aibioSutro Biopharma to cut about 50% of workforce in restructuring, names new CEO
Tickers STRO
Sutro will deprioritize luvelta, exit its manufacturing facility and cut about 50% of staff, with costs of $40 million to $45 million. Jane Chung succeeds William J. Newell as CEO. Cash was $316.9 million at year-end.
Key facts
- Company
- Sutro Biopharma, Inc. (NASDAQ: STRO)
- News type
- Distress
- Primary source
- SUTRO BIOPHARMA, INC. Form 8-K filed March 13, 2025 (SEC EDGAR)
Sutro Biopharma, Inc. (Nasdaq: STRO) said on March 13, 2025 that it will cut about 50% of its workforce, deprioritize its most advanced clinical candidate and replace its chief executive officer. The company disclosed the restructuring in a Form 8-K under Item 2.05, the item for costs tied to exit or disposal activities.
The company estimates total cash payments and costs of about $40 million to $45 million for the luvelta pullback and the workforce reduction, with a significant majority expected to be paid in 2025. About $20 million to $25 million relates to deprioritizing luvelta-related activities, and the remaining $20 million is for the workforce reduction. The company says actual results may differ.
What the restructuring covers
Sutro completed a strategic portfolio review that puts three wholly owned preclinical programs in its next-generation antibody drug conjugate (ADC) pipeline first. The first of those is STRO 004, an exatecan ADC against Tissue Factor, which the company expects to enter the clinic in the second half of 2025.
Sutro will deprioritize further investment in luveltamab tazevibulin, or luvelta, mainly across clinical and manufacturing functions. It will keep exploring global outlicensing for luvelta, which means licensing its rights to another company. It also plans to exit its internal GMP manufacturing facility by year-end, citing its progress in externalizing its cell-free manufacturing.
Cash, revenue and spending
In a press release issued the same day, Sutro reported cash, cash equivalents and marketable securities of $316.9 million as of December 31, 2024, down from $388.3 million at September 30, 2024. It expects cash runway into at least the fourth quarter of 2026, excluding anticipated milestones from existing collaborations.
Revenue fell to $62.0 million in 2024 from $153.7 million in 2023. The company says the 2024 amount came principally from the Astellas collaboration and the Tasly agreement. Total operating expenses rose to $300.5 million from $243.0 million, and the net loss was $227,461 thousand against $106,793 thousand in 2023. Cost reductions from the restructuring, combined with refocused clinical development, are expected to support the runway.
Leadership changes
Under Item 5.02, the 8-K reports three executive transitions. William J. Newell, President, Chief Executive Officer and a director, ceased to serve as CEO and resigned from the board effective March 13, 2025, after the company filed its 10-K for 2024. He will provide transition services through May 1, 2025. His separation terms include two cash payments totaling $1,066,500.00, equal to 150% of his annual salary, eighteen months of accelerated vesting on equity awards and a prorated 2025 bonus. The filing says the departure was a mutual agreement and not the result of any disagreement with the company.
The board appointed Jane Chung, President and Chief Operating Officer since December 2023, as CEO and as a Class II director. Her amended offer letter sets a base salary of $675,000, a target bonus of 60% of base salary, and awards of 620,000 stock options and 310,000 restricted stock units. The filing says she held roles at AstraZeneca from 2015 to 2021 and worked in commercial roles at Genentech from 2003 to 2013.
Chief Financial Officer Edward C. Albini will leave on May 15, 2025 under a mutual agreement. He will receive two cash payments totaling $629,375.40, equal to 125% of his annual salary, and accelerated vesting on equity awards. Chief Medical Officer Dr. Anne Borgman's transition took effect March 13, 2025, under a mutual agreement.
About the company
Sutro's annual report filed March 25, 2024 describes a clinical-stage oncology company developing site-specific and novel-format ADCs on its XpressCF cell-free protein synthesis platform. That report named luvelta as its most advanced product candidate. The company now says it is deprioritizing that candidate.
What comes next
Most of the cost is expected to be paid in 2025. The 8-K gives no outlicensing deal for luvelta, and the runway into the fourth quarter of 2026 excludes anticipated collaboration milestones. The refocused pipeline depends on STRO 004 entering the clinic in the second half of 2025, as the company expects.