Just over a year after striking an obesity deal with Novo Nordisk, an SEC filing shows Flagship Pioneering spinout Omega Therapeutics is days away from bankruptcy and will lay off up to 17 employees.
Despite a 2024 collaboration with obesity giant Novo Nordisk, Omega Therapeutics appears to have reached the end of its rope, with bankruptcy looming just ahead. As its cash runway fizzles, the epigenomic medicines company has entered into a restructuring support agreement with its founder, Flagship Pioneering.
According to an SEC filing dated Jan. 29, Omega has until Feb. 10 to commence bankruptcy proceedings and go through a sale process with Pioneering Medicines, an affiliate of Flagship Pioneering, to potentially wind down operations. The company will provide a bridge loan of about $1.4 million upon the signing of the agreement. Up to 17 employees are to be laid off effective immediately.
Omega had previously warned investors of its cash concerns in a November SEC filing which stated the company had only enough capital to take it into the second quarter of 2025. Omega attempted to cut costs last March when it laid off 35% of its workforce, representing more than 30 staffers based on its headcount at the end of 2023.
In another sign of trouble, Nasdaq sent a written notice to the company in late January after its stock price sat below $1 for 30 consecutive days, according to the Jan. 29 filing. Year to date the stock has dropped 55% to around 35 cents.
Struck in January 2024, Omega’s deal with Novo—worth up to $532 million—focused on creating an mRNA therapeutic to treat obesity. In contrast to most obesity therapeutics which focus on regulating appetite, Omega’s unique approach worked to boost thermogenesis, a natural metabolic function of the body’s innate ability to produce heat within tissues.
While the filing makes no mention of the collaboration with Novo, a spokesperson for Flagship told Endpoints News in an emailed statement that the company is “committed to ensuring the continuity of Omega’s program in obesity management.”
The arrangement with Flagship will provide Omega cash to continue operations for a short time and provide a path for selling assets, according to the filing. Both the company’s CEO and senior vice president will receive a retention bonus to stay aboard the sinking ship through at least the end of June.
