Sutro Biopharma Announces Second Round of Layoffs Amid Strategic Refocus

Sutro Biopharma, a biotechnology company specializing in antibody-drug conjugates (ADCs), has announced a second round of layoffs this year, further reducing its workforce by a third. This latest restructuring comes as the company continues to realign its focus on next-generation ADC programs and extends its financial runway.

Workforce Reduction and Pipeline Prioritization

In a move that follows a previous 50% headcount reduction in March, Sutro Biopharma is now parting ways with an additional third of its remaining staff. CEO Jane Chung, who took the helm in March, stated, "After continued review of our business and pipeline priorities, we have identified and are implementing further operational efficiencies to focus our resources where they will have the greatest impact."

The initial layoffs earlier this year were tied to Sutro's decision to deprioritize luveltamab tazevibulin, a FolRα-targeting ADC that was being evaluated in multiple clinical trials, including a phase 2/3 study for platinum-resistant ovarian cancer. The company has since shifted its focus to next-generation exatecan and dual-payload ADC programs, despite these candidates not yet having entered clinical trials.

Financial Outlook and Development Pipeline

Sutro ended June with $205.1 million in cash, which the company now expects to last into mid-2027, an extension from the previous projection of early 2027. This extended runway is crucial for the company's plans to advance its lead candidate, STRO-004, into clinical trials.

STRO-004, a Tissue Factor-targeting exatecan ADC, is anticipated to enter the clinic later this year. Chung affirmed, "We remain on track to advance STRO-004 into the clinic this year, with initial data expected in 2026." The company is also continuing work on two other preclinical ADCs, including an integrin beta-6 candidate, with plans to initiate human trials for one of these by 2027.

Recent Setbacks and Future Direction

The restructuring follows a significant setback in August when Ipsen decided to terminate an $875 million deal for Sutro's ROR1-directed ADC. Ipsen cited a "review of new data and developments in the ROR1 landscape" as the reason for backing out. Sutro has confirmed it has no plans to develop this drug internally.

Despite these challenges, Sutro remains committed to its refined strategy. "Importantly, these changes extend our expected financial runway through critical milestones and strengthen our ability to create value for both patients and shareholders," Chung emphasized. The company's focus now lies squarely on advancing STRO-004 and its other preclinical ADC candidates, as it navigates a competitive landscape in the ADC field.