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id: 507, Created by Stan Vick, Scout
Orchard Therapeutics Unexpected Business Cut-Off Case
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On November 4, 2021, Orchard Therapeutics (NASDAQ: ORTX) reported disappointing Q3 GAAP Ruslts with EPS and Revenue missed estimates.
- Going back to June 29, 2021, Orchard issued an update on the progress of its lead gene therapy programs pointing out delays in the submission for marketing approval in the U.S. for Libmeldy (OTL-200) in metachromatic leukodystrophy (MLD). In reaction, Cantor Fitzgerald analyst Emma Nealon has lowered the price target of the stock by ~29.4%.
- Earlier, within multiple data releases and investor presentations, the Company and its Leaders did not indicate any issues or delays, including in November 2022 on OTL-200, December 2021 on OTL-201 and OTL-200 in the EU, January 2022 on OTL-103, OTL-200, and OTL-203, February on OTL-200, OTL-203, May 2022 on OTL-101.
But later in March 2022, Orchard Therapeutics reported its Q4 result and said it plans to refine its portfolio and undertake a 30% proposed workforce reduction, including:
- The company said it plans to focus its hematopoietic stem cell (HSC) gene therapy platform exclusively on severe neurometabolic diseases and early research programs.
- It plans to seek strategic alternatives for primary immunodeficiency programs, including OTL-103 in Wiskott-Aldrich syndrome.
- The Company has proposed to reduce its current workforce by ~30%, which will result in a restructuring charge in 2022.
- It noted that the actions are intended to extend its cash runway into 2024 and focus operations on the highest-value programs in its portfolio.
- As of Dec. 31, 2021 cash, cash equivalents and investments, were ~$220.1M, with $33M of debt outstanding, compared to $191.9M and $25M of debt outstanding as of Dec. 31, 2020.
- The Company expects R&D expenses to decline beginning in Q2 due to the portfolio updates and workforce reduction and the completion of activities to support the OTL-200 BLA submission.
Investors have reasons to suspect that the Company and Management did not properly inform shareholders of the extent of the problems that could lead to such an unexpected business cut-off. Therefore, Investors have every reason to suspect that the Company and its Leaders withheld information and misinformed them, which led to the complete depreciation of their shareholdings by over 80%.
Failure to Disclose,
Shock Event Date
04 November 2021