As summer heat turns to cool winds, hopes that this year would bring widespread industry relief have dissipated, with quarterly layoffs evening out to similar levels as the same time last year.
Forty-nine layoff rounds were reported in the third quarter of this year, compared to 46 in 2023, according to Fierce Biotech’s 2024 Layoff Tracker.
August saw a surge in workforce reductions, with 21 rounds reported, compared to July’s 17 and September’s 11.
The quarterly total falls in line with numbers from this year’s second quarter as well, when 39 rounds were tallied by Fierce Biotech. Both quarters are lower than the 58 rounds seen in 2024’s first quarter.*
At least 2,659 workers were impacted by biopharma layoffs in the third quarter. However, that number isn't a definitive total, because some companies only report the percentage of the workforce affected, while others don’t provide any information about how many employees are laid off.
Of the 27 times that companies did provide a percentage of staff eliminated, 43% was the mean and 37% was the median reduction size.
This year’s total layoff rounds are on track to meet 2023’s 187 layoffs, with 146 rounds reported in the first three quarters of 2024.
Of particular note are the layoffs occurring at gene editor Tome Biosciences in August. Less than a year after unveiling with $213 million, the biotech said it would be letting go of 131 employees—the majority, if not all, of its workforce.
“Despite our clear scientific progress, investor sentiment has shifted dramatically across the gene editing space, particularly for preclinical companies,” a Tome spokesperson told Fierce Biotech in an Aug. 22 emailed statement. The statement was provided before news of the layoffs broke and pertained to undisclosed operational cuts. “Given this, the company is operating at reduced capacity, maintaining core expertise, and we are in ongoing confidential conversations with multiple parties to explore strategic options.”
In May, the biotech revealed its lead programs to be a gene therapy for phenylketonuria and a cell therapy for renal autoimmune diseases, both in preclinical development. The company debuted in December 2023 with a $213 combined series A and B financing and hopes to usher in a “new era of genomic medicines based on programmable genomic integration.”
Another biotech included in the quarterly toll is Galera Therapeutics, a clinical-stage biotech that shuttered a year after the FDA rejected its radiotherapy complication drug. In mid-August, Galera’s board approved a liquidation plan that whittled down the company’s workforce to just three people. The move followed “extensive consideration of potential strategic alternatives” over the past year, according to Galera CEO Mel Sorensen, M.D.
As with last quarter, layoffs at Big Pharmas factored heavily into the data, with pink slips handed out across Bristol Myers Squibb, Bayer, Takeda, Astellas, Pfizer, Merck & Co. and Roche’s Genentech, the last of which closed the doors to its cancer immunology research department in August.
Notably absent from the roster of Big Pharmas restructuring are Novo Nordisk and Eli Lilly, two pharmas flush with cash from the obesity drug boom.
While layoffs are an inherent part of any market, workforce reductions picked up speed for biotech in 2022 after a peak in funding related to the pandemic began its descent. As investments returned to lower levels, biotechs have had to turn to creative alternatives for their financing, such as partnerships, venture debt loans, unique development funding arrangements, and of course the cash-saving workforce reductions.
Failure is part of biotech after all, a business that is fundamentally risky. Layoff rounds are often tied to clinical failures, as seen at Aadi Bioscience or Lykos Therapeutics this August.
The current stability in layoff numbers is not necessarily bad news—it’s certainly better than rates that continue to climb. Plus, many of the displaced workers are funneled back into the industry, picking up jobs at new biotechs that continue to debut. For example, Candid Therapeutics unveiled in September with $370 million and Ken Song, M.D., at the helm. Or Arsenal Bio, a cell therapy company that’s raised $325 million and touts a team of 265 people—and growing.
Lately, other parts of the industry have shown signs of recovery, such as a recent uptick in IPOs and a pair of billion-dollar VC fund closures.
Perhaps the last few months of 2024 could still bring reprieve for biotech, after all. Here's to hoping.
* Figures for the first and second quarters are slightly higher than previously reported to include retroactive additions.