Cut loose by BARDA, Biota slashes R&D and hunts for a survival strategy

The news out of Biota Pharmaceuticals has been a steady drumbeat of defeat, setbacks and layoffs for the past two years. And this week the dirge grew even louder with the announcement that the biotech company is slashing the bulk of its staff several weeks after it lost a key government contract to support its work on a new flu drug.  

Investors never much cared for the reverse merger that Biota ($BOTA) pulled off with Nabi back in 2012, which the Australian group used to get into the U.S. market and close to its sponsors at BARDA. Shares went down as Biota used the failed Nabi operation--which went into decline on the failure of a nicotine addiction vaccine--to get a Nasdaq listing.

A year ago, Biota Pharmaceuticals decided to cut back on research and focus on the development of laninamivir octanoate--a long-acting neuraminidase inhibitor--under a contract with BARDA. Its facility in Rockville, MD, was closed, staffers were cut and the HQ was relocated to Atlanta. Then even more cuts followed last fall when its declining fortunes forced the biotech to dump its work on antibiotics. But the real pain came in late April, when Biota announced that BARDA had issued a stop-work order, which the biotech claimed was triggered by the end of the flu season. A few days later, BARDA yanked the $231 million contract for laninamivir.

Shares are down 63% over the past three months.

Biota's research facility in Melbourne is being shuttered as the company axes two-thirds of its employees. According to a report in The Australian, that means that 55 investigators in Melbourne--representing one of the longest lasting biotech operations Down Under--are being cut in the coming months.

The remaining staffers are staying on board to see if they can orchestrate some sort of a comeback strategy, looking for some new deals that could salvage its work on laninamivir, another program for vapendavir and some preclinical work on RSV. More data on its advanced programs are expected in the third quarter.

"We believe that these operational changes, while very unfortunate and difficult to make, will more closely align our ongoing fixed costs with our expected revenues going forward and allow us to continue to support our later-stage clinical and preclinical programs," said CEO Russell Plumb in a statement.

- here's the release from Biota
- here's the story from The Australian