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Domino effect around next-generation Covid vaccine trial pushes Gritstone to cut 40% of staff
Andrew Allen, CEO and co-founder of Gritstone
TODD JOHNSON | SAN FRANCISCO BUSINESS TIMES
Ron Leuty
By Ron Leuty – Senior Reporter, San Francisco Business Times
Mar 1, 2024
Updated Mar 1, 2024 3:00am PST
Gritstone Bio Inc. will cut 94 jobs — or 40% of its workforce — after the delay of a Covid-19 vaccine clinical trial led to a domino effect stopping a payout the Emeryville company had hoped to receive this quarter.
Gritstone (NASDAQ: GRTS) represents the ongoing struggle not-yet-commercial drug makers face to raise cash even while the biotech industry generally makes a modest comeback following a two-year lull. Just as successful clinical trials can lead to fundraising, hiccups in trial timelines can be a drag.
The genesis for the layoffs is a Food and Drug Administration requirement that Gritstone use materials that are fully GMP-grade, a system for consistent and controlled products that stands for "good manufacturing practice," in the 10,000-person trial of the next-generation Covid-19 vaccine. That upgrade could mean the FDA is looking for the study to generate data leading to an FDA decision on whether to approve the vaccine, but the short-term result was Gritstone delaying the trial to upgrade materials.
Because of the delay in starting the trial, Gritstone did not receive an expected milestone payment from the federal government's Biomedical Advanced Research and Development Authority, or BARDA, with which it has a contract valued at $430 million to run the study.
"The lack of near-term funding necessitated this difficult step to fortify our balance sheet and cash position, which unfortunately means an impact to our workforce," Gritstone co-founder, President and CEO Andrew Allen said in a statement.
Gritstone did not say how much money it was expecting from the trial's launch or from what organization it was expecting the payment.
The company received $9 million last year from BARDA for reimbursement of trial preparation expenses, but it also inked a pact with the National Institute of Allergy and Infectious Diseases, or NIAID, to fund a Phase I trial of the Covid vaccine. Others that have supported the program are the Bill & Melinda Gates Foundation and the Coalition for Epidemic Preparedness Innovation, or CEPI, a Norwegian organization founded by the Gates Foundation and the Indian government to finance independent research projects to develop vaccines against infectious diseases.
When the Covid trial delay was announced Feb. 12, Gritstone estimated it had $86.9 million in cash, equivalents, marketable securities and restricted cash at the end of last year, a tenuous amount for a company in the cash-intensive biotech world.
Gritstone, which went public in fall 2018 at $15 a share, closed Thursday at $2.80. It lost another 72 cents in after-hours trading after the layoffs were disclosed.
The job cuts, the company said, would result in $2.5 million in employee severance and benefit costs.
Gritstone has been creative responding to the chill that met biotechs on Wall Street over the past two-plus years. It raised more than $100 million some 16 months ago through a PIPE, or private investment in public equity, and has lined up collaborations with Gilead Sciences Inc. around a potential HIV therapeutic and with the NIAID around the Covid vaccine.
Those deals have helped the company bring in cash to run trials the company couldn't run on its own, Allen told the Business Times last month.
"You just have to keep adapting to survive," he said.
Meanwhile, Gritstone is continuing work on its core programs, Allen said, including a personalized cancer vaccine for a type of metastatic colorectal cancer. That study is expected to produce early data next month from the Phase II part of a Phase II/III trial.
Gritstone's experimental Covid vaccine is designed to drive both B cell and T cell immunity by using self-amplifying mRNA, or samRNA, and so-called immunogens that contain viral targets and the Spike protein, which plays a key role in transmitting the SARS-CoV-2 virus.
Immunogens are molecules that elicit an immune response; Gritstone designs novel immunogens.
SamRNA vaccines, like the first-generation mRNA Covid vaccines produced by Moderna Inc. and Pfizer Inc./BioNTech SE, use the host cell's translation system to convert mRNA to targeted antigens that stimulate immunity. But Gritstone's "Spike plus" samRNA is designed to go one step farther, creating multiple copies of the RNA once in the cell, potentially leading to a longer, stronger expression of the invading antigen to stimulate the immune system.