In a striking turn of events within the San Francisco Bay Area’s biotech landscape, Third Harmonic Bio, once valued at a staggering $1 billion, has announced its decision to cease operations and liquidate its assets. Founded in 2019, Third Harmonic Bio carved a niche for itself as a clinical-stage biopharmaceutical company, focusing on innovative treatments for chronic inflammatory diseases affecting the skin, respiratory system, and gastrointestinal tract. Most notably, it had been developing THB335, a promising treatment for chronic spontaneous urticaria, commonly known as hives.
The company’s recent announcement on April 14 came after a series of challenging months, including a significant workforce reduction of 50% earlier in February. According to LinkedIn, Third Harmonic Bio employed fewer than 60 individuals at its peak, a size that underscores the impact of its recent decisions on a tightly-knit team of innovators. The decision to shut down operations was unanimously approved by the board of directors on April 10, and they are now seeking shareholder approval for the dissolution plan, slated for June 5.
In a candid statement, CEO Natalie Holles emphasized the company’s commitment to maximizing shareholder value. “Our management team and board of directors together have completed an efficient review of our strategic alternatives for maximizing the value of our assets and have determined that returning cash to shareholders and selling our assets, including THB335, is the best path forward,” she noted. This sentiment reflects a broader trend in the biotech industry, where companies often face tough decisions in the face of financial adversity.
The THB335 program, although not yet approved for commercialization, was anticipated to extend beyond treating chronic hives to potentially addressing severe asthma and other inflammatory conditions. This potential was part of what made the company’s dissolution particularly poignant for investors and the medical community alike. Holles expressed pride in the team’s past achievements despite the unfortunate circumstances, stating, “We are proud of the work that our team has done over the past years to advance our science, to make tough decisions, and to act with integrity in the best interest of our patients and shareholders.”
As part of the liquidation process, Third Harmonic Bio has halted all projects unrelated to the THB335 program, signaling a focused effort to streamline operations in the final stretch. If shareholders approve the dissolution plan, the company anticipates distributing between $245.6 million and $259.8 million to its investors, translating to approximately $5.13 to $5.42 per share. This payout may provide some solace to shareholders amid the unfolding developments.
However, the company also warned of the precarious position it would face if the dissolution plan were not approved. In a recent filing, they stated, “If our stockholders do not approve the Plan of Dissolution, we would have to continue our business operations from a difficult position, in light of our announced intent to dissolve and liquidate.” This highlights the integral role of shareholder support in navigating such transitions, particularly in an industry where innovation is both costly and time-consuming.
The dissolution of Third Harmonic Bio marks the second significant loss for the Bay Area biotech scene in 2023, following the recent wind-down of Cargo Therapeutics, which had been focused on next-generation cell therapies for cancer treatment. This trend raises questions about the sustainability of early-stage biotech ventures, especially in a landscape that demands both substantial investment and successful clinical outcomes.
As we reflect on Third Harmonic Bio’s journey, it serves as a poignant reminder of the volatility inherent in the biotech sector. The challenges faced by emerging companies underscore the need for innovation, strategic pivoting, and perhaps most importantly, robust financial planning. For stakeholders—be it investors, employees, or patients—the narrative unfolding at Third Harmonic Bio illustrates the delicate balance between ambition and reality in the pursuit of groundbreaking medical advancements.
