Sutro Biopharma Undergoes Major Restructuring Amid Strategic Shift

Sutro Biopharma, a clinical-stage drug discovery, development, and manufacturing company, has announced a significant restructuring plan that includes leadership changes, workforce reductions, and a shift in its product pipeline focus. The move comes as part of a strategic portfolio review aimed at extending the company's cash runway and prioritizing next-generation antibody-drug conjugate (ADC) programs.

Leadership Change and Workforce Reduction

In a surprising turn of events, Sutro Biopharma's CEO Bill Newell has stepped down from his position, with the company's board citing a mutual agreement that it was "the right time to transition leadership." Jane Chung, who previously served as the company's president and chief operating officer, has been promoted to the role of CEO.

Accompanying this leadership shakeup is a substantial workforce reduction, with Sutro planning to lay off nearly 50% of its staff. This drastic measure is expected to result in redundancy-related payments ranging from $40 million to $45 million.

Strategic Shift in Product Pipeline

The restructuring plan includes a major shift in Sutro's product pipeline strategy. The company has decided to deprioritize its lead candidate, luveltamab tazevibulin (luvelta), a FolRα-targeting antibody-drug conjugate that was being evaluated in multiple clinical trials for platinum-resistant ovarian cancer, non-small cell lung cancer, and a type of acute myeloid leukemia in pediatric patients.

Despite promising results announced as recently as December, including a 32% objective response rate in evaluable patients who received the 5.2-mg/kg starting dose of luvelta in the first part of a phase 2/3 ovarian cancer study, Sutro has opted to focus on its next-generation exatecan and dual-payload ADC programs.

The company's new lead asset will be an exatecan tissue factor ADC targeting solid tumors, with an Investigational New Drug (IND) submission expected in the second half of 2023. Additionally, Sutro plans to advance an integrin beta-6 ADC into the clinic next year and aims to submit an IND for a dual-payload ADC in 2027.

Manufacturing and Financial Outlook

As part of its cost-saving measures, Sutro plans to vacate its drug substance manufacturing facility in San Carlos, California, by the end of the year. The company cites significant progress in building external manufacturing capacity for its next-generation ADC portfolio as the reason for this decision.

These strategic changes are expected to substantially reduce operating costs and extend Sutro's cash runway into the fourth quarter of 2026. As of the beginning of the year, the company reported having $316.9 million in cash reserves. This financial projection does not include potential milestone payments from existing collaborations with pharmaceutical companies such as Ipsen and Astellas, which could potentially bring in up to $2 billion in additional funds.