NewLink cuts 30% of staff to continue indoximod development
- Along with a second quarter earnings announcement, NewLink Genetics revealed a corporate restructuring Tuesday meant to support the development of its beleaguered immunotherapy indoximod, as well as cut costs. NewLink expects to spend $10 million per quarter after the restructuring.
- The restructuring includes a reduction of its workforce by 30%, as well as a realignment of some senior management positions. CFO Jack Henneman will be appointed chief administrative officer during the transition, before he leaves the company in November. Carl Langren has been appointed CFO.
- "Given the changing competitive immuno-oncology landscape, NewLink Genetics felt it prudent to undertake an extensive review of its clinical programs and its organization to determine the best path to produce validating data within its financial horizon," said NewLink CEO Charles Link on the call.
After a wild change of fortune for the IDO inhibitor class, NewLink Genetics finds itself in a precarious position. The company had been riding high as one of the more closely watched developers of an IDO inhibitor — a class of immunotherapies thought to be the best combination to enhance the action of PD-1/L1 inhibitors.
The market has become flooded with the new checkpoint inhibitors over the last three to four years, with Merck & Co.'s Keytruda (pembrolizumab) and Bristol-Myers Squibb's Opdivo (nivolumab) taking an early lead in the space. While both drugs have achieved blockbuster status multiple times over, they only work in a limited number of patients who show a high occurrence of the PD-L1 biomarker. The industry has feverishly been working to test combinations of drugs that could expand that patient population.
Big pharma took a big bet on IDO inhibitors. But the failure of combination studies of Incyte's IDO inhibitor epacadostat with Keytruda halted that theory. Big pharma has since pulled out en masse from combination studies testing the two classes of drugs together.
But it wasn't just the backlash from the epacadostat failure that hit NewLink; the company's own IDO inhibitor indoximod has previously failed to show any benefit in metastatic breast cancer.
NewLink's current pipeline is just indoximod and an indoxmid product. The company will now focus clinical development on indoximod for recurrent pediatric brain tumors, front-line treatment of diffuse intrinsic pontine glioma and front-line treatment of acute myeloid leukemia. It will also advance the product NLG802.
"We also have promising results from our Phase 2 trial of indoximod plus PD-1 blockade as frontline treatment for patients with advanced melanoma presented recently at ASCO," Link said on a call with analysts. "While we decided not to pursue a Phase 3 trial in this indication, a trial in advanced melanoma for those who have failed frontline PD-1 therapy is still under consideration."
Based on the pared-down R&D plans, NewLink is shaving off a good portion of its staff, and key executives are making exits. Chief Commercial Officer Brian Wiley recently left the company and will depart later this year. CFO Henneman
The company had cash and equivalents of $137.1 million on hand as of June 30, and expects to now have enough cash to give it a runway through the second half of 2021.
This isn't the first time the biotech has reduced its headcount. In 2017, the company eliminated 50% of its workforce after deciding not to pursue the development of a treatment for the Zika virus.
NewLink has also been hit by the exit of its big pharma partner, Roche, which it originally hooked up with in 2014. The Swiss company pulled out of a development for another IDO inhibitor dubbed GDC-0919, or navoximod. And about a year later, pulled out of the remainder of the deal.
NewLink stock was down nearly 19%, trading at about $3 per share in morning trading Wednesday. This is well off the company's 52-week high of $19.30, and a far cry from its trading price just three years ago at nearly $55 per share.
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