Zentalis Pharmaceuticals announces restructuring with workforce reduction of approximately 40%

Zentalis Pharmaceuticals, Inc. (Nasdaq: ZNTL) said its board approved a strategic restructuring on January 22, 2025 that includes a workforce reduction of approximately 40%. The company disclosed the plan in a Form 8-K filed January 28, 2025. It believes its existing cash, cash equivalents and marketable securities will be sufficient to fund operating expenses and capital expenditure requirements into late 2027 following the plan.

What the filing says

The Board of Directors approved the plan to support late-stage development of azenosertib, the company's WEE1 inhibitor product candidate. The stated aim is also to extend the company's cash runway beyond a potentially registration-enabling azenosertib data readout from the DENALI Part 2 study, which the company anticipates by the end of 2026. A WEE1 inhibitor is a drug that blocks the WEE1 protein.

The filing says Zentalis expects to reduce its workforce by approximately 40%.

Costs and timing

Zentalis expects to incur one-time costs of approximately $7.0 million to $8.0 million in the first quarter of 2025 in connection with the cuts. The company says the costs consist primarily of cash expenditures for one-time termination benefits, some of which are contractual. They include severance, healthcare and related benefits, and other estimated non-cash expense.

The company estimates the cuts will be substantially completed in the second quarter of 2025. It also cautions that the cost and timing estimates depend on a number of assumptions and that actual results may differ materially. Zentalis says it may also incur additional costs that are not currently contemplated.

The cash runway statement

In Item 8.01 of the filing, Zentalis says that after the plan it believes its existing cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses and capital expenditure requirements into late 2027. The company labels the runway estimate a forward-looking statement.

The filing's cautionary note lists risk factors that could make actual results differ. They include losses the company has incurred and expects to continue to incur, a need for additional funding that may not be available, and substantial dependence on the success of azenosertib. It also notes the limited operating history of the company, which it says may make it difficult to evaluate its current business and predict its future success.

About the company

In its annual report on Form 10-K, filed February 27, 2024, Zentalis describes itself as a clinical-stage biopharmaceutical company focused on discovering and developing small molecule therapeutics that target fundamental biological pathways of cancers. The report names azenosertib (ZN-c3) as its lead product candidate, for advanced solid tumors and hematological malignancies. It says azenosertib is being evaluated as a monotherapy and in combination in multiple ongoing clinical trials, and that it has shown monotherapy anti-tumor activity in trials including in ovarian cancer and uterine serous carcinoma.

The company also describes a BCL-2 inhibitor, ZN-d5, being developed in combination with azenosertib, and research on protein degraders of undisclosed targets through what it calls its Integrated Discovery Engine. It says azenosertib was being evaluated in more than 10 ongoing and planned clinical trials at the time of that report, and that the company exclusively in-licenses or solely owns worldwide development and commercialization rights to azenosertib and ZN-d5.

Who is involved

Julie Eastland, President and Chief Executive Officer, signed the 8-K on behalf of Zentalis. The 10-K filed in February 2024 lists David M. Johnson as Chairperson and Cam S. Gallagher as President and Director.

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