Gritstone bio, Inc. (NASDAQ:GRTS), a biotechnology company, has disclosed a significant reduction in its workforce and the impending delisting of its common stock from the Nasdaq Stock Market. The company, which specializes in biological products, announced that it will lay off approximately 25 employees by November 15, 2024, constituting a 19% decrease in its total workforce, to maintain a remaining staff of about 101 employees. This decision comes as part of the company's efforts to restructure operations amid Chapter 11 bankruptcy proceedings.
The layoffs are expected to result in a one-time charge of approximately $300,000, primarily due to severance payments, with the majority of these costs anticipated to affect the fourth quarter of 2024. Impacted employees will receive all earned wages and unused paid time off, in addition to a severance payment equivalent to 30 days of employment.
Furthermore, on October 11, 2024, Gritstone bio received a Delisting Notice from Nasdaq, prompted by its Chapter 11 filing and related public concerns, as well as doubts about the company's ability to meet continued listing requirements. As a result, Gritstone's common stock is set to be suspended from trading at the start of business on October 22, 2024, followed by the formal removal of the company's securities from Nasdaq.
Gritstone bio has opted not to appeal the delisting decision. The company's management confirmed the developments in an 8-K filing with the U.S. Securities and Exchange Commission, as per the obligations under the Securities Exchange Act of 1934. The information provided is based on a press release statement.
In other recent news, Gritstone bio has seen significant developments regarding its GRANITE cancer vaccine. Interim Phase 2 data indicated a 21% relative risk reduction in disease progression or death in the overall treated population, and a 38% reduction in a subgroup with low circulating tumor DNA. However, analysts from B.Riley, Jones Trading, and JMP Securities downgraded Gritstone bio, citing concerns about the company's financial position and interim data. On the other hand, TD Cowen and Piper Sandler maintained positive ratings on the company.
The company reported a second-quarter net loss of $23 million, with cash reserves of $62 million and $40 million in debt. To tackle these financial challenges, Gritstone bio has engaged Raymond James as a financial advisor to explore strategic options. Despite the promising trial results, the company's limited cash reserves and debt balance have raised concerns about its financial sustainability.
In other company news, Gritstone bio announced the election of Elaine Jones, Ph.D., and Clare Fisher to its Board of Directors. Additionally, the company's stockholders approved the compensation of executive officers. These developments come as Gritstone bio continues to analyze data from its ongoing GRANITE study and consult with regulatory authorities.
InvestingPro Insights
The recent developments at Gritstone bio, Inc. (NASDAQ:GRTS) are reflected in the company's financial metrics and market performance. According to InvestingPro data, GRTS has experienced a dramatic decline in its stock price, with a 1-week price total return of -65.42% and a 1-year price total return of -96.98%. This aligns with the company's announcement of workforce reduction and impending delisting from Nasdaq.
InvestingPro Tips highlight that GRTS is "quickly burning through cash" and "operates with a significant debt burden," which provides context for the company's decision to file for Chapter 11 bankruptcy and restructure its operations. The tip indicating that GRTS "suffers from weak gross profit margins" is corroborated by the InvestingPro data showing a gross profit margin of -718.3% for the last twelve months as of Q2 2024.
These insights underscore the financial challenges facing Gritstone bio and offer additional perspective on the company's current situation. For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for GRTS, providing a deeper understanding of the company's financial health and market position.
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