After PhIII disaster, NewLink Genetics plots reorganization

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On the heels of devastating Phase III trial results for its pancreatic cancer vaccine, NewLink Genetics will undergo a restructuring, downsizing by 100 employees, reducing manufacturing capacity and lowering its headquarters space.

The biotech’s overhaul will see the company focus on its late-stage Merck ($MRK) Ebola vaccine collaboration and other R&D programs including a checkpoint inhibitor program with Roche’s ($RHHBY) Genentech, according to an earnings release issued on Friday. NewLink ($NLNK) posted a loss of $1.12 per share in the second quarter, 35 cents worse than analysts had forecast.

The second-quarter results stem from yet another late trial failure in the troubled cancer vaccines field. Back in May, NewLink reported that its pancreatic cancer vaccine algenpantucel-L actually did worse than standard therapy in a large Phase III study.

But the company's Ebola vaccine collaboration with Merck has shown success. Merck recently reported that the FDA and EMA granted the vaccine milestones to assist it through the regulatory process following a Phase III trial in which it protected all participants. Merck, which licensed the vax from NewLink, is planning to file for approval in 2017.

With the refocus, NewLink plans to downsize its Ames, IA, headquarters from 133,000 square feet to 66,000 square feet and wind down its manufacturing capabilities for algenpantucel-L, among other moves intended to highlight R&D.

The Phase III blowup in May was just one in a line of cancer vaccine failures as bets in the field have so far have failed to produce notable successes. After flops from GlaxoSmithKline ($GSK) and Merck KGaA in cancer vaccines, many now believe checkpoint inhibitor combinations will help cancer vaccines fare better. Pharmas such as Bristol-Myers Squibb ($BMY), Johnson & Johnson ($JNJ) and AstraZeneca ($AZN) have so far signed on to that idea by inking lucrative deals with cancer vaccines players, one potentially worth more than $1 billion.

- here's the release

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