Biotech layoffs 2025: Prothena joins the wave—What’s driving the restructuring trend?

The announcement by Prothena Corporation plc to significantly reduce its workforce after halting birtamimab development has become the latest headline in a widening pattern of biotech downsizing seen throughout 2025. Once hailed for aggressive innovation and rapid post-pandemic expansion, the biotech sector is now facing a recalibration moment—marked by job cuts, program halts, and organizational restructuring.

This is not an isolated case. Companies like Biogen, Amgen, and Novartis have also undertaken restructuring initiatives in recent months, citing similar themes: portfolio reprioritization, weak late-stage trial results, and investor pressure to conserve cash. Against this backdrop, Prothena’s move is emblematic of broader industry headwinds. The company will formally detail the scope of its cost-reduction plan, including the expected layoffs, in June 2025.

The reasons for the trend are multifaceted. Interest rate pressures, tightening venture capital, reimbursement uncertainties, and clinical trial failures are contributing to an industry-wide reassessment. Prothena’s decision to curtail birtamimab’s development after disappointing Phase 3 data fits into a larger narrative: biotech firms are increasingly trimming non-performing or high-risk assets and cutting costs to protect runway.

How Does Prothena’s Layoff Plan Fit Into the 2025 Biotech Reset?

While Prothena has not yet disclosed exact numbers, its language of a “substantial reduction in organizational size” signals a deep workforce restructuring. The timing is notable—occurring just months before critical updates on its Alzheimer’s program PRX012 and ongoing partnered trials with Roche, Bristol Myers Squibb, and Novo Nordisk.

This form of strategic austerity—cutting headcount while doubling down on high-potential programs—has emerged as a favored tactic in 2025. Institutional investors have shown preference for leaner biotech structures, especially those that channel resources into programs with clearer regulatory and commercial pathways. By eliminating the sunk cost attached to birtamimab, Prothena is aligning itself with this risk-managed operating model.

For a clinical-stage company, burn rate discipline is survival strategy. And in a year when access to secondary offerings and PIPE deals has been limited, internal capital preservation has become non-negotiable. Prothena’s layoffs are part of a broader playbook that prioritizes platform sustainability over broad R&D diversification.

What Other Biotech Companies Have Followed a Similar Path?

Prothena joins a growing list of biotech and pharma players that have made similar announcements in 2025:

Biogen began the year by announcing another wave of job cuts as part of its post-Leqembi commercial pivot, realigning efforts toward biosimilars and neurology. Amgen undertook program-level consolidation, closing several early-stage projects to focus on inflammation and oncology. Novartis and Bristol Myers Squibb, though more diversified, also indicated pipeline pruning and global workforce optimization to align with therapeutic area priorities.

Smaller clinical-stage companies have seen even deeper cuts. Many have pivoted to virtual operations, paused IND filings, or sought M&A exits as a path to liquidity. Overall, layoffs in the biotech sector have surpassed 15,000 globally as of May 2025, according to tracking from BioSpace and Fierce Biotech.

What Does This Mean for Prothena’s Long-Term Pipeline?

While layoffs often signal contraction, they can also serve as pipeline refocusing mechanisms. For Prothena, birtamimab’s exit frees up internal bandwidth for PRX012’s Phase 1 Alzheimer’s trial, due to read out in August 2025, as well as partnered assets like PRX005 and others still in early-stage development. These programs remain aligned with strategic partners such as Roche, Novo Nordisk, and Bristol Myers Squibb.

The company’s Board Chair, Daniel G. Welch, stated that operational spending cuts were being developed in consultation with financial advisors and would be executed “thoughtfully and expeditiously.” This suggests that layoffs are being coordinated as part of a broader financial strategy rather than reactionary downsizing. Shareholders are watching closely to see whether these cuts stabilize balance sheet metrics without compromising the scientific foundation.

The effectiveness of this realignment depends heavily on how well Prothena can maintain morale and operational continuity in its remaining staff, while advancing programs that now carry heightened strategic weight.

What Is Driving the Macro Shift in Biotech Employment?

Several macroeconomic forces are contributing to the biotech employment contraction in 2025. First, rising interest rates have altered the cost of capital, discouraging speculative investment. Biotech companies that previously relied on aggressive Series C or D rounds are now finding private capital markets more selective and conservative.

Second, regulatory delays and payer pushback—especially in expensive, chronic care indications like Alzheimer’s, oncology, and rare diseases—have made commercial timelines harder to predict. This has eroded investor patience, forcing management teams to focus on assets with faster or clearer return profiles.

Third, the biotech boom of 2020–2021 led to overhiring in R&D, clinical operations, and commercial build-outs—a trend now being reversed as companies “right-size” to reflect current realities. Even large-cap biopharma players are not immune, as they look to offset revenue pressures from patent expirations and weak emerging market growth.

This structural reset is expected to continue into 2026, with some companies embracing mergers or licensing deals as alternatives to job cuts. However, for firms like Prothena that remain independent, internal workforce recalibration remains the most immediate tool for fiscal resilience.

How Are Investors Reacting to Biotech Layoffs in 2025?

Market reaction to layoffs in biotech this year has been largely neutral-to-positive, particularly when cuts are positioned as part of strategic realignment. In Prothena’s case, while its stock declined after the birtamimab announcement, the prospect of reduced cash burn and focused pipeline investment has been welcomed by certain institutional holders.

Analysts have suggested that further upside in Prothena’s valuation could come if PRX012 delivers favorable data in Q3, paired with proof of execution in downsizing efforts. Investors are placing a premium on management discipline and capital efficiency, especially in companies with validated partnerships and late-stage visibility.

While employee morale and public image remain important, Wall Street is primarily rewarding firms that can show resource optimization without derailing strategic goals. In this light, Prothena’s layoffs may ultimately be seen as an unfortunate but necessary step in its reconfiguration.

As Prothena joins a swelling list of biotech firms trimming their headcount in 2025, the industry trend reflects more than isolated struggles—it marks a sector-wide transformation. In a market that now demands capital prudence and program selectivity, layoffs have become a symbol of adaptive survival. For Prothena, the true measure will lie not just in cost savings, but in its ability to extract value from what remains.