NGM Bio lays off a third of its workforce in ‘difficult’ decision
06 Apr 2023
Phase 2Executive ChangeClinical Trial Failure
Dive Brief:
NGM Biopharmaceuticals is laying off a third of its employees after significant research setbacks that prompted its partner Merck & Co. to walk away from two collaborations.
The layoffs affect 75 people at the California biotech, according to an email sent by CEO David Woodhouse to staff on Tuesday. Severance packages will cover at least three months’ worth of salary and healthcare through July, Woodhouse said. NGM had 239 employees at the end of last year, with around 65% involved in research and development work.
In what Woodhouse called a separate development, NGM founder Jin-Long Chen will also step down from his role as chief scientific officer and leave the company. Dan Kaplan, the senior director of translational science, will take over his role “at a time when we are re-affirming our commitment to research,” Woodhouse said.
Dive Insight:
Conditions aren’t favorable at the moment for biotechs running low on cash. Companies are having a hard time getting investors interested in everything from early-stage investing to secondary offerings on the stock market. The S&P Biotech ETF index is down almost 20% over the past year.
Woodhouse said NGM had hoped to raise more money on the back of positive results for an eye disease drug last year. But that trial failed in October. Afterward, Merck decided not to exercise an option to license the medicine, known as NGM621, and related compounds.
Meanwhile, Merck ended a Phase 2b trial of another experimental drug designed to treat liver disease, and will let its licensing rights revert to NGM later this month. NGM is now actively seeking partners for that medicine, known as MK-3655 or NGM313, as well as several other experimental drugs.
The company is also narrowing its focus to concentrate on experimental cancer treatments. “We must take steps to reduce our operating expenses and extend our cash runway for long enough to put us in a position to generate meaningful clinical data from our solid tumor oncology product candidates,” Woodhouse said in his email to employees.
NGM is joining more than 50 other biotechnology companies that have laid off staff so far in 2023, according to BioPharma Dive data.
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