Rubius Therapeutics’ plan to revive its red blood cell therapy research with a new approach has run out of time and money, and the biotech is now looking to strike a deal to salvage what’s left of the business. The strategy shift comes less than two months after a corporate shakeup that slashed headcount by 75%.
The layoffs from the September restructuring were expected to be complete this month. Now, most of the rest of the employees have gotten pink slips. In a Wednesday regulatory filing, Cambridge, Massachusetts-based Rubius said it has laid off 42 workers, representing 82% of the current employee base.
“The Company expects that these measures will reduce its operating expenses with the goal of allowing the Company to pursue any viable strategic alternatives,” Rubius said in the filing.
Launched from venture capital firm Flagship Pioneering in 2015, Rubius set out with the ambitious goal of turning red blood cells into a new kind of cell therapy. Because these cells naturally circulate in the body and have a long life span, they offered the potential for a long-lasting therapeutic effect. Rubius had raised about $240 million prior to its 2018 IPO, which raised another $241 million. Rubius’s initial research with a rare metabolic disorder stalled in early clinical development. In 2020, the biotech decided to shift its focus to the larger indications of cancer and autoimmune disease.
Rubius reached early clinical development with red cell therapies for cancer. But in September, the company announced it would adopt a new manufacturing process for its cell therapies that executives said would be faster, cheaper, and more efficient. Adopting the new process meant the company would stop its cancer programs and become a preclinical company once again.
When the company announced its restructuring in September, executives said they expected the savings would last the company until the end of next year, when it would have preclinical data supportive of its new technology. On Wednesday, Rubius said that it has new monkey data with its next-generation cell therapy platform. Those results show longer circulation time compared with the first-generation technology. Rubius added that there were other measures indicative of the therapy’s effect on the body.
Despite the preclinical progress, Rubius ran out of money. Following the September restructuring, Rubius repaid a $75 million loan from SLR Investment Corp. The company said in a regulatory filing at that time that it was working on securing additional capital to support the reorganization plan. On Wednesday, Rubius cited the early stage of its drug research along with its financial condition as the reason for seeking strategic alternatives that could include the sale of the biotech’s assets or a merger with another company.
Rubius estimates it will incur about $4.4 million in charges in the fourth quarter of this year, mainly related to severance payments. Rubius said it plans to engage an investment bank to advise on its options. While most of the workforce is now gone, a small team will remain to implement the new strategic review. Rubius President and CEO Pablo Cagnoni has been appointed chair of the company’s board of directors but will step away from his executive roles on Nov. 15. At that time, Dannielle Appelhans, who joined Rubius as its chief operating officer last year, will take over Cagnoni’s executive role. The chief financial officer and chief legal officer will also leave on that date.
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