Rocket Pharmaceuticals announced Thursday it is laying off 30% of its workforce and strategically realigning its pipeline to focus on late-stage cardiovascular gene therapies, following a turbulent year marked by regulatory setbacks and clinical holds.
The New Jersey-based biotech will eliminate 80 positions at its Cranbury facility, beginning October 23 and continuing through year-end, according to a Workers Adjustment and Retraining Notification (WARN) Act notice. The layoffs will reduce Rocket's 12-month cash burn by almost 25% and extend the company's cash runway into the second quarter of 2027, compared to late 2026 under the previous plan.
Pipeline Prioritization Amid Regulatory Challenges
The workforce reduction accompanies a strategic narrowing of Rocket's pipeline priorities. The company will concentrate resources on its cardiovascular gene therapies, including programs for Danon disease, PKP2-associated arrhythmogenic cardiomyopathy, and BAG3-associated dilated cardiomyopathy. This shift reflects the company's focus on late-stage assets to maximize near-term shareholder value.
The strategic pivot follows significant regulatory turbulence for Rocket. In May, the FDA imposed a clinical hold on the company's pivotal Phase II study for Danon disease after a patient died following treatment with investigational gene therapy RP-A501. The patient developed complications associated with capillary leak syndrome, prompting Rocket to voluntarily suspend dosing before the FDA's regulatory freeze.
Jefferies analysts noted uncertainties surrounding RP-A501, particularly regarding when the clinical hold will be lifted. "We anticipate months," the analysts said, adding that "we could see meaningful stock upside as we receive more visibility." They emphasized the importance of Rocket establishing that the patient death "was an isolated event."
Hematology Programs Face Delays
The pipeline refocusing significantly impacts Rocket's hematology assets. The company was targeting FDA approval for RP-L102 in Fanconi anemia next year but has abandoned that timeline as part of the prioritization. Rocket also expects delays to its pyruvate kinase deficiency program RP-L301.
Leukocyte adhesion deficiency-I gene therapy Kresladi remains the only hematology candidate on Rocket's priority list. The FDA rejected the therapy last year, citing manufacturing issues in a complete response letter. Rocket is currently working on submitting a response to address the regulatory concerns.
Financial Implications and Strategic Outlook
Rocket expects to incur $3.5 million in costs from the restructuring, primarily from severance payments to the 80 affected employees. The company began notifying staff on Wednesday and aims to complete layoffs by August 8.
The biotech could potentially benefit from a priority review voucher if Kresladi wins approval, though Rocket hasn't factored this into its cash runway calculations. Priority review vouchers have been selling for $150 million or more, representing a potential significant revenue opportunity.
Rocket ended last year with 299 full-time employees. The 30% workforce reduction represents a substantial downsizing as the company adapts to regulatory challenges and focuses resources on its most promising late-stage cardiovascular programs.
