(Reuters) – Nektar Therapeutics said on Monday it would lay off about 70% of its workforce, or more than 500 employees, after stopping the development of its key cancer drug earlier in the month.
The company scrapped all clinical trials of the drug, bempegaldesleukin, including those in combination with Bristol Myers Squibb Co’s cancer drug Opdivo, after the therapy failed to meet the main goal in several studies.
The layoffs are expected to result in a charge of between $150 million and $160 million, most of which would be recorded in the second quarter, Nektar said. Its chief medical officer and chief commerical officer would also step down.
Shares of the company were 3% lower in extended trading.
Nektar said the restructuring would help ensure that it has enough capital to fund the development of drugs that it considers “most impactful” to its future.
These include NKTR-358, an experimental treatment for autoimmune and inflammatory diseases that is being developed in partnership with Eli Lilly, and NKTR-255, which is being studied in clinical trials in patients with head and neck and colorectal cancer.
The company expects to end the year with about $440 million to $450 million in cash and investments and no debt.
(Reporting by Amruta Khandekar; Editing by Aditya Soni)