Philadelphia-area life sciences industry nears 900 layoffs since 2022

The article originally appeared in the Philadelphia Business Journal.

By John George – Senior Reporter, Philadelphia Business Journal | October 18, 2024

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The number of job cuts by the local life sciences industry since the start of 2022 is approaching 900, according to a Business Journal analysis.

During that nearly three-year stretch, the sector has largely struggled to attract investment capital from jittery investors who are favoring less risk options. That has resulted in companies narrowing their research focus and resorting to layoffs to conserve cash.

The most recent example occurred last week when West Chester-based Verrica Pharmaceuticals announced it was reducing its workforce by 47 people, nearly half it workforce. Verrica (NASDAQ: VRCA), which markets the skin disorder drug Ycanth, said it was restructuring its sales and operating teams to reduce costs and expand access to its flagship product.

Since Jan. 1, 2022, the Business Journal’s review of state and federal filings, in addition to announcements from area life sciences companies and research organizations found 18 area companies and organizations have eliminated a total of 883 positions.

Nationally, over the past two years, the biotechnology and pharmaceutical industry has experienced more than 20,000 layoffs — a period that has been dubbed as the “biotech winter” due to slow growth, high interest rates and stagnant investing.

The number of local layoffs is higher with Spark Therapeutics declining to provide a specific number of jobs it eliminated earlier this year as part of a strategy to discontinue several early-stage programs and focus on its therapies in later-stage development. Additionally, the analysis does not include layoffs at small private life sciences that are not required to file Work Adjustment and Retraining Notifications with the state or material business notices with the Securities and Exchange Commission.

Public life sciences companies with layoffs so far 2024 include:

• Carisma Therapeutics, Philadelphia — 40 positions
• Marinus Pharmaceuticals, Radnor — 33 positions
• Arbutus Biopharma, Warminster— 30 positions
• Trevena Pharmaceuticals, Chesterbrook — 8 positions
• Galera Therapeutics, Malvern — 4 positions

Large industry layoffs locally have also included Inovio trimming a combined 132 workers in 2002 and 2023, Penn gene therapy program laying off 84 last December, and Adaptimmune cutting 68 employees in November 2022. Center for Breakthrough Medicines laid off 60 workers in August 2023.

Claire Marrazzo Greenwood, senior vice president for economic competitiveness at the Chamber of Commerce for Greater Philadelphia, said the job reduction trend in the local life sciences industry is “consistent with the broader innovation economy” since 2022. She notes the life sciences industry supports 1,200 companies and institutions in the region, and 88,000 jobs.

Chris Frew, founder of BioBuzz, a biosciences workforce community and events company based in Maryland, believes the “biotech winter” may be thawing.

“There are still going to be layoffs, but in general I think we’ve reached a plateau,” Frew said. “I think we’re headed in the other direction with a lot of the restructuring done.… We’ve kind of stabilized, and we’re seeing more investments in late-stage companies.”

Frew said BioBuzz has started to see an uptick in employers discussing plans to hire staff. BioBuzz operates as an alternative to traditional employment recruitment agencies in that it uses storytelling, events and recruitment marketing to engage audiences and reach active and passive job seekers.

Philadelphia, he said, has weathered the biotech winter better than many markets. He attributes that to its 60-plus company cell and gene therapy sector that has been able to attract investment capital.

Chris Molineaux, CEO of Life Sciences Pennsylvania, noted the high-risk of the industry and capital-intensive nature of drug and device development.

“Given this risk, coupled with rising interest rates, fears of inflation and other public policy uncertainty, we have seen investors stay on the sidelines for much longer than in recent memory,” he said.

The result, he said, is many companies have shelved or temporarily deprioritized programs to focus on new drug candidates that are in late-stage testing or have demonstrated the greatest probability of success.

“Unfortunately,” Molineaux said, “in many cases this means the jobs associated with those programs [are eliminated] as well.”

Just one local life sciences company this year completed an initial public stock offering. ArriVent Biopharma of Newtown Square, which is focused on bringing biopharmaceutical medicines approved and under development in China to the U.S. and European Union, raised $175 million from its IPO in January.

A handful on local life sciences companies have raised more than $100 million in private equity investment deals led by Third Arc Bio of Lower Gwynedd, which raised $165 million in August, and Impulse Dynamics, which raised $136 million in February.

Among the dozen Philadelphia-area life sciences companies that have reduced staff since the start of 2022, two companies — Passage Bio (NASDAQ: PASG) and Inovio (NASDAQ: INO) — have each trimmed their workforces three separate times.

The region has also seen two companies file for bankruptcy during the past three years.

PhaseBio, which had offices in Malvern and San Diego, filed for Chapter 11 in October 2022 shortly it was sued for alleged breach of contract by its California development partner SFJ.

In early 2023, the company transferred the assets of for its drug candidate bentracimab assets to SFJ Pharmaceuticals for $32.9 million. PhaseBio, which had about 50 employees in Chester County prior to the bankruptcy filing, has since winded down its operations.

Baudax Bio, also of Malvern, filed for Chapter 11 in February, a year after it shelved its lone product in the market, the pain medicine Anjeso. The company said it shelved the drug, which had to be administered in a health center, due to “persistent economic challenges facing hospitals.” Baudax has received a court extension allowing the company to file its reorganization plan by Oct. 19.