UPDATE 2-Allogene to cut 22% of its workforce
(Adds background and analyst comments in paragraphs 2,4-6, share movement in paragraph 3)
Jan 5 (Reuters) - Allogene Therapeutics said on Friday it will cut 22% of its workforce, as the gene editing company shifts focus to developing its blood cancer therapy.
The announcement comes shortly after the company, which had 361 employees as of February 2023, had said it will no longer focus on two of its studies testing blood cancer therapy Cema-Cel.
Shares of the California-based company fell over 20% in premarket trading.
Allogene added that trial activities were underway for a new study for the same class of therapy and will focus on developing it as a first-line treatment for patients with a type of blood cancer.
Analysts at TD Cowen said the move was "surprising yet thoughtful", while Truist noted it enables the company to "achieve a much more commercially attractive outcome".
B. Riley Securities said ending the two studies would introduce potential delays in bringing the cell therapy to market.
Allogene estimates it will incur charges of about $5.0 million to $5.5 million associated with the layoffs.
The reduction in workforce is expected to be completed by the end of January 2024. (Reporting by Christy Santhosh; Editing by Krishna Chandra Eluri)
