Finch Therapeutics said Thursday it will cut 37% of its workforce and halt a preclinical program as part of a restructuring triggered by Takeda’s recent decision to cut ties with the microbiome drug developer.
The layoffs will affect 50 full-time employees and be completed by the fourth quarter. The company expects to incur about $1.6 million in severance costs, it said in a regulatory filing.
Finch will also halt preclinical work on a candidate, FIN-211, designed to treat gastrointestinal and behavioral symptoms of autism spectrum disorder. Finch may now rely on third-party studies to inform its strategy, CEO Mark Smith said in a statement.
The cost-cutting moves were announced less than a week after Takeda said it would end a 2017 deal with Finch and return rights to two oral microbiome medicines being developed for diseases in the gut. Both are in preclinical testing. One candidate, known as TAK-524, is for ulcerative colitis, and the other, FIN-525, is for Crohn’s disease.
The deal was Finch’s only industry partnership and a key source of future revenue. The Massachusetts biotechnology company was promised as much as $354 million in total payments in the alliance, but only ended up receiving about $44 million, mostly in reimbursed research and development expenses. Finch has scaled back its pipeline as a result of that lost revenue and the “current capital market environment,” Smith said. It’s the second round of job cuts the company has announced since April, when it revealed plans to lay off 20% of its workforce.
Finch had 189 full-time employees at the end of 2021, according to a regulatory filing.
Finch went public in March 2021 to help advance a lead drug candidate, CP101, designed to prevent a recurrent type of bacterial infection known as Clostridioides difficile, or C. diff. That drug is one of several microbiome-based medicines to show promise treating C. diff. Seres Therapeutics, for instance, will soon seek approval of a similar type of treatment after reporting positive results in Phase 3 testing. Rebiotix, another microbiome drug developer, has also touted success with a C. diff therapy. Finch’s drug is slated to start a second Phase 3 trial later this year
But Finch and its peers have had setbacks. Regulatory issues triggered Finch’s first wave of job cuts and contributed to the company losing more than 90% of its stock value since going public. An experimental Seres treatment for ulcerative colitis failed in a study last year, and Kaleido Biosciences, another microbiome drug developer, announced plans to wind down in April.
Finch’s layoffs come amid a wave of job cuts in the sector this year. Fifty-four biotech companies announced layoffs in the first half of 2022, according to the trade group BIO, and the number has grown since then. Codiak BioSciences said Tuesday it will cut 37% of its workforce and reprioritize its drug pipeline. Adverum Biotechnologies, CytomX Therapeutics and privately held Pact Pharma have also recently announced job cuts.