl-CoA desaturase (SCD), an enzyme associated with neuron death that ultimately could negatively impact cognition and movement. Results from the company’s phase 1b trial found that the drug was able to reduce the fatty acid desaturation index, a biomarker for SCD, by 20-40%. 

RELATED: Yumanity backs onto Wall Street via Proteostasis merger

The company was named to Fierce Biotech’s Fierce 15 list in 2015, elevated by the promise of co-founder Tony Coles who, as CEO of Onyx Pharmaceuticals, orchestrated a nearly $10 billion dollar acquisition by Amgen. Coles ultimately left his post at Yumanity in 2019 but has continued as chairman of the board. 

In 2020, Yumanity signed a licensing deal with Merck for up to $500 million for two therapies aimed at ALS and frontotemporal lobar dementia, both of which remain in preclinical stages. Later that year, the company executed a merger with Proteostasis Therapeutics, in which Yumanity shareholders maintained ownership of two-thirds of the new company.  

But cash has been dwindling, made clear by the company’s third quarter earnings last year. As of Sept. 30, 2021, the company had about $46 million on hand, after a nearly $40 million drop year-to-year. 

RELATED: Merck pens $500M Yumanity pact, nabbing 2 neuro hopefuls in the process

At the time, the company predicted having a long enough cash runway to last until the third quarter of 2022. But operating expenses ballooned last year, up 57% in the first three-quarters of the year compared to the same period in 2020. 

Moving forward, Yumanity says it’s tapped H.C. Wainwright as financial advisor to explore strategic options.