The point-of-care testmaker Talis Biomedical is undergoing a second wave of layoffs this year after struggling to get its COVID-19 diagnostic off the ground.
Alongside its second-quarter earnings report, the company said it would make another 35% reduction in its headcount, pursue “additional cost-saving measures” to help extend its runway out to 2025. Talis is walking away from COVID testing altogether, pivoting instead to screeners for sexually transmitted diseases.
The news follows Talis’ announcement less than six months ago that it would lay off about 25% of its staff. At that time, the company said that it was unable to roll out the coronavirus test for its cartridge-based Talis One system due to challenges with manufacturing at scale and that it was launching a full review of its processes and product design.
Those troubles continued throughout this year—though, in May, Talis CEO Rob Kelley expressed confidence that the company still saw a path to market for the diagnostic, which had received an emergency authorization from the FDA in November 2021.
However, diagnostics companies large and small have begun preparing to see COVID revenues shrink. Many are predicting a steep downturn in the months ahead, as the world continues to move away from the pandemic mindset.
Abbott, despite collecting $5.6 billion in test sales in the first six months of the year, said it expects to make only $500 million during 2022’s latter half. Meanwhile, the portable test developer Cue Health said in late June it would let go 170 staff from its manufacturing workforce, as government bodies trim back their pandemic testing contracts.
That landscape has led to the latest round of cuts at Talis, which will affect 57 employees according to a WARN notice filed in its home state of California. The Redwood City-based company said it expects the layoffs to be completed in the fourth quarter of this year.
It’s been a dramatic fall for Talis, which completed the 10th largest medtech IPO of last year by collecting $232.5 million in February 2021.
However, less than a month later, the company disclosed it would withdraw its application for an FDA emergency authorization of its COVID test—saying it could not make sure the comparison diagnostic used in Talis One’s primary study was sensitive enough to prove its accuracy.
And before the FDA’s green light was eventually handed down that autumn, Talis announced the departure of its president and CEO, Brian Coe. He was replaced by interim chief Kim Popovits, the former president and CEO Genomic Health before it was acquired by Exact Sciences.
Talis found a new leader two months later in Brian Blaser—former executive VP of diagnostics at Abbott—but his tenure would last about three weeks before he stepped down in early December 2021 due to personal matters. Kelley, the company’s chief commercial officer, was promoted to CEO effective immediately.
After making its Nasdaq debut at $27.80 per share, the company's stock price is currently trading at about 75 cents.
This week, Kelley said Talis now has “evidence that we can manufacture cartridges and instruments at scale and $165 million in cash to execute on our strategy.” After dropping investments in its COVID test, it will now refocus on a multiplex panel currently under development for chlamydia and gonorrhea.
The company reported $600,000 in revenue over the second quarter of 2022, driven largely by sales of rapid antigen tests separate from the Talis One system. Operating expenses, meanwhile, topped $26.5 million, though that’s well below the $64.5 million in expenses it logged during the same three months of 2021.
According to Talis, that drop in operating costs was primarily due to cutbacks in R&D spending, following headway in scaling up its manufacturing processes.