[Strategic and Corporate Updates](index=1&type=section&id=Corporate%20and%20Program%20Updates) In Q1 2025, Sutro Biopharma executed a significant strategic shift, discontinuing the development of luvelta to prioritize its wholly-owned, next-generation ADC portfolio, including exatecan and dual-payload ADCs, accompanied by a major corporate restructuring, including the appointment of **Jane Chung** as the new **Chief Executive Officer**, a **nearly 50%** reduction in headcount, and plans to decommission its manufacturing facility by **year-end 2025** - Announced a **strategic decision** to shift focus from luvelta to a pipeline of wholly-owned novel exatecan and dual-payload ADCs[3](index=3&type=chunk)[5](index=5&type=chunk) - **Jane Chung**, formerly **President and COO**, was appointed as **Chief Executive Officer** and a member of the Sutro Board[10](index=10&type=chunk) - The company is reducing its organizational headcount by **nearly 50%** and decommissioning its manufacturing facility by **year-end 2025**[10](index=10&type=chunk) [Pipeline and Collaborations](index=1&type=section&id=Wholly-Owned%20Pipeline) Sutro's pipeline is now led by **STRO-004**, a Tissue Factor-targeting ADC, with an IND submission planned for the **second half of 2025**, and the company anticipates filing three INDs for its wholly-owned programs over the next three years, while key collaborations, such as with Astellas, continue to advance, with one program triggering a **$7.5 million** milestone payment to Sutro after initiating IND-enabling toxicology studies - **STRO-004**, a next-generation Tissue Factor-targeting ADC, has been selected as the lead clinical candidate, with an IND planned for **2H 2025**[3](index=3&type=chunk)[4](index=4&type=chunk)[8](index=8&type=chunk) Wholly-Owned Pipeline Development Timeline | Program | Description | Anticipated IND/Clinical Entry | | :--- | :--- | :--- | | **STRO-004** | Novel exatecan Tissue Factor ADC | 2H 2025 | | **STRO-006** | Differentiated integrin beta-6 (ITGB6) ADC | 2026 | | **Dual-Payload ADC** | First wholly-owned dual-payload ADC | 2027 | - Presented promising preclinical data for **STRO-004** at AACR, showing potent anti-tumor activity and a favorable safety profile[3](index=3&type=chunk)[8](index=8&type=chunk) - The Astellas collaboration for dual-payload iADCs advanced with one program entering an IND-enabling toxicology study, triggering a **$7.5 million** milestone payment to Sutro[3](index=3&type=chunk)[4](index=4&type=chunk)[8](index=8&type=chunk) [Financial Results](index=3&type=section&id=First%20Quarter%202025%20Financial%20Highlights) For the first quarter of 2025, Sutro reported revenue of **$17.4 million** and a net loss of **$76.0 million**, which includes **$21.0 million** in restructuring costs, and the company ended the quarter with **$249.0 million** in cash and marketable securities, providing an expected cash runway into **early 2027** [Financial Performance](index=3&type=section&id=Revenue) In Q1 2025, revenue grew to **$17.4 million** from **$13.0 million** in Q1 2024, primarily driven by the Astellas collaboration, while operating expenses totaled **$85.9 million**, including **$21.0 million** in restructuring costs related to the deprioritization of the luvelta program, resulting in a net loss of **$76.0 million**, or **($0.91)** per share Q1 2025 vs Q1 2024 Statement of Operations (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Revenue** | $17,399 | $13,008 | | Research and development | $51,597 | $56,878 | | General and administrative | $13,273 | $12,721 | | Restructuring and related costs | $21,043 | $0 | | **Total operating expenses** | $85,913 | $69,599 | | **Loss from operations** | ($68,514) | ($56,591) | | **Net loss** | ($75,968) | ($58,213) | | **Net loss per share** | ($0.91) | ($0.95) | - Revenue increased to **$17.4 million** for Q1 2025, compared to **$13.0 million** for Q1 2024, with the 2025 amount principally related to the Astellas collaboration[12](index=12&type=chunk) - The company incurred **$21.0 million** in restructuring and related costs during Q1 2025 due to the deprioritization of the luvelta program[14](index=14&type=chunk)[20](index=20&type=chunk) [Financial Position and Liquidity](index=3&type=section&id=Cash%2C%20Cash%20Equivalents%20and%20Marketable%20Securities) As of March 31, 2025, Sutro had **$249.0 million** in cash, cash equivalents, and marketable securities, a decrease from **$316.9 million** at the end of 2024, with total assets of **$321.4 million** and total liabilities of **$347.2 million**, and despite the cash burn, cost reductions from the recent restructuring are expected to extend the cash runway into **early 2027** - Cash, cash equivalents and marketable securities totaled **$249.0 million** as of March 31, 2025[4](index=4&type=chunk)[11](index=11&type=chunk) - The current cash position, combined with cost reductions from restructuring, provides an expected cash runway into **early 2027**, excluding potential future milestone payments[4](index=4&type=chunk)[11](index=11&type=chunk) Selected Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Cash, cash equivalents and marketable securities** | $248,972 | $316,895 | | **Total Assets** | $321,430 | $387,207 | | **Total Liabilities** | $347,241 | $342,606 | | **Total Stockholders' (Deficit) Equity** | ($25,811) | $44,601 |

Company Overview - Sutro Biopharma, Inc. is focused on the discovery and development of precisely designed cancer therapeutics, particularly antibody drug conjugates (ADCs) [3] - The company utilizes innovative technology, including cell-free XpressCF, to enhance patient benefits and experiences [3] - Sutro is advancing a robust early-stage pipeline of novel exatecan and dual-payload ADCs, supported by high-value collaborations and industry partnerships [3] Upcoming Events - Sutro management will participate in two investor conferences: - The Citizens Life Sciences Conference on May 7-8, 2025, in New York, NY [2] - BofA Securities 2025 Health Care Conference on May 13-15, 2025, in Las Vegas, NV [2] - Webcasts of the presentations will be available on the company's website, with archived replays accessible for at least 30 days post-event [2]

Core Insights - Sutro Biopharma, Inc. announced promising preclinical findings for STRO-004, a novel antibody drug conjugate (ADC) targeting tissue factor, showcasing its anti-tumor activity and favorable safety profile [1][2] - The company will present its findings at the 2025 American Association for Cancer Research (AACR) Annual Meeting, highlighting the advantages of its XpressCF+ platform in developing dual-payload ADCs [1][2] Preclinical Findings - STRO-004 demonstrated potent, dose-dependent anti-tumor activity and a favorable safety profile across all tested doses in preclinical studies [2] - After a single dose, STRO-004 achieved promising overall response and disease control rates in Tissue Factor-positive patient-derived xenograft models across multiple cancer types [2] Technology and Platform - Sutro's XpressCF+ platform enables the creation of dual-payload ADCs with higher drug-to-antibody ratios and fully site-selective conjugation of two linker payloads [2] - The platform addresses limitations of conventional ADCs and the challenges of targeting complex disease biology, reinforcing the company's technology leadership [2] Presentation Details - The poster presentation titled "Preclinical activity and safety of STRO-004, a novel ADC targeting tissue factor for solid tumors" will take place on April 28, 2025, at the AACR meeting [3] - Another presentation will focus on enhancing Topo1i ADC efficacy through the development of homogeneous dual-payload ADCs [3] Company Overview - Sutro Biopharma is focused on discovering and developing precisely designed cancer therapeutics, leveraging its cell-free XpressCF technology for broader patient benefits [4] - The company is advancing a robust early-stage pipeline of novel exatecan and dual-payload ADCs, supported by high-value collaborations and industry partnerships [4]

Core Insights - Sutro Biopharma, Inc. announced expanded data from the REFRαME-O1 trial for luveltamab tazevibulin (luvelta) in patients with platinum-resistant ovarian cancer, showcasing promising results at the SGO Annual Meeting [1][2] Group 1: Clinical Data and Results - Luvelta demonstrated encouraging antitumor activity in late-stage ovarian cancer patients with Folate Receptor-α (FRα) expression of 25% or greater, achieving an overall response rate (ORR) of 32% at the optimized dose of 5.2 mg/kg [2][9] - The disease control rate (DCR) at the 5.2 mg/kg dose was 96%, compared to an ORR of 13.8% and a DCR of 69% for the 4.3 mg/kg group [9] - Safety profiles were consistent across dosing groups, with no new safety signals observed and neutropenia well-managed [9] Group 2: Treatment Implications - The data suggests potential for improved patient responses compared to standard chemotherapy, particularly for patients with FRα expression between 25% and 75%, addressing an important unmet medical need [3] - The optimized dosing regimen selected was 5.2 mg/kg + G-CSF for two cycles, followed by 4.3 mg/kg [2] Group 3: Company Strategy and Future Directions - Despite the promising data, the company announced it is deprioritizing investment in the development of luvelta across all indications and is exploring out-licensing opportunities [5] - Luveltamab tazevibulin is designed to treat a broad range of ovarian cancer patients, including those with lower FRα expression, and has received Fast Track designation from the FDA for ovarian cancer [7]

Financial Data and Key Metrics Changes - The company has completed a strategic portfolio review, resulting in the prioritization of three wholly owned preclinical programs and plans to submit three INDs in three years starting in 2025 [4][5] - The company's cash runway extends into at least Q4 of 2026, not including anticipated milestones from existing collaborators or potential additional business development [5][6] Business Line Data and Key Metrics Changes - The strategic review led to the deprioritization of additional investment in the development of Lavelta bisutro, with a focus on advancing the next generation ADC pipeline [5][6] - The company is reducing its workforce by nearly 50% by year-end to align resources with new strategic priorities [5][6] Market Data and Key Metrics Changes - The company is exploring global out-licensing opportunities for Lavelta, believing in its potential for patients with difficult-to-treat cancers [5][6] - The ADC pipeline is expected to provide differentiated treatment options, with a focus on complex biology and challenging targets [10][11] Company Strategy and Development Direction - The company aims to advance its next generation ADC pipeline, with a focus on unique design features that improve tolerability, pharmacokinetics, and efficacy [9][10] - The company is committed to externalizing its cell-free manufacturing capabilities to optimize production and reduce costs [5][6] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging macro environment and the need to pivot resources towards the early pipeline [5][6] - The company remains optimistic about the potential of its ADC candidates and the ability to deliver growth based on its platform and R&D team [13][14] Other Important Information - The company has established partnerships with world-class partners such as Astellas and Ipsen, enhancing its long-term potential [10][11] - The proprietary technology allows for precise design of ADCs, which is expected to differentiate the company's candidates in the market [8][9] Q&A Session Summary Question: What should we know about the next steps for Lavelta? - The company is looking to deprioritize and wind down additional investment in Lavelta while actively seeking a partner to realize its full potential [20][21] Question: How much data will be available this year to support the IND for STRO4? - The company plans to file an IND and initiate first-in-human trials later this year, with initial clinical data expected in 2026 and 2027 [23][24] Question: Were the layoffs mostly in the discovery area? - The majority of layoffs are tied to Lavelta work streams, with a focus on reallocating resources to align with new strategic priorities [29][30] Question: How will the deprioritization of Lavelta affect study enrollment? - The company is looking to deprioritize and wind down expenses related to Lavelta while seeking a partner to take over its clinical development [34][35] Question: What are the key reasons for discontinuing the Lavelta program? - The decision to deprioritize Lavelta is based on the capital required to take it to market, not due to any clinical findings [42][43] Question: How much should R&D and SG&A be going down this year? - The company expects a dramatic decrease in overall expenditures for the remainder of 2025 and into 2026 and beyond [48][49]

Core Viewpoint - Sutro Biopharma is prioritizing its antibody-drug conjugates (ADC) pipeline while undergoing significant restructuring, including workforce reduction and deprioritization of certain drug developments [1][2]. Financial Performance - The company reported a loss of $2.96 per share for 2024, an increase from a loss of $1.78 the previous year, and missed the consensus estimate of $2.92 [4]. - Sales for 2024 were $62.04 million, exceeding the consensus of $59 million, but down from $153.7 million a year ago, primarily driven by collaborations with Astellas and Tasly [4]. Strategic Changes - Sutro plans to cease operations at its San Carlos manufacturing facility by the end of 2025 and is reducing its workforce by nearly 50% [2]. - The company has deprioritized further investment in Luveltamab tazevibulin (luvelta, STRO-002) across all indications and is exploring global out-licensing opportunities for this drug [2]. Cash Position and Runway - As of December 31, 2024, Sutro had $316.9 million in cash, cash equivalents, and marketable securities [2]. - The company estimates that cash payments from its strategic portfolio review and related restructuring will be between $40 to $45 million, providing a cash runway into at least the fourth quarter of 2026, excluding anticipated milestones from existing collaborations [3]. Pipeline Developments - Sutro's ADC targeting Tissue Factor, STRO-004, is expected to enter clinical trials in the second half of 2025 [6]. - The differentiated integrin beta-6 ADC, STRO-006, is set to begin clinical development in 2026, targeting multiple solid tumors [6]. - An Investigational New Drug (IND) application for Sutro's first wholly-owned dual-payload ADC is anticipated to be filed in 2027 [6]. Leadership Changes - Jane Chung, the current President and Chief Operating Officer, will take on the responsibilities of Chief Executive Officer and Board member immediately [4].

Company Performance - Sutro Biopharma, Inc. reported a quarterly loss of $0.89 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.86, and a significant decline from earnings of $0.42 per share a year ago, indicating an earnings surprise of -3.49% [1] - The company posted revenues of $14 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 34.11%, but this represents a decline from year-ago revenues of $113.72 million [2] - Over the last four quarters, Sutro Biopharma has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - Sutro Biopharma shares have declined approximately 27.2% since the beginning of the year, contrasting with the S&P 500's decline of -4.8% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.86 on $15 million in revenues, and for the current fiscal year, it is -$2.95 on $61.38 million in revenues [7] Industry Outlook - The Medical - Biomedical and Genetics industry, to which Sutro Biopharma belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - As of December 31, 2024, the company had an accumulated deficit of $786.9 million and reported a net loss of $227.5 million for the year ended December 31, 2024, compared to a net loss of $106.8 million for the year ended December 31, 2023[176]. - The company expects to incur significant operating losses for the foreseeable future due to high costs associated with research and development, preclinical studies, and clinical trials[176]. - The company anticipates that additional funding will be necessary to advance product development and may seek funds through collaborations, licensing agreements, or equity offerings[177]. - Future capital requirements may vary significantly, and the company may need to seek additional funds sooner than planned due to uncertainties in research and development timelines[179]. Product Development and Regulatory Approval - The company has no products approved for commercial sale and has not generated any revenue from commercial product sales[176]. - The company plans to seek regulatory approval for its product candidates in the United States and selected foreign countries, which involves compliance with varying regulatory requirements[187]. - The success of the company's product candidates, including STRO-004, depends on successful clinical trials, regulatory approvals, and establishing commercial manufacturing capabilities[188]. - The regulatory approval process for the company’s novel product candidates may be more complex and lengthy due to limited prior experience with similar therapeutics[197]. - The time required to obtain FDA and other regulatory approvals is unpredictable and can take many years, affecting the timeline for product development[328]. - Delays in obtaining regulatory approval could materially affect the company's ability to generate revenues from its product candidates[330]. Research and Development - The company has invested significantly in research and development activities, which are capital-intensive and require substantial additional funds as product candidates progress[178]. - The company has not yet demonstrated the ability to successfully navigate the risks associated with biotechnology product development, which remains speculative and high-risk[175]. - Patient enrollment for clinical trials is influenced by various factors, including the size of the patient population and competing trials, which may lead to delays[190]. - The company may face significant variability in clinical trial results, which could negatively impact the development timeline and regulatory approval prospects[200]. Manufacturing and Supply Chain - The company plans to wind down its manufacturing activities in San Carlos, California, by the end of 2025, transitioning to an outsourced manufacturing model[220]. - The hybrid product supply approach currently used may be impacted by the planned shutdown of the San Carlos facility, potentially affecting product quality and clinical trial timelines[226]. - Manufacturing processes must comply with FDA and foreign regulatory authority standards, and failure to do so could hinder product development and commercialization[228]. - Scaling up manufacturing processes for product candidates is complex and may lead to delays or prevent successful commercialization[231]. Competition and Market Dynamics - The company faces intense competition from larger biopharmaceutical firms and emerging biotechnology companies, which may affect its market penetration and commercialization efforts[245]. - The success of the company depends on developing therapeutics that are safer and more effective than competing products, as competing products could reduce or eliminate commercial opportunities[247]. - If the company's advanced product candidates are approved, they will compete with a range of oncology therapeutics, including tumor-targeting monoclonal antibodies and CAR-T cell therapies[248]. Intellectual Property and Legal Risks - The company's success relies on obtaining and maintaining sufficient patent protection for its technologies, which is critical for the development and commercialization of product candidates[282]. - The patent application process is time-consuming and expensive, with no guarantee of obtaining enforceable patents in all jurisdictions[285]. - The company may face significant challenges related to third-party patent claims, which could lead to costly litigation and delays in product marketing[308]. - The outcome of patent litigation is unpredictable, and a loss could result in the loss of patent protection for key products, adversely affecting the company's financial condition[299]. Compliance and Regulatory Risks - The company is subject to ongoing regulatory obligations and potential penalties if it fails to comply with regulatory requirements[333]. - Changes in FDA policies and government regulations could limit or delay the approval of product candidates, impacting the company's business[336]. - The company faces significant penalties for noncompliance with healthcare laws, which could adversely affect financial results and market acceptance[356]. Cybersecurity and Data Privacy - The company is increasingly dependent on information technology systems, which are vulnerable to security breaches, cyber-attacks, and data loss, potentially harming business operations and financial condition[264]. - Compliance with privacy and data security laws is rigorous and time-intensive, with potential liabilities for non-compliance that could adversely affect client base and revenue[266]. - Failure to comply with data privacy and security regulations could result in damage to the company's reputation and potential litigation, leading to significant fines and sanctions[362]. Workforce and Management - The company must attract and retain qualified management and technical personnel to implement its business plan, as losing key employees could adversely affect operations and financial condition[250]. - As of December 31, 2024, the company had 310 full-time employees, but a restructuring in March 2025 resulted in a reduction of approximately 50% of its workforce[255]. Future Growth and Market Challenges - Future growth may depend on the ability to operate in foreign markets, which involves navigating complex regulatory requirements[257]. - Price controls in the U.S. and foreign markets may adversely affect future profitability, with potential legislative measures aimed at controlling drug costs[258]. - Future healthcare reforms may lead to more rigorous coverage criteria and downward pressure on product pricing, impacting revenue generation[352].

Financial Performance - Revenue for the year ended December 31, 2024, was $62.0 million, a decrease of 59.6% compared to $153.7 million for the year ended December 31, 2023, primarily due to changes in collaboration agreements[4] - The net loss for the year ended December 31, 2024, was $227.5 million, compared to a net loss of $106.8 million in 2023, reflecting a significant increase in operational costs[12] - Total operating expenses for the year ended December 31, 2024, were $300.5 million, an increase of 23.7% from $243.0 million in 2023, with research and development expenses accounting for $252.0 million[5] - The company reported interest income of $18.6 million for the year ended December 31, 2024, compared to $14.5 million in 2023, indicating improved financial management[12] Cash and Assets - As of December 31, 2024, Sutro Biopharma had cash, cash equivalents, and marketable securities of $316.9 million, down from $388.3 million as of September 30, 2024, with a cash runway expected into at least Q4 2026[3] - Sutro Biopharma's total assets decreased to $387.2 million as of December 31, 2024, from $470.7 million in 2023, reflecting a decline in cash and marketable securities[14] Liabilities and Expenses - Sutro Biopharma's total liabilities increased to $342.6 million as of December 31, 2024, compared to $321.1 million in 2023, primarily due to deferred royalty obligations[14] - General and administrative expenses for the year ended December 31, 2024, were $48.5 million, down from $62.6 million in 2023, showing efforts to streamline operations[12] - Restructuring expenditures related to the strategic portfolio review are estimated to be between $40 million and $45 million, aimed at achieving cost reductions and refocusing clinical development priorities[6] Strategic Focus - The company has prioritized its next-generation ADC pipeline following a strategic portfolio review, indicating a shift in focus towards more promising therapeutic areas[2]

Core Insights - Sutro Biopharma has completed a strategic portfolio review, prioritizing its next-generation antibody-drug conjugate (ADC) programs and announcing key management changes as part of the transition [1][7] Financial Highlights - As of December 31, 2024, Sutro reported cash, cash equivalents, and marketable securities totaling $316.9 million, down from $388.3 million as of September 30, 2024, with a cash runway expected into at least Q4 2026, excluding anticipated milestones from existing collaborations [2] - Revenue for the year ended December 31, 2024, was $62.0 million, a significant decrease from $153.7 million in 2023, primarily due to the Astellas collaboration and the Tasly agreement [3] - Total operating expenses for 2024 were $300.5 million, compared to $243.0 million in 2023, with research and development expenses accounting for $252.0 million and general and administrative expenses at $48.5 million [4][11] Restructuring and Cost Management - The strategic portfolio review and related restructuring are expected to incur cash payments estimated between $40 million and $45 million, with anticipated cost reductions contributing to the cash runway extending into at least Q4 2026 [5] Conference Call - A conference call is scheduled for today at 2:00 p.m. PT / 5:00 p.m. ET to discuss the pipeline reprioritization, team restructuring, and next steps [1][6]