It’s a show-me year for many biotechs, which rode waves of layoffs throughout 2023 and cut programs in order to stay afloat amid an extremely challenging fundraising environment.
The trees have been trimmed, branches pruned, underbrush cleared away. A thinner, leaner biotech forest arrived at the American Association for Cancer Research (AACR) conference in San Diego ready to showcase the budding data that have sprouted as a result of difficult decisions made during the sector’s so-called “nuclear winter.”
It’s a show-me year for these companies, which rode waves of layoffs throughout 2023 and cut programs in order to stay afloat amid an extremely challenging fundraising environment. Many kept just the highest priority programs going.
Reflecting on the tough times past, biotech executives told Fierce Biotech in interviews on the sidelines of the AACR conference that they are ready to show what all those gut-wrenching decisions were for.
“It was devastating. It was really tough,” said Raquel Izumi, Ph.D., chief operations officer for Vincerx. The company cut 33% of staff in June 2022 and trimmed its pipeline to focus on just three cancer indications. Lead asset VIP152 (now known as enitociclib) took on an even bigger role, with trials continuing in three indications in lymphoma and leukemia.
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Mythic Therapeutics launched in December 2021 with a $103 million series A to develop new antibody-drug conjugates (ADCs). But the initial enthusiasm from the nine-figure raise quickly changed, and Mythic’s leadership had to revert back to its scrappy early days to survive.
“We saw the hatches shut,” said Chief Scientific Officer Brian Fiske, Ph.D., on the funding environment in the past two years.
And so the company battened down its own hatches, demonstrating the ability to stretch that cash as long as possible. But Fiske said it was still important to spend some money to ensure a stream of data would arrive to secure the next round.
“You're looking at Mythic’s first investor,” he said with a laugh. “We rented six feet of lab space in basically a converted warehouse in a strip mall in order to start, so we had to be fuel efficient from the very beginning.”
Meanwhile, Foghorn Therapeutics was sent into a spiral in 2022 when the FDA placed a clinical hold on blood cancer candidate FHD-286 after a patient death in a phase 1 trial. A second drug was partially halted by the FDA in April 2023 and then in June 2023, the company was forced to drop uveal melanoma as an indication for FHD-286. This all, of course, happened amid the larger market challenges for all biotechs.
It’s been a whirlwind, but CEO Adrian Gottschalk says they’re on the other side now.
“I think we've sort of weathered the valley of death, if you will, of biotech that everyone was going through for the last few years as best as one can,” Gottschalk said in an interview. “Obviously, when you're doing completely novel biology targets, some things are gonna work, some things aren't, and that's just the business we're in.”
Trimming the sails
The workforce reduction at Vincerx was personal for Izumi, who says she has long brought along colleagues from previous companies she had worked at to her next gig.
“It was a difficult decision to make. But it was necessary because—as the term goes—we needed to trim sails to really focus,” she said.
The drastic move was meant to extend Vincerx’s cash runway into late 2024. As of the biotech’s latest earnings report on March 29, the runway remains at the third quarter of 2024 with $12.8 million in cash and cash equivalents as of Dec. 31, 2023. This compares to $52.5 million a year prior.
So the showing at AACR couldn’t be more important, Izumi said.
“We have a great candidate in an enitociclib, and we're still developing it,” she said.
What has changed is how the phase 1 study is funded. Instead of running it as a sponsored trial, Vincerx is now relying on the National Institutes of Health in an effort to reduce costs.
That allowed the company to move two other candidates, VIP236 for advanced solid tumors and the ADC VIP943 in relapsed/refractory acute myeloid leukemia (AML), myelodysplastic syndrome (MDS), and B-cell acute lymphoblastic leukemia.
“Focusing our resources allowed us to get to where we are today with these two drugs with early phase 1 data,” Izumi said.
Izumi could not speak to Vincerx’s fundraising needs, saying the company intends to present its case in the form of data and “take it from there.”
“Last year, we call that one of the biotech nuclear winters, for sure. And there's a lot of companies in our position, but I don't know. I am an optimist. I'm seeing signs of change. And we think the future is bright,” Izumi said.
At AACR, Vincerx presented early data for the two candidates behind enitociclib. Preliminary data for VIP236 as a monotherapy showed tumor reductions in patients with metastatic tumors who had tried all other standard options for treatment.
The small, open-label dose escalation study has seen 15 patients receive the drug so far, every three weeks. VIP236 is a small-molecule drug conjugate, a modality that plays off of the ever-popular ADC that has been the apple of pharma’s eye the past few quarters.
Just two doses into the cycle, seven patients achieved objective stable disease, including tumor reduction, Vincerx said.
“Obviously, everybody in the industry does this, you're benchmarking against other drugs at this stage of development, and we're really happy because we're seeing results that we feel are on target and on track for this stage of development,” Izumi said.
“We look at other drugs like [Gilead Sciences' breast cancer drug] Trodelvy and look at what they were like in their first-in-human trial, and we're seeing very similar results—and that's an approved drug. So we're really excited about what we're showing here.”
The company said the every-three-week dosing schedule was well tolerated with no dose-limiting toxicities and no discontinuations due to adverse events. There were also no reports of life-threatening diarrhea, which is a common issue in this patient population, according to Izumi.
“I'd like to remind people that phase 1 trials are 'Last Chance Saloon' for these patients. They've seen everything. They've failed everything. And this is the last thing for many of them. It's either that or hospice for many of them,” Izumi said.
As for VIP943, a very early readout of seven patients across two cohorts provided some details on dose-limiting toxicities.
Vincerx is lucky to be playing in an arena of great interest to Big Pharma with its ADC technology. The company has even funded its own efforts to showcase how the VersAptx bioconjugation platform can boost the efficacy of approved ADC like Gilead’s Trodelvy and AstraZeneca-Daiichi Sankyo’s Enhertu. While at AACR the biotech is showcasing its lead molecules, Izumi hopes the platform can attract some big-time partnerships.
Don’t be arrogant
While Vincerx’s CEO Ahmed Hamdy, M.D., blamed the markets for the workforce reduction, over at Foghorn Therapeutics, similar decisions were driven by data and regulatory hurdles.
In the middle of 2023, Foghorn had about 165 people on staff and was running about three clinical trials. Then the melanoma indication for FHD-286 was dropped, and FHD-609 was paused in synovial sarcoma and SMARCB1-deleted tumors after the FDA’s partial hold in April 2023.
“We knew at that point that we would need to reduce the footprint of our clinical organization,” Gottschalk said.
The company conducted a round of layoffs initially, then a larger round in October 2023, while also taking a hard look at the pipeline. Ultimately about 35 to 40 people lost their jobs, while the total reduction was about 50 when resignations were accounted for. Gottschalk estimates the total head count is now around 115.
“There's never a great way to do that stuff. We try to do it with as much dignity and grace and respect for all our colleagues,” the CEO said.
After a tough year, Gottschalk and his Chief Scientific Officer Steve Bellon, Ph.D., are trying to take lessons from the clinical ups and downs.
“What Steve and I talk a lot about is really learning from some of the challenges or the setbacks and then improving on the next generation of molecules we're bringing forward,” Gottschalk said.
At AACR, Foghorn previewed preclinical data, including for BRM (SMARCA2) selective inhibitor FHD-909 in BRG1 mutated cancers, showing tumor growth inhibition and regression. The program is being developed with Eli Lilly’s Loxo Oncology unit, and the pharma plans to file for an investigational new drug application in BRG1-mutated non-small cell lung cancers this quarter.
Bellon said the collaboration with Loxo has “clearly helped us drive to the sort of finish line in this challenging target. That collaboration is super important for helping us achieve this success.”
Foghorn has emerged from the “valley of death” with a cash runway extending into 2026. Gottschalk said they entered the year with about $244 million and do not have any debt.
“We're certainly not in an existential position or state. At the same time, biotech companies do spend a lot of money,” he cautioned. So Foghorn will likely look for fundraising opportunities or business development in the next six to 12 months, he said.
While Foghorn survived, Gottschalk knows of many companies, made up of fellow biotech leaders and friends, who did not make it through. They have great scientists and physicians, and, through funding challenges or trial failures, they had to pack up and call it quits.
“It comes back to, don't be arrogant in this business, because there's a lot of serendipity,” he said. “Everyone works really hard in this sector, I think. So it's not about the hard work. It's like, did you get the results? And sometimes that's a lot of luck. You try and be as smart as you can, but sometimes the science just doesn't work. So it was painful to see. It was painful to see people go through all of that. So, you know, hopefully we're in a brighter spot as a sector. It feels that way.”
