The shares of Gritstone Bio saw a significant drop late Thursday as the company revealed plans to reduce its workforce by approximately 40%. The stock plummeted by 23% in after-hours trading to $2.15, following a 1.4% decline at the close of Thursday’s session. Despite this setback, shares have shown a 37% increase since the beginning of the year.
Funding Setback Leads to Workforce Reduction
Based in Emeryville, California, Gritstone Bio attributed the decision to the delayed clinical study, which resulted in the company missing out on anticipated external funding. The company initially planned to commence a trial for a cutting-edge Covid-19 vaccine in the first quarter but had to postpone it to fall 2024. With this delay came a setback in securing additional funding, causing the need for the substantial reduction in workforce.
Strengthening Cash Position Amid Financial Pressure
CEO Andrew Allen emphasized the importance of bolstering the company’s cash reserves due to the lack of immediate external funding. Gritstone Bio anticipates cash expenditures of around $2.5 million for severance and benefit expenses, as disclosed in a regulatory filing.
