- Five Prime Therapeutics announced Thursday a restructuring that will eliminate roughly 70 jobs before the end of 2020, with about 70% of the cuts set for this year.
- As part of the restructuring, Five Prime intends to sublet either a "significant portion" or the entirety of its 115,000-square-foot headquarters in South San Francisco, California. The company expects office space and workforce reductions, along with other measures, will result in $20 million worth of annual cost savings that will help to extend its cash runway.
- In January, Five Prime announced a separate restructuring meant to focus resources around its five clinical-stage cancer drugs. That plan eliminated 42 positions, mostly from research, pathology and manufacturing departments. At the end of last year, Five Prime reported having 209 full-time employees.
Shareholder confidence in Five Prime has waned since late 2016, when shares in the California biotech went for $61 apiece. By Friday morning, they were trading at $4.20.
The company's business revolves around cancer drugs, an area of development that has become exceptionally crowded and, therefore, more difficult to hold investor attention. Five Prime's clinical-stage pipeline includes three proprietary drugs — bemarituzumab, FPA150 and FPT155 — as well as two drugs from a partnership with Bristol-Myers Squibb.
The two most advanced of those assets are bemarituzumab and one of the Bristol-Myers collaboration drugs, cabiralizumab. The former is an FGFR-targeting antibody that's in Phase 3 testing as a treatment for gastric cancer, while the latter is a CSF-1 receptor inhibitor under investigation in mid-stage studies of pancreatic and billary tract cancer patients.
Further development of Five Prime's three wholly-owned drugs now rests on a "small research group" that the company expects to have following its latest shake up. By 2020, there should be less than 100 employees if the restructuring goes as planned.
Raymond James analyst Steven Seedhouse wrote in a note to clients that the additional restructuring is "unfortunately not surprising," due to the company's cash burn rate and the ambiguity around whether any of its assets can soon be monetized. Seedhouse also highlighted how the company's interim CEO, William Ringo, has been taking a critical look at the business.
"My immediate focus as CEO has been to conduct a review of Five Prime’s operations with the goal of ensuring long-term sustainability and value creation. This restructuring provides the cash runway to prioritize future pipeline investments based on clinical data readouts in 2020," Ringo said in an Oct. 10 statement.
"It also allows us to evaluate long-term strategies to grow our pipeline," he added. "We acknowledge this decision impacts many talented employees who helped build Five Prime into a clinical-stage company. We are grateful for their contributions and hold them in high regard."
Five Prime estimates the new restructuring will cost around $3 million due to severance payments and other associated expenses.
The company recorded $38 million worth of cash and cash equivalents and $176 million in marketable securities by the end of June. The company is reaffirming its financial guidance, and expects to close 2019 with $148 million to $153 million in cash, cash equivalents and marketable securities.