Neoleukin Therapeutics is slashing its workforce by about 70% as it seeks “strategic alternatives” for its future, according to a company statement Wednesday.
The publicly traded Seattle biotech company hired investment bank SVB Securities to review potential alternatives including a sale, merger, asset divestiture or licensing.
“It was a difficult decision to restructure our workforce as we conduct this review of strategic alternatives; however, we believe it was a prudent decision that will maximize shareholder value,” said board chairman Todd Simpson in the statement.
Neoleukin’s stock was up more than 30% in Thursday trading.
The company said CEO Jonathan Drachman will also step down after a short transition. Drachman, a former executive at Seagen, led Neoleukin since it spun out of the University of Washington in 2019.
The job cuts are expected to be completed by the end of June.
The cuts are the second round of layoffs for the company, which announced a 40% workforce reduction in November. Neoleukin currently has 46 employees, according to a spokesperson, down from 77 in September.
The November layoffs coincided with a decision by Neoleukin to discontinue development of a computationally designed protein therapeutic being tested in a phase 1 trial.
The protein was designed to mimic the powerful immune molecules Interleukin-15 and Interleukin-2 (IL-2). IL-2 can quell cancer but it can also have toxic effects, which Neoleukin’s protein aimed to to minimize. The trial was the first to test a synthesized protein engineered “de novo” from scratch, according to the company.
The program was shuttered “based on a review of the preliminary data, the expected benefit to risk ratio for patients, and recent developments in the field of IL-2 therapeutics,” according to a November company statement. Neoleukin shifted its focus to developing other protein therapeutics.
In Wednesday’s statement, Simpson cited “challenging capital markets” and the time and investment needed to further develop Neoleukin’s technology as barriers.
Multiple other companies are testing IL-2 therapies in the clinic, including Cue Biopharma, Anaveon and Aulos Bioscience. Seattle biotech company Good Therapeutics sold its IL-2 program to Roche for $250 million in September and later rebranded as Bonum Therapeutics.
Neoleukin was incubated at the UW’s Institute for Protein Design and merged with another biotech company to go public in August 2019, raising more than $40 million. Neoleukin later raised $86.2 million in a public offering. As of September 30, the company had $106.9 million in cash, cash equivalents and short-term investments.
The layoffs are the latest to hit biopharma in Washington state, which has seen workforce cuts at Absci, Zymeworks, TwinStrand Biosciences, NanoString Technologies, Sana Biotechnology, Eliem Therapeutics and others. Last week Novo Nordisk announced it was laying off 86 workers and shutting a lab site in Seattle.
More than 40 biotech companies have laid off employees this year, adding to 119 last year, according to Fierce Biotech’s layoff tracker. Novartis and other big pharma companies have also seen workforce cuts.