NGM Bio’s webpage declares "We're Hiring!" but a peek at the investor relations section of the biotech’s website tells a different—and sobering—story.
In fact, the developer of four solid tumor candidates revealed in a Securities and Exchange Commission (SEC) filing Tuesday that its workforce would be reduced by 33%, or 75 people. Staff were told of the restructuring the same day, according to the document.
The decision was made in response to the failure of the phase 2 CATALINA trial back in October 2022, CEO David Woodhouse, Ph.D., wrote in a letter to staff included in the filing.
“While we had hoped to be able to pursue a significant financing on the back of positive clinical data in 2022 following Catalina, the clinical data we announced unfortunately did not support pursuing such a financing at that time,” the CEO explained.
Woodhouse's letter provides a refreshingly transparent look inside the biotech layoffs process, which is playing out in boardrooms across the industry right now. Often this news is revealed in tersely worded SEC filings, short press releases or hidden among other news in earnings filings, but NGM has taken the unusual step of including the letter sent to staff—so long as you make your way to the investor relations portion of the website.
As a result of the difficult funding environment in the biotech industry, and in light of the study’s failure, NGM had to take some drastic actions to reduce its operating expenses and extend the cash runway in order to get to the next meaningful data generation point for the biotech's solid tumor programs, the CEO explained.
NGM expects the runway to now be clear through the second quarter of 2025. The company reported $271.5 million in cash and equivalents as of December 2022 in a fourth-quarter earnings report issued Feb. 28.
The board considered many different ways to pave more runway, but in the end the layoffs had to be done, according to Woodhouse. The company is still hoping to partner up for one or more of the solid tumor programs.
“Even if we were to succeed in securing a deal or deals this year, we believe a restructuring would still be necessary to arrive at a more sustainable cash burn rate,” Woodhouse said. “In other words, we came to this decision when we believed it was required to enable us to continue to invest in our critical discovery research work and advance our development programs with a narrowed focus on oncology to fulfill that mission for the benefit of patients.”
The restructuring will impact all areas of the company, including general and administrative functions as well as research and development, Woodhouse said.
“There is no good way to communicate the decision to all of you whose jobs are being eliminated. In an effort to minimize anxiety and waiting, all employees will receive an email shortly,” Woodhouse explained. He promised that all employees who are affected will be contacted with details of their severance packages and transition out of the company.
NGM expects to pay out about $5 million in restructuring charges including $4.5 million in employee severance and the rest in noncash stock-based compensation expenses during the second quarter. The restructuring process is expected to be “substantially complete” by the end of the quarter, too. The package includes a continuation of salary and severance payments covering at least three months, plus healthcare through July. Departing employees will also be offered career transition support and a resume book will be compiled to share with other biotechs, Woodhouse said.
At the same time, founder and Chief Scientific Officer Jin-Long Chen, Ph.D., is resigning, effective April 4. Dan Kaplan will take over the role.
“While the timing of this restructuring makes the announcement of this departure even more jarring than it might otherwise be, in many ways, it is fitting,” Woodhouse wrote of Chen’s departure.
NGM narrowed its focus to the solid tumor programs in 2022, after assets in nonalcoholic steatohepatitis and macular degeneration failed in the clinic in 2021 and 2022, respectively. The biotech also saw a major deal with Merck for the eye drug NGM621 further eroded after the phase 2 fail. Originally signed in 2015 to work on oncology, cardiovascular and metabolic diseases targets, Merck trimmed it in July 2021 to exclude oncology, then again in December 2022 to cut NGM621.
NGM has four solid tumor candidates in clinical development; the most advanced is NGM120, which is in a phase 2 trial for metastatic pancreatic cancer.
In closing his letter, Woodhouse asked continuing employees to be compassionate toward those leaving the company and patient as the changes are implemented.
“I am profoundly saddened that NGM has arrived at this moment and for the effect the restructuring will have on each of you,” he wrote. “We will rebuild from here.”
Editor's Note: This story was amended at 10:57 a.m. ET on April 6, 2023, to correct the clinical stage of the four solid tumor candidates.