AI drug developer BenevolentAI is facing another wave of layoffs, this time slashing 30% of its workforce as it ditches its software ambitions. The company, grappling with a failed clinical trial and investor cold shoulder, is shutting down its US office and doubling down on its core drug development business in a desperate bid to extend its cash runway.
This marks the second round of major cuts for BenevolentAI in less than a year. The company shed a significant portion of its staff in May 2023 following a disappointing mid-stage trial for their eczema treatment. Back then, they emerged with a two-pronged strategy: build their own drug pipeline while creating software tools (“Knowledge Exploration Tools”) to sell to other pharma players.
Software Pivot Fizzles, Jobs Vanish
However, those software dreams appear to have fizzled out. BenevolentAI completed product development and user testing but determined that the commercialization costs and timeline for their software-as-a-service (SaaS) product were simply unfavorable. In simpler terms, the software wasn’t generating enough excitement to justify the investment needed to launch it.
This realization comes as BenevolentAI stares down a financial cliff. Their stock price has languished below €1 ($1) for most of 2024, severely limiting their ability to raise new capital. While future milestones might bring in cash, their current runway isn’t enough to reach those paydays.
Back to Basics: Drug Discovery and Out-licensing
Faced with this harsh reality, BenevolentAI is making a sharp turn back to its core business – drug discovery. The latest round of layoffs likely targets the software team, with those resources being reallocated to their internal pipeline, particularly the development of BEN-8744, a treatment for ulcerative colitis. This shift is estimated to extend their cash runway to late Q3 2025, offering a temporary reprieve.
Collaboration as a Lifeline
To bridge the remaining gap, BenevolentAI is aggressively seeking new partnerships and exploring out-licensing opportunities for existing programs. They aim to leverage their existing ties with pharma giants like AstraZeneca and Eli Lilly, potentially bringing in additional funding without needing a direct cash infusion.
The company assures investors they’ll maintain the expertise required to support these collaborations despite the layoffs. However, a big question mark remains – will this renewed focus on drug discovery and out-licensing be enough to convince investors to open their wallets again? BenevolentAI’s future hinges on their ability to find new sources of funding and deliver successful drug programs, a task that just got a whole lot harder after this round of significant staff cuts.
