Stock Plummets as Genocea Axes 40% of Jobs, Shifts R&D Focus in Restructuring
September 26, 2017
By Alex Keown, BioSpace.com Breaking News Staff
CAMBRIDGE, Mass. – Shares of Genocea Biosciences Inc. are down more than 58 percent in pre-market trading after the company announced it was pivoting its development strategy to focus on development of neoantigen cancer treatments and scrapping its Phase III-ready herpes drug.
As part of its shift to an immuno-oncology focus, Genocea announced it was terminating its workforce by approximately 40 percent. Last year, the company indicated it had about 87 employees. The job cuts should drop that to between 50 and 55 employees left. Genocea said it was exploring strategic alternatives for its lead candidate GEN-003 for the treatment of genital herpes. Genocea said it was ceasing all expenditures on GEN-003, which includes the employees working on that treatment.
Instead, the new focus will be neoantigens and its experimental treatment GEN-009. The company said it intends to file an Investigational New Drug Application with the U.S. Food and Drug Administration in early 2018. Neoantigens which are personalized tumor mutations seen as “foreign invaders” by an individual’s immune system. Neoantigen responses, couples with checkpoint inhibitors, have become a popular treatment focus in immuno-oncology. Earlier this month California-based Gritstone Oncology scored nearly $100 million in funding from entities such as Google and Eli Lilly to advance its neoantigen-focused cancer treatment for lung cancer. Like Genocea, Gritstone intends to file an IND with the FDA in early 2018.
Investors reacted negatively to the news, driving stock prices to $2.55 per share in early trading. The stock closed Monday at $5.33. In August, the company reported cash on hand of about $35 million. With the shift in treatment focus and job terminations, Genocea said it estimates annualized savings of approximately $6.5 million in personnel-related costs. Severance costs are expected to be approximately $1.1 million in the third quarter of 2017. Genocea said its existing cash and cash equivalents are sufficient to support its operating expenses and capital expenditure requirements into the middle of 2018 – just after it intends to file an IND for its first neoantigen product.
When Genocea enters the clinic with GEN-009, it will focus on a range of tumor types and expects to report initial immunogenicity data in the first half of 2019. GEN-009 is an adjuvanted peptide vaccine designed to direct a patient’s T cells to attack their tumor. Antigens in a patient’s vaccine are selected by Genocea’s proprietary ATLAS platform. The ATLAS platform is designed to comprehensively identify the actual neoantigens to which a patient’s CD4+ and CD8+ T cells respond, according to company data. In its statement, Genocea said its ATLAS platform is a “superior approach” to identify neoantigens for personalized treatments in comparison to “methods used by others developing similar products.” Following ATLAS neoantigen identification, Genocea will manufacture a personal vaccine for each patient.
“With our research and development efforts now focused entirely on neoantigen cancer vaccines, we believe the power of ATLAS to identify the right vaccine antigens, combined with our vaccinology expertise, gives us the opportunity to create value for our shareholders by developing best-in-class vaccines for cancer patients and achieving leadership in this exciting field,” Chip Clark, president and chief executive officer of Genocea, said in a statement.