SQZ Biotechnologies, a small Watertown, Mass.-based biotechnology company, will lay off 60% of its staff and replace its CEO as part of a research pivot announced Wednesday.
Armon Sharei, SQZ's founder and chief executive since its launch in 2015, is stepping down from his role immediately, the company said in its statement. Howard Bernstein, previously SQZ's chief scientific officer and member of its board of directors, will serve as interim CEO in Sharei's place.
Micah Zajic, SQZ's chief financial officer, is also stepping down, effective Dec. 31.
The biotech plans to reprioritize its research, changing focus to what it's calling a "second-generation" approach to the cell therapies it's been developing. It will also stop work on other research.
As a result of restructuring, SQZ will reduce its workforce by 60%, layoffs that it expects to "substantially complete" by January. The company employed 113 full-time staff at the end of last year.
"As we navigate an unprecedented operating environment, we plan to be disciplined with our capital and pursue opportunities where we see great potential promise,” said Bernstein. The company expects its reduced costs will allow it to fund its operations until 2024.
In a note to clients, Stifel analyst Stephen Willey wrote that, while the pipeline transition "isn't all that surprising," the change in leadership is.
"We view the management transition ... and full pipeline re-prioritization ... as incrementally negative announcements which increase near-term uncertainty," he wrote.
Shares in SQZ sank by 25% to trade below $2 a piece, valuing the company at just over $50 million. The company went public at $16 per share in October 2020.
Dozens of other biotechs have been forced to cut costs and lay off staff this year as a market downturn has limited funding options.