Gossamer Bio is picking up the pieces after failing to bring its only late-stage drug to market.
The local biotech plans to lay off 65 San Diegans, almost half of its total workforce.
While the company — focused on treating a rare lung disease — has other drugs in the pipeline, the question remains whether Gossamer has the money and manpower to continue with the costly trials.
The Phase 3 failure of Gossamer’s highly anticipated drug, seralutinib, puts the future of the $93 million company into question.
“We depend entirely on the success of seralutinib,” the company said in filings with the Securities and Exchange Commission. “If we are unable to advance seralutinib in clinical development … our business will be materially harmed.”
The 65-employee layoff will take effect May 15, according to a WARN notice released by the state last week.
The cuts will impact employees on the clinical development team and a number of senior positions — including several senior vice presidents — at the company.
When Gossamer announced that seralutinib passed its Phase 2 trial in 2022, its stock jumped to more than $25 per share.
In March, the company announced it failed the Phase 3 trial. The results were “well below what we believe could be considered clinically meaningful results,” Guggenheim Partners told investors in a Feb. 23 note.
Now, the stock is trading at an all time low — $0.40 per share.
While seralutinib initially showed the most promise, it is not the only drug Gossamer is trying to bring to market.
A second drug candidate, RT234, is also in the pipeline. The Phase 2 drug is licensed from a company called Respira Therapeutics.
But Gossamer warned investors it may not have enough money to continue developing RT234, according to government filings.
Gossamer’s other candidate, PH-ILD, entered a Phase 3 clinical trial late last year, but as of February, the company paused enrollment.
PH-ILD was being partially funded by the Italian pharmaceutical company, Chiesi Farmaceutici. The collaboration also included the development and commercialization of seralutinib. The agreement, signed in May 2024, included $160 million upfront and is valued at almost $500 million, contingent on meeting specific milestones.
Now, “we may not have sufficient capital or other resources to continue, and even if we do, any development efforts may not be successful or warrant continued development,” the company said.
In a last-ditch effort to save seralutinib, Gossamer is examining all of its options.
Gossamer is planning to meet with the FDA sometime this quarter to review the results of the study “with the aim to determine the path forward for seralutinib,” the company said in filings. “If we are unable to develop or seek marketing approval for seralutinib … our business would be significantly harmed.”
Now, the company is conserving cash by cutting jobs. As of December, Gossamer has $137 million in cash, cash equivalents and marketable securities, enough to fund the company into the first quarter of 2027.
Whether the company will continue to operate after that is still in question.
“There can be no assurance that any particular course of action, development path or strategic arrangement will be pursued, successfully consummated or lead to increased stockholder value,” the company said.