ALLO - Allogene Layoffs 2024: What to Know About the Latest ALLO Job Cuts
2024-01-05 12:25:58 ET
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Biotechnology company Allogene (NASDAQ: ALLO ) is certainly not having the day that many in the company’s C-Suite may have anticipated. Shares of ALLO stock are plunging yet again, dropping more than 15% on two key announcements .
More specificially, a major round of layoffs and a pipeline shakeup have many investors scrambling to understand what this will mean for the company moving forward. Allogene announced a cut of around 22% of its workforce today, citing the move as necessary in order to reduce the company’s cash burn.
Additionally, the company announced that it will “deprioritize its mid-stage ALPHA2 and EXPAND trials for its anti-CD19 AlloCAR T candidate, cemacabtagene ansegedleucel (cema-cel).” This shift in focus moves the firm away from its lymphoma research, with Allogene deciding to instead focus on its Phase 2 trial of ALPHA3. The 230-patient study is anticipated to begin sometime around the middle of this year, but investors don’t appear to be receiving this news well.
Let’s dive into what to make of Allogene’s announcements today.
ALLO Stock Down on Job Cuts, Pipeline Refocus
Any time a clinical-stage company can reduce its cash burn, that’s generally considered to be a good thing for investors. Accordingly, today’s price action with ALLO stock is certainly worrisome.
On the one hand, reducing its workforce to such an extent could inhibit the company’s timelines moving forward. And, while this reduction will reportedly allow Allogene to extend its financial runway into 2026, the market appears to be sending a clear message that it doesn’t like how resources are being utilized, or how the company’s management team is prioritizing its pipeline.
One-time charges of between $5 million and $5.5 million are expected to hit the books during the first quarter of this year as well, so there’s some immediate financial impact to price in. All said, investors seem to be viewing the news as broadly negative.
As we await updated guidance from Allogene in its upcoming earnings report, many investors appear to be selling first and asking questions later.
On the date of publication, Chris MacDonald did not hold (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 .
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