The end is near for Neoleukin Therapeutics. Months after laying off 40% of its staff and dropping its lead candidate, the de novo protein specialist has revealed plans to part company with 70% of its remaining employees, including its CEO, and hunker down while it searches for a strategic alternative.
In 2019, Neoleukin rode the wave of interest in IL-2 spurred by Bristol Myers Squibb’s massive bet on the cytokine by merging with Aquinox Pharmaceuticals to secure itself a Nasdaq listing and cash. Neoleukin stood out among the clutch of companies seeking to tame IL-2, a powerful but problematic molecule, because it designed a protein to mimic the action of the cytokine from scratch.
Hopes that Neoleukin’s approach would yield better results than other IL-2 programs faded late last year when preliminary monotherapy data from a phase 1 trial of NL-201 caused the biotech to stop work on its de novo IL-2/IL-15 agonist.
At the time, Neoleukin planned to pivot to preclinical, leading it to reduce its head count—which stood at 77 at the end of September—and focus on advancing its next-generation de novo protein therapeutics. With $107 million in the bank, the company calculated that it could keep going into the second half of 2025 without securing additional funding.
Neoleukin has now pulled back from the preclinical pivot plan and tasked SVB Securities with helping it find strategic alternatives such as a sale or merger. Todd Simpson, chairman of the board at Neoleukin, explained the thinking behind the change in plan.
“Based on the anticipated time and investment necessary to further develop the technology and potential product candidates in this challenging capital markets environment, we believe that it is appropriate to pursue other strategic options,” Simpson said in a statement.
As part of the changes, Neoleukin CEO Jonathan Drachman, M.D., will be stepping down “after a short transition.” Drachman is one of a number of Neoleukin employees who may now be polishing up their résumés. With the 70% layoffs coming hot on the heels of the 40% head count reduction, Neoleukin is down to a small crew, enabling it to preserve cash as it looks for an exit.