Biotechnology firm Arbutus (NASDAQ:ABUS) — which specializes in virology — announced a major overhaul of its business. It will dramatically cut headcount in an effort to streamline operations and focus on its most promising therapeutic candidates. The Arbutus layoffs will result in a 40% reduction in the company’s workforce. Though steep, ABUS stock gained about 1% in the early afternoon session.
According to a MarketWatch report, the notable aspect of the shakeup is that Arbutus “plans to cease all Hepatitis B Virus discovery efforts, including its Im-Prove III clinical trial.” Per the company’s profile, the biopharmaceutical firm focuses on developing novel therapeutics for chronic hepatitis B virus (cHBV) infection.
Instead, the biotech will focus on its candidate, imdusiran. In a statement accompanying the entity’s second-quarter earnings report, Interim President and CEO Michael J. McElhaugh reported impressive clinical results with the therapeutic. Given the research data, McElhaugh believes that imdusiran may represent “a potential cornerstone therapeutic in a treatment regimen to functionally cure cHBV.”
The Arbutus CEO added that the company intends to focus its “existing resources on conducting a Phase 2b clinical trial with imdusiran, assuming continued positive data. This has the potential to create a true inflection point for both Arbutus and HBV patients.”
Wall Street Views the Arbutus Layoffs Constructively
While the Arbutus layoffs undoubtedly hit the impacted employees hard — the company only has 73 full-time workers, per its profile — Wall Street views the headcount reduction constructively. After an initial bout of volatility, investors began bidding up ABUS stock. Since the start of the year, shares have gained about 47%.
Per MarketWatch, the pink slips will mainly impact members of the biotech’s discovery and administrative units. Further, the action item “will incur a one-time restructuring charge of approximately $3 million to $4 million, which will be recorded in the third quarter.”
Significantly, management mentioned with the Arbutus layoffs and the accompanying organizational changes and cost-management efforts, it “now expects its current cash, cash equivalents and investments in marketable securities will be sufficient to fund operations into the fourth quarter of 2026.”
Regarding the Q2 report, Arbutus posted a quarterly loss of 11 cents, slightly worse than the expected loss of 10 cents. However, the company managed to post revenue of $1.73 million for the June quarter, beating the consensus target by 12.08%. However, the latest tally is a noticeable decline from the year-ago quarter’s sales of $4.65 million.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
