[Andrii Yalanskyi/Adobe Stock]
Biotech layoffs continue to pummel the industry in early 2024 — albeit at a slightly lower clip than in 2023. Smaller firms continue to bear the brunt of funding woes and disappointing clinical data. From January to February, operational reorganizations fueled 45 layoff announcements, followed closely by strategic pivots in 37 events. Other common drivers of job cuts include funding challenges and project restructuring.
The Sankey diagram below highlights the web of factors driving the 2024 biotech layoffs for select companies, from operational changes to clinical failures. Think of it like a map tracking why employers let go of workers, which can span multiple reasons. The width of the lines is proportional to the number of employees affected by each layoff. Note, some of the layoff counts are estimated based on percentages and the most recent available employee counts.
Operational reorganizations drive the most biotech layoffs in early 2024
Many biotech and pharmaceutical companies, including prominent names such as Johnson & Johnson, Thermo Fisher Scientific and the genomics-based oncology firm Exelixis, have slimmed down to streamline processes. J&J closed a new facility in Brisbane, California. The Brisbane facility was a nearly 200,000 square-foot R&D site that J&J had opened less than 18 months earlier.
In Alameda, California, Exelixis, cut 175 staffers, or 13% of its workforce, to prioritize late-stage drug development. The company appears to have discontinued its Phase 1 small molecule CDK7 inhibitor asset XL102, which was under investigation for solid tumors. It is not listed in the company’s pipeline.
Additionally, Thermo Fisher Scientific closed a facility in Petaluma, California, resulting in 74 job cuts in response to weak customer spending and a challenging macroeconomic environment. The closure will be effective in July when Thermo Fisher’s ten-year lease on the property expires. This move comes after significant investments during the pandemic to expand manufacturing capacity, including over $140 million in laboratory plastics disposables to meet COVID-19 testing demand.
Strategic pivots: Adjusting sails as headwinds blow
The second most common reason for biotech industry layoffs in early 2024 was strategic pivots. These initiatives involve reallocating resources toward core programs and promising therapies and represent a more fundamental shift in a company’s direction than operational reorganizations, which focus on efficiency within an existing structure.
Examples of recent strategic pivots include job cuts at Aera Therapeutics, which cut one-quarter of its staff in January 2024 as part of a shift to prioritize the development of novel delivery platforms. This pivot highlights the growing industry emphasis on overcoming drug delivery challenges. Aera Therapeutics' decision to discontinue its gene-editing enzyme program highlights the competitive nature of that field. Similarly, Intellia Therapeutics cut 15% of its workforce in January as part of an effort to streamline operations and focus on key strategic priorities. Intellia Therapeutics also paused exploratory research programs to prioritize its most promising projects. Another example comes via Senti Biosciences, a synthetic biology company, which pared down its workforce by 37% in January as part of its strategic realignment to prioritize investment in its leading clinical programs, including SENTI-202 for acute myeloid leukemia and SENTI-301A for hepatocellular carcinoma.
Other common causes for job cuts
Difficult Funding Environment: Several biotech companies faced challenges in securing adequate funding, leading to workforce reductions. For example, Ring Therapeutics, a gene therapy startup, eliminated 19 jobs, nearly 20% of its workforce, as funding for private biotechs remains scarce.
Strategic Pivot/Refocusing: Many companies underwent strategic pivots, refocusing on their most promising programs and resulting in layoffs. Allogene Therapeutics cut 22% of its workforce as it shifted its focus to developing its blood cancer therapy. Another company, Senti Biosciences, reduced its staff by 37% to prioritize investment in its leading clinical programs, SENTI-202 and SENTI-301A.
Clinical Trial Failures: Clinical trial failures directly contributed to layoffs in several companies. AlloVir cut 95% of its workforce following the failure of three Phase 3 studies of posoleucel, while Allakos laid off half its staff after the failure of mid-stage trials for its experimental drug lirentelimab.
Operational Reorganization: Several companies, including Pfizer and Thermo Fisher Scientific (mentioned earlier as well), implemented layoffs as part of operational restructuring. Pfizer laid off 285 employees at its Pearl River, New York vaccine R&D site as part of a global R&D strategy shift.
Liquidation or Wind Down: Some companies, such as Catamaran Bio and ObsEva, were forced to wind down operations, laying off all employees as a result of insurmountable challenges. Catamaran Bio suspended day-to-day operations while seeking strategic partners for its CAR NK cell therapy candidates. Meanwhile, ObsEva ceased operations given a lack of financial resources and viable options.
Asset Sales or Divestitures: Companies like 2seventy bio and Catalent underwent layoffs in conjunction with strategic asset sales or divestitures. 2seventy bio sold its R&D pipeline to Regeneron Pharmaceuticals, resulting in a 25% workforce reduction. Catalent's layoffs were part of a broader restructuring plan ahead of its acquisition by Novo Holdings.