Bear market shows no signs of abating, claiming Finch Therapeutics as the latest layoff victim
Much ink has been spilled over the continuing wave of layoffs hitting the biotech industry, and that doesn’t look to be stopping anytime soon.
Finch Therapeutics reported Tuesday morning that it would be laying off 37 staffers, or approximately 20% of its workforce, per an SEC filing. The decision to cut costs comes about a month after Finch said the FDA had placed a treatment for C. difficile infections on partial clinical hold, and roughly three weeks after pausing its hepatitis B program.
“This was a difficult decision; however, we believe this decision will put us in a stronger financial position to execute upon our strategic priorities and continue to deliver on our mission to harness the microbiome to serve patients and their families,” CEO Mark Smith said in a prepared statement.
Finch shares $FNCH, already down 64% since the start of the year, showed no change as the market opened Tuesday.
Tuesday’s layoffs may have been in the works following a rough March, which saw the FDA hold and the hepatitis B pause. Regulators had requested Finch provide more information on its screening protocols for C. difficile infections, the biotech said, reportedly pointing to issues at a manufacturer Finch had acquired while a Phase II study was underway.
The manufacturer, OpenBiome, was placed on hold in late 2019, but Finch was allowed to continue using donor samples from before then in its study. The hold was released in January 2021, and Finch bought the company’s manufacturing tech two months later. Finch began dosing Phase III patients last November, but the FDA returned with questions this past January.
At the time it reported the hold, Finch also noted that some patients were dosed in this study while the hold was in effect. The company says it’s reviewing the matter.
The biotech followed up at the end of March saying it had responded to the hold notice and obtained additional feedback from the agency. Per Finch, execs noted regulators wanted changes to the Phase III testing algorithm used to diagnose suspected reinfections, as well as more info on the trial’s statistical analysis plan. The company is expecting “at least” a one quarter delay.
Finch’s March 31 update also revealed the biotech would be pausing hepatitis B activities “following a strategic review” of its pipeline. The move will allow Finch to focus on its C. difficile and autism spectrum disorder programs.
The biotech, much like its industry compatriots, falls on hard times as 2022 is yet to let up on the sector. Finch’s layoffs come as part of a broader reshifting within the biotech space following record activity during the previous two years.
Much of the downturn has been captured in the XBI, an index measuring the industry’s performance as a whole. It’s down about 30% on the year and down almost 50% from its peak in February 2021. And sometimes, the movements appear to be happening randomly: on Monday, for example, the XBI fell 5% despite the lack of major news.