USA — Gene therapy developer Avrobio has made an unexpected announcement, revealing its decision to halt further development of its experimental medicines and explore alternative business options, potentially including a sale.
The company cited the need to consider potential strategic alternatives such as acquisitions, mergers, business combinations, or other transactions.
As a consequence of this strategic shift, Avrobio will reduce its workforce by 50%, with the remaining employees focusing on winding down the company’s research and fulfilling a recent deal with Novartis.
In late May, Novartis paid a substantial sum of US$87.5 million to acquire one of Avrobio’s three clinical-stage gene therapies.
Among the gene therapies in Avrobio’s pipeline are treatments for Hunter syndrome in early-stage clinical development and Pompe disease in the preclinical stage.
This change in direction marks a retreat for Avrobio, a biotechnology company specializing in treatments derived from patients’ own stem cells.
The company has primarily focused on lysosomal storage disorders, including Gaucher disease and Pompe.
Avrobio previously announced the deprioritization of its Fabry disease program in January of last year, redirecting its focus to other clinical-stage programs within its lysosomal disorder pipeline.
Initially established during the surge of interest and investment in gene therapy-based medicines, Avrobio’s prospects have dimmed in recent years, resulting in a steady decline in its market value.
Currently trading at just over US$1 per share, the company’s value has significantly diminished compared to its initial public offering price of US$19 in 2018.
One significant setback for Avrobio occurred in early 2022 when the company discontinued work on its most advanced gene therapy due to disappointing clinical trial results. This setback led to a restructuring and a reduction of approximately 25% of the company’s workforce.
The challenging market conditions in recent years have affected Avrobio, as funding options for research-stage biotechs have become limited.
Many companies in the field have been compelled to cut costs and downsize their staff. Despite notable successes and regulatory approvals in the gene therapy field, the financial climate remains challenging.
Former CEO Geoff MacKay, who departed in May, acknowledged these challenges in a previous interview, predicting further restructuring, consolidation, pipeline reprioritization, mergers and acquisitions, market de-listings, and unfortunate bankruptcies as a result of the tough financing environment.
Avrobio clarified in its statement that the review of alternative business options may not necessarily lead to a transaction, and no specific timeline has been set for the completion of this search for options.
In its Q1 financial report released in May, Avrobio disclosed having US$72.3 million in cash and cash equivalents, which would support its operating expenses and capital expenditure requirements until early 2024.
Following the departure of Geoff MacKay, the company appointed CFO Erik Ostrowski as the interim CEO.
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