The biotech industry is currently experiencing significant restructuring as companies adjust to changing market conditions and research priorities. As an industry analyst who’s been tracking these developments for over a decade, I’ve observed a concerning trend of workforce reductions across multiple organizations. The recent announcement from Vaxart Inc. about cutting approximately 10% of its staff following a U.S. government order to halt its Phase IIb oral COVID-19 vaccine trial exemplifies the challenges facing biotech firms today.
Understanding the Recent Wave of Biotech Layoffs
The pattern of staff reductions in early 2025 continues a trend that began in earnest during 2024, which saw major players like Bayer, Bristol Myers Squibb, and Johnson & Johnson implement substantial workforce reductions. These decisions reflect both immediate financial pressures and strategic pivots as companies reassess their research portfolios.
Vaxart’s situation is particularly interesting as their reduction follows directly from regulatory intervention. According to their SEC filing, the company had 105 employees and $51.7 million in cash and investments as of December 31, 2024. The company now faces a 90-day waiting period to learn whether the stop-work order will be canceled, extended, or if the COVID-19 vaccine trial will be terminated completely.
Elevation Oncology presents another instructive case. Following disappointing Phase I results, the company announced it would discontinue development of its claudin 18.2 antibody-drug conjugate and lay off approximately 70% of its workforce. Despite this dramatic reduction, the company reports having $93.2 million in cash reserves, supposedly sufficient to fund operations into the second half of 2026 as they pivot to focus on their HER3 candidate EO-1022.
Biotech – Strategic Shifts Behind the Reductions
Having consulted with numerous biotech executives during similar transitions, I’ve noticed that these workforce reductions often accompany fundamental shifts in company strategy. TC BioPharm exemplifies this trend, cutting about 20 employees (half its workforce) as part of a transition toward a CDMO (Contract Development and Manufacturing Organization) model.
This approach allows smaller companies to outsource manufacturing rather than maintaining expensive in-house capabilities. According to TC BioPharm’s press release, this restructuring should generate approximately $4.2 billion in annualized savings. CEO Bryan Kobel framed the decision as positioning the company for “future clinical trial plans as well as advancements in new cell therapy manufacturing technologies.”
The most extreme example comes from Cargo Therapeutics, which is laying off 90% of its remaining staff after already cutting 50% of its workforce earlier this year. The company is suspending all development operations, including work on its trispecific CAR-T candidate and allogeneic platform, to “preserve cash and maximize shareholder value.” This essentially transforms the company into a shell seeking a reverse merger or similar business arrangement.
Biotech – The Broader Industry Impact
These workforce reductions reflect a biotech sector undergoing significant transformation. From my experience analyzing industry trends, several factors are likely contributing to this wave of restructuring:
- Reallocation of resources toward high-priority programs with clearer paths to approval
- Adaptation to changing funding environments and investor expectations
- Response to regulatory shifts and government priorities
- Technological advances that enable more efficient research with smaller teams
For scientists and other professionals in the biotech industry, these changes create both challenges and opportunities. While job security may decrease, those with expertise in priority areas like cell and gene therapy, immunology, and computational biology may find their skills in even higher demand.
Implications for Innovation and Research Direction
The concentration of resources on fewer programs has significant implications for the breadth of biotech innovation. When companies like Vaxart curtail vaccine research or Elevation abandons oncology candidates, potentially valuable approaches may go unexplored.
I’ve witnessed this phenomenon repeatedly throughout my career. During the early 2010s, several promising neurological disease candidates were abandoned as companies shifted focus to oncology. Today, we’re seeing some companies move away from pandemic preparedness to concentrate on more immediately profitable therapeutic areas.
For patients and healthcare systems, these shifts may create gaps in addressing certain medical needs. The halt of Vaxart’s oral COVID-19 vaccine work, for instance, affects the development of potentially more accessible vaccination options for future variants or pandemic threats.
While industry consolidation and focus can accelerate progress in selected areas, the overall narrowing of research directions may slow discoveries that emerge from pursuing diverse approaches. The most transformative breakthroughs often come from unexpected directions and programs that initially seemed less promising.
As biotech companies continue navigating these challenging waters in 2025, the industry’s capacity to maintain scientific diversity while achieving financial sustainability will determine whether this period of contraction ultimately strengthens or weakens its ability to address unmet medical needs.
