Genocea Biosciences Inc. (NASDAQ:GNCA)
Genocea Biosciences Inc. (NASDAQ:GNCA) shares slumped 76.5% after the biopharmaceutical company said it was shifting its drug development focus. The Cambridge, MA-based company is shifting its focus to immuno-oncology to focus on the development of neoantigen cancer vaccines. Pursuant to the corporate restructuring, the company has also announced plans to trim its workforce by 40%
GNCA Stock Implosion
News of the proposed changes did not go well. GNCA stock plummeted to multi-year lows. GNCA stock is currently trading at the lower end of a $1.23 – $1.99 trading range.
Genocea Biosciences Inc. (NASDAQ:GNCA) management team is putting a brave face after feeling the wrath of Wall Street. According to the Chief Executive Officer, Chip Clark, the company remains well positioned to come up with neoantigen cancer vaccines which should spearhead the next phase of growth and generate shareholder value.
The change of focus means the company will no longer develop its genital herpes treatment GEN-003 which was in late-stage clinical trials. However, the company plans to initiate a Phase 1 clinical trial of GEN-009, in the first half of next year, for the treatment of a range of tumor types.
“With our research and development efforts now focused entirely on neoantigen cancer vaccines, we believe the power of ATLAS to identify the right vaccine antigens, combined with our vaccinology expertise, gives us the opportunity to create value for our shareholders,” said Mr. Clark.
Genocea Workforce Reduction
The proposed 40% workforce reduction should be complete by the end of the third quarter leaving the company with about 55 employees. The reduction is part of a cost-saving strategy in which Genocea Biosciences Inc. (NASDAQ:GNCA) expects an annualized savings of up to $65 million on personnel-related costs. The company is also estimating one-time severance and related costs of about $1.1 million.
The proposed restructuring comes after the biopharmaceutical company posted second-quarter earnings that fell short of Wall Street expectations. For the three months ended June 30, 2017, Genocea Biosciences Inc. (NASDAQ:GNCA) posted a net loss of (-$15.4) million or (-$0.54) cents a share. Analysts were expecting a net loss of (-$0.46) cents a share.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.