Cash-Strapped Biotech Firm Codiak Files for Bankruptcy Protection

March 28, 2023

(Reuters) -Codiak BioSciences Inc said on Monday it has filed for U.S. bankruptcy protection in the latest blow to the struggling drug developer's ambitions of making a COVID-19 vaccine.

The Chapter 11 bankruptcy filing ends months of investor uncertainty after the company, which has been facing a cash crunch, raised going concern doubts and cut its workforce by 37% last year.

The company said on Monday it will cut an additional 34 jobs, bringing its total number of employees to 19, and expects to incur severance-related costs of about $1.1 million.

Codiak previously said it would prioritize its COVID-19 vaccine development program that was funded by a global vaccine coalition, while halting development of two cancer drug candidates which were ready for mid-stage study.

The company will also wind down a clinical trial of its drug for a type of bone marrow cancer, according to a filing on Monday.

The $2.5-million funding by the Coalition for Epidemic Preparedness Innovations in July was aimed at an experimental vaccine that would target COVID-19 as well as other coronaviruses.

Pre-clinical data from the company's vaccine last year showed it produced a durable immune response against multiple SARS-CoV-2 variants.

Cambridge, Massachusetts-based Codiak said on Monday its executive management team will leave the firm effective April 7.

Challenging macro conditions and a dearth of large acquisitions has led to investors favoring companies that are testing their therapies or vaccines in humans, versus earlier-stage biotech companies, analysts have said.

Several smaller companies in the sector have been forced to cut jobs or restructure to save cash.

Codiak's shares fell 63.6% to a record low of 16 cents on Monday. The drug developer had a market cap of $16.21 million as of last close, according to Refinitiv data.

(Reporting by Bhanvi Satija and Sriparna Roy in Bengaluru; Editing by Shounak Dasgupta)