Arvinas, Inc. (NASDAQ:ARVN) shares fell sharply by 29% as the market reacted to the company’s announcement of a significant workforce reduction and the removal of two Phase 3 trials from its development plan. Despite reporting positive topline results from the Phase 3 VERITAC-2 trial and presenting promising data for its neuroscience program, the clinical-stage biotechnology firm’s decision to re-prioritize its development strategy and reduce costs, including cutting approximately one-third of its workforce, has raised concerns among investors.
The company’s first-quarter financial results revealed a cash position of $954.3 million, down from $1,039.4 million at the end of the previous quarter. The decrease was mainly due to cash used in operations and minor purchases of lab equipment and leasehold improvements. Research and development expenses saw an increase of $6.5 million compared to the same quarter last year, largely driven by external expenses related to various programs.
General and administrative expenses also rose by $2.3 million, attributed mainly to an uptick in professional fees and costs associated with preparing for commercial operations. However, the company reported a significant increase in revenue to $188.8 million, up from $25.3 million in the first quarter of the previous year, primarily due to changes in total program cost estimates following the removal of certain trials from the development plan with Pfizer (NYSE:PFE).
Arvinas emphasized the positive outcomes from its VERITAC-2 trial, which supports global regulatory filings, and highlighted data showing that its ARV-102 therapy can penetrate the blood-brain barrier and degrade LRRK2 protein in the central nervous system and peripheral regions. Despite these advancements, the company’s strategic shift, including the discontinuation of certain trials in collaboration with Pfizer, has prompted a reassessment of its business priorities and capital needs in light of recent challenges in the capital markets.
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