Genocea Biosciences was able to go from startup to publicly traded company, in part, because of the early progress it made developing an experimental vaccine for genital herpes. Yet the Cambridge, MA, company couldn’t get the financial help to take that vaccine, GEN-003, through its final test. Instead it has shifted gears and will try to stand out in the increasingly crowded field of cancer immunotherapy.
Shares of Genocea (NASDAQ: GNCA) fell over 48 percent, to $2.74 apiece Monday afternoon after the company disclosed plans to restructure, seek “strategic alternatives” for GEN-003, and focus on cancer immunotherapy. Genocea is cutting roughly 40 percent of its workforce in the move and putting its resources behind developing vaccines that contain “neo-antigens,” or genetic fingerprints left behind by tumors as they mutate.
Genocea was already facing a cash crunch. According to a regulatory filing, the company had just $35.2 million at the end of June after burning through $15 million in the quarter. In its last quarterly report, the company—which has gone through about $237 million since inception in 2006—said it didn’t have enough cash to survive through 12 months and warned that it would have to cut costs or stop developing GEN-003 if it didn’t get the needed funding.
In an e-mail, CEO Chip Clark (pictured) told Xconomy that the financial resources required to move GEN-003 into “a large and long Phase 3 program are beyond Genocea alone.” Genocea was always banking on a partnership, or a debt or equity financing, to help carry GEN-003 through clinical testing. That help never materialized, however, so Genocea now has to change course.
“Given this reality, we have had to make the hard decision to restructure our workforce to focus on our emerging cancer programs,” Clark said in the e-mail. Genocea still hopes to find “the right partner” for GEN-003, he said.
The field Genocea aims to pivot to is already competitive and well-funded. At least two high-profile startups, Neon Therapeutics and Gritstone Oncology, have formed in since 2015 to develop neo-antigen vaccines, which, the thinking goes, may help boost the effects of other cancer immunotherapies. (Here’s more on neo-antigen vaccines.)
Combined, Neon and Gritstone have both raised more than $300 million—and both closed sizeable Series B rounds this year. Neon began its first clinical trials this year; Griststone should follow in 2018. Genocea says it can have its most advanced prospect, GEN-009, ready for a test in a “range of tumor types” early next year with data in 2019. By restructuring, Genocea now has enough cash to get to the middle of 2018.
Clark says Genocea’s core technology, a way to quickly identify the right antigens for a vaccine, may give the company a leg up on the competition—but that will have to be proven. By halting development of GEN-003, Genocea has now ended the only two programs it has brought to human clinical testing. An experimental vaccine for pneumococcus failed a mid-stage trial in 2015.