– Extends cash runway into at least mid-2027 – SOUTH SAN FRANCISCO, Calif., Sept. 29, 2025 (GLOBE NEWSWIRE) -- Sutro Biopharma, Inc. (Sutro or the Company) (NASDAQ: STRO), an oncology company pioneering site-specific and novel-format antibody drug conjugates (ADCs), today announced an organizational restructuring to prioritize the advancement of its three ADC programs and research and development collaborations. The restructuring, along with certain expected near-term milestone payments, is expected to exte ...

Company Overview - Sutro Biopharma, Inc. is a biotechnology company focused on developing cancer therapies using a proprietary platform for antibody-drug conjugates and other biologics [1] Financial Performance - Sutro's Return on Invested Capital (ROIC) is -105.71%, significantly lower than its Weighted Average Cost of Capital (WACC) of 43.22%, resulting in a ROIC to WACC ratio of -2.45 [2][6] - Scholar Rock Holding Corporation has a more negative ROIC of -109.48% against a WACC of 5.32%, leading to a ROIC to WACC ratio of -20.57, indicating a worse financial position than Sutro [3] - Replimune Group and Kezar Life Sciences also show significant negative spreads with ROIC to WACC ratios of -10.70 and -10.94, respectively [3] - Y-mAbs Therapeutics has a ROIC of -27.64% and a WACC of 6.11%, resulting in a ROIC to WACC ratio of -4.53, indicating a relatively better position compared to peers [4] - Crinetics Pharmaceuticals shows a negative spread with a ROIC to WACC ratio of -6.99, also in a better position than some peers [4] Comparative Analysis - Overall, all companies are generating returns below their cost of capital, but Sutro Biopharma has a less negative ROIC to WACC ratio compared to some peers, indicating a relatively better position in terms of capital efficiency [5][6]

Financial Data and Key Metrics Changes - The company is on track with the IND filing in the second half of the year, indicating progress in its clinical pipeline [16] - The company has guided that it is fully funded for three INDs in three years, with cash expected to last into early 2027 [42][43] Business Line Data and Key Metrics Changes - Sutro Biopharma is transitioning from a phase III asset to an early-stage clinical pipeline, focusing on differentiating its early pipeline to drive shareholder value [3] - The STRO-four program has shown a 50-fold increase in exposure with a high dose of 50 mg/kg in non-human primate models, significantly higher than the approved tissue factor program [10][19] Market Data and Key Metrics Changes - The company sees significant clinical opportunities in multiple tumors expressing tissue factor, including lung, head and neck, pancreatic, and esophageal cancers [12][34] - Sutro Biopharma's STRO-six program targets integrin beta-six, a validated target in lung cancer, with competition primarily from Pfizer's program [27][28] Company Strategy and Development Direction - The company aims to redefine the tissue factor program and expand its applications beyond cervical cancer [12] - Sutro is focusing on dual payload strategies to overcome resistance in ADCs, positioning itself as a leader in this emerging area [35][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the differentiation of their ADC platform, particularly in safety and efficacy compared to existing therapies [19][22] - The company plans to share interim top-line results as soon as possible to maintain transparency with investors [20] Other Important Information - Sutro Biopharma has a collaboration with Astellas that is expected to yield milestone payments in the next nine to twelve months [44] - An R&D day is planned for later this year to provide more specifics on the tissue factor program and its development strategy [47][48] Q&A Session Summary Question: What is the company's strategy regarding partnerships? - The company is open to discussions about partnerships but aims to retain value for its programs while being flexible in exploring opportunities [29] Question: How is the company addressing funding needs for clinical trials? - The company is fully funded for its INDs and is looking at operational efficiencies to extend its runway [43] Question: What milestones should investors expect in the near future? - Investors can expect interim results from the STRO-four program and updates on the dosing strategy during the upcoming R&D day [46][48]

This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. Se ...

Core Insights - Sutro Biopharma, Inc. reported a quarterly loss of $0.14 per share, significantly better than the Zacks Consensus Estimate of a loss of $0.39, and an improvement from a loss of $0.59 per share a year ago, resulting in an earnings surprise of +64.10% [1] - The company achieved revenues of $63.75 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 293.54%, compared to $25.71 million in the same quarter last year [2] - Sutro Biopharma's stock has declined approximately 55.6% year-to-date, contrasting with the S&P 500's gain of 7.9% [3] Earnings Outlook - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the next quarter is -$0.24 on revenues of $14.66 million, and for the current fiscal year, it is -$1.79 on revenues of $62.76 million [7] Industry Context - Sutro Biopharma operates within the Medical - Biomedical and Genetics industry, which is currently ranked in the top 41% of over 250 Zacks industries, indicating a favorable industry outlook [8] - The performance of Sutro Biopharma's stock may be influenced by the overall industry trends, as historically, the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8] Estimate Revisions - The trend of estimate revisions for Sutro Biopharma was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market in the near future [6] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

PART I. FINANCIAL INFORMATION This part presents the company's unaudited interim condensed financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited interim condensed financial statements, including the Balance Sheets, Statements of Operations, Comprehensive Loss, Stockholders' Equity (Deficit), and Cash Flows, along with detailed notes explaining the accounting policies, collaboration agreements, restructuring costs, and other financial details for the periods ended June 30, 2025, and December 31, 2024 [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Key Balance Sheet Data | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total Assets | $262,355 | $387,207 | $(124,852) | | Cash and cash equivalents | $64,025 | $190,304 | $(126,279) | | Marketable securities | $141,106 | $126,591 | $14,515 | | Total Current Assets | $231,630 | $343,310 | $(111,680) | | Total Liabilities | $294,466 | $342,606 | $(48,140) | | Deferred revenue - current | $11,964 | $69,783 | $(57,819) | | Deferred royalty obligation | $200,084 | $180,809 | $19,275 | | Total Stockholders' (Deficit) Equity | $(32,111) | $44,601 | $(76,712) | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) This section presents the company's revenues, expenses, and net loss over specific reporting periods Key Statements of Operations Data | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Revenue | $63,745 | $25,706 | **148%** | $81,144 | $38,714 | **110%** | | Research and development | $38,325 | $62,020 | **(38)%** | $89,922 | $118,898 | **(24)%** | | General and administrative | $10,343 | $12,371 | **(16)%** | $23,616 | $25,092 | **(6)%** | | Restructuring and related costs | $18,422 | $0 | * | $39,465 | $0 | * | | Total operating expenses | $67,090 | $74,391 | **(10)%** | $153,003 | $143,990 | **6%** | | Loss from operations | $(3,345) | $(48,685) | **(93)%** | $(71,859) | $(105,276) | **(32)%** | | Net loss | $(11,499) | $(48,018) | **(76)%** | $(87,467) | $(106,231) | **(18)%** | | Net loss per share, basic and diluted | $(0.14) | $(0.59) | **(76)%** | $(1.04) | $(1.49) | **(30)%** | [Condensed Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Loss) This section details the company's net loss and other comprehensive income or loss components for the reporting periods Key Comprehensive Loss Data | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(11,499) | $(48,018) | $(87,467) | $(106,231) | | Net unrealized loss on available-for-sale securities | $(4) | $(50) | $(52) | $(184) | | Comprehensive loss | $(11,503) | $(48,068) | $(87,519) | $(106,415) | [Condensed Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) This section outlines changes in the company's equity or deficit, including accumulated deficit and additional paid-in capital Key Stockholders' Equity (Deficit) Data | Metric (in thousands) | December 31, 2024 | June 30, 2025 | Change | | :-------------------------------- | :------------------ | :-------------- | :------- | | Total Stockholders' Equity (Deficit) | $44,601 | $(32,111) | $(76,712) | | Accumulated deficit | $(786,869) | $(874,336) | $(87,467) | | Additional paid-in-capital | $831,348 | $842,153 | $10,805 | [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities for the reporting periods Key Cash Flow Data | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash used in operating activities | $(112,607) | $(55,286) | $(57,321) | | Net cash used in investing activities | $(13,678) | $(16,270) | $2,592 | | Net cash provided by financing activities | $6 | $93,061 | $(93,055) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(126,279) | $21,505 | $(147,784) | | Cash, cash equivalents and restricted cash at end of period | $64,883 | $91,645 | $(26,762) | [Notes to Unaudited Interim Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the interim condensed financial statements [1. Organization and Principal Activities](index=9&type=section&id=1.%20Organization%20and%20Principal%20Activities) This section describes the company's business, recent restructuring, financial position, and Nasdaq compliance status - **Sutro Biopharma** is an **oncology company developing site-specific and novel-format ADCs**[24](index=24&type=chunk) - On **March 13, 2025**, the company announced a **Restructuring Plan** to **prioritize preclinical programs** (**STRO-004**, **STRO-006**), **deprioritize luveltamab tazevibulin (STRO-002)**, **exit internal GMP manufacturing by year-end**, and **reduce workforce by approximately 50%**[25](index=25&type=chunk) Key Financial Highlights | Metric | June 30, 2025 | | :-------------------------------- | :------------ | | Accumulated Deficit | **$874.3 million** | | Unrestricted Cash, Cash Equivalents, and Marketable Securities | **$205.1 million** | - The company received a **Nasdaq non-compliance notice** on **June 20, 2025**, for **not meeting the $1.00 minimum bid price requirement** and **has until December 17, 2025, to regain compliance**, with a **potential reverse stock split approved by shareholders**[30](index=30&type=chunk)[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and estimates used in preparing the interim financial statements - Interim financial statements are **unaudited** and prepared under **U.S. GAAP**, with **estimates affecting reported amounts**[34](index=34&type=chunk)[35](index=35&type=chunk) - **Restructuring costs** are accounted for under **ASC Topic 712** for ongoing benefits and **ASC Topic 420** for one-time termination benefits[38](index=38&type=chunk) - The company is evaluating the impact of **new accounting standards** **ASU 2023-09** (Income Taxes) and **ASU 2024-03** (Expense Disaggregation Disclosures) for future periods[40](index=40&type=chunk)[42](index=42&type=chunk) [3. Fair Value Measurements](index=12&type=section&id=3.%20Fair%20Value%20Measurements) This section details the categorization and valuation methodologies for financial assets and liabilities measured at fair value - **Fair value measurements** are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than **Level 1**), and **Level 3** (unobservable inputs)[45](index=45&type=chunk) Fair Value Measurement Summary | Asset Type (in thousands) | June 30, 2025 Total | Level 1 | Level 2 | Level 3 | December 31, 2024 Total | Level 1 | Level 2 | Level 3 | | :------------------------ | :------------------ | :------ | :------ | :------ | :---------------------- | :------ | :------ | :------ | | Money market funds | $46,404 | $46,404 | $— | $— | $68,474 | $68,474 | $— | $— | | Commercial paper | $21,764 | $— | $21,764 | $— | $50,932 | $— | $50,932 | $— | | Corporate debt securities | $46,716 | $— | $46,716 | $— | $94,257 | $— | $94,257 | $— | | Asset-backed securities | $23,607 | $— | $23,607 | $— | $40,522 | $— | $40,522 | $— | | U.S. government securities | $64,639 | $64,639 | $— | $— | $49,644 | $49,644 | $— | $— | | U.S. agency securities | $— | $— | $— | $— | $9,582 | $— | $9,582 | $— | | Total Assets | $203,130 | $111,043 | $92,087 | $— | $313,411 | $118,118 | $195,293 | $— | - The **deferred royalty obligation** related to the sale of future Vaxcyte royalties is classified as **Level 3**[66](index=66&type=chunk) [4. Cash Equivalents and Marketable Securities](index=17&type=section&id=4.%20Cash%20Equivalents%20and%20Marketable%20Securities) This section provides a breakdown of the company's cash, cash equivalents, and marketable securities portfolio Cash Equivalents and Marketable Securities Portfolio | Asset Type (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | | :------------------------ | :----------------------- | :--------------------------- | | Money market funds | $46,404 | $68,474 | | Commercial paper | $21,764 | $50,932 | | Corporate debt securities | $46,716 | $94,257 | | Asset-based securities | $23,607 | $40,522 | | U.S. government securities | $64,639 | $49,644 | | U.S. agency securities | $— | $9,582 | | Total | $203,130 | $313,411 | - **No marketable securities had maturities of more than one year** as of **June 30, 2025**, and **December 31, 2024**[67](index=67&type=chunk) - The company concluded that **unrealized losses on marketable securities were not attributable to credit** and did not record any **other-than-temporary impairment charges**[68](index=68&type=chunk) [5. Collaboration and License Agreements and Supply Agreements](index=18&type=section&id=5.%20Collaboration%20and%20License%20Agreements%20and%20Supply%20Agreements) This section details the company's revenue-generating collaboration and license agreements, including terms and financial impacts - **Revenue** is derived from **collaboration arrangements**, including **upfront payments, milestones, and royalties**, recognized when customers obtain control of goods or services[51](index=51&type=chunk)[52](index=52&type=chunk) Collaboration and License Revenue Summary | Collaborator (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Astellas Pharma Inc. | $7,415 | $24,752 | **(70)%** | $24,294 | $36,137 | **(33)%** | | Tasly Biopharmaceuticals Co., Ltd. | $96 | $5 | **1820%** | $105 | $975 | **(89)%** | | Vaxcyte, Inc. | $165 | $846 | **(80)%** | $388 | $1,493 | **(74)%** | | Ipsen Pharma SAS | $56,069 | $95 | * | $56,357 | $95 | * | | Merck Sharp & Dohme Corporation | $— | $8 | **(100)%** | $— | $14 | **(100)%** | | Total revenue | $63,745 | $25,706 | **148%** | $81,144 | $38,714 | **110%** | Deferred Revenue Movement | Deferred Revenue (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Deferred revenue—beginning balance | $82,319 | N/A | | Additions to deferred revenue | $8,184 | N/A | | Recognition of revenue in current period | $(71,633) | N/A | | Deferred revenue—ending balance | $18,870 | $82,319 | [Astellas Pharma Inc. Agreements](index=18&type=section&id=Astellas%20License%20and%20Collaboration%20Agreement) This section outlines the collaboration agreement with Astellas Pharma Inc., including upfront payments, contingent milestones, and revenue recognition - Received a **$90.0 million upfront payment** from Astellas in **2022** for development of immunostimulatory ADCs for up to **three biological targets**[75](index=75&type=chunk) - Astellas' decision in **June 2024** not to nominate a third target program resulted in a **contract modification** and a **$17.8 million cumulative catch-up adjustment to revenue**[77](index=77&type=chunk) - Earned a **$7.5 million contingent payment** in **March 2025** for the initiation of the first IND-enabling toxicology study, leading to a **$5.7 million cumulative catch-up adjustment to revenue**[78](index=78&type=chunk) Astellas Pharma Inc. Revenue Breakdown | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Ongoing performance | $5,410 | $21,590 | $18,368 | $28,820 | | Research and development services | $609 | $1,381 | $1,507 | $3,004 | | Financing component | $832 | $1,758 | $2,008 | $3,918 | | Materials supply | $564 | $23 | $2,411 | $395 | | Total revenue | $7,415 | $24,752 | $24,294 | $36,137 | [Vaxcyte, Inc. Agreements](index=22&type=section&id=Agreements%20with%20Vaxcyte) This section describes the agreements with Vaxcyte, Inc., covering R&D services, material supply, and potential contingent payments - Vaxcyte reimburses the company for **third-party CMO costs**, which are recorded as a **reduction to R&D expense**[85](index=85&type=chunk) Vaxcyte, Inc. Revenue Breakdown | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | R&D services revenue | $147 | $650 | $369 | $1,297 | | Materials supply revenue | $18 | $196 | $19 | $196 | | Total revenue | $165 | $846 | $388 | $1,493 | - The Vaxcyte Agreement includes **potential contingent payments up to $60.0 million**, which are **currently constrained and not eligible for revenue recognition**[88](index=88&type=chunk)[89](index=89&type=chunk) [Ipsen Pharma SAS Agreements](index=24&type=section&id=Ipsen%20Agreements) This section details the licensing agreement with Ipsen Pharma SAS for STRO-003, including upfront fees, milestones, and the impact of program discontinuation - Licensed **STRO-003** to Ipsen in **March 2024**, receiving a **$50.0 million upfront license fee** and **$25.0 million** from Ipsen USA for common stock (with a **$0.4 million premium**)[91](index=91&type=chunk)[92](index=92&type=chunk)[96](index=96&type=chunk) - Eligible for **up to $447.0 million in developmental/regulatory milestones** and **$360.0 million in sales milestones**, plus tiered royalties[93](index=93&type=chunk) - Ipsen's decision in **June 2025** not to advance the **STRO-003 program** resulted in the **acceleration and derecognition of $53.2 million in deferred revenue**[100](index=100&type=chunk)[101](index=101&type=chunk) Ipsen Pharma SAS Revenue Breakdown | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Ongoing performance | $50,429 | $— | $50,429 | $— | | Research and development services | $17 | $18 | $71 | $18 | | Materials supply | $5,623 | $77 | $5,857 | $77 | | Total revenue | $56,069 | $95 | $56,357 | $95 | [6. Commitments and Contingencies](index=26&type=section&id=6.%20Commitments%20and%20Contingencies) This section discloses the company's lease obligations and other potential liabilities - The company leases facilities in South San Francisco and San Carlos, California, and **plans to exit its San Carlos manufacturing facility by year-end 2025**[102](index=102&type=chunk) Lease Cost Summary | Lease Cost (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease cost | $1,984 | $1,984 | $3,968 | $3,968 | | Short-term lease cost | $60 | $38 | $99 | $91 | | Variable lease cost | $718 | $853 | $1,440 | $1,447 | | Total lease costs | $2,762 | $2,875 | $5,507 | $5,506 | Operating Lease Liabilities | Operating Lease Liabilities (in thousands) | June 30, 2025 | | :--------------------------------------- | :------------ | | Total lease payments | $22,128 | | Less: imputed interest | $(2,535) | | Operating lease liabilities | $19,593 | | Less: current portion | $(8,057) | | Total lease liabilities, non-current | $11,536 | [7. Accrued Expenses and Other Current Liabilities](index=28&type=section&id=7.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This section provides a breakdown of the company's accrued expenses and other current liabilities Accrued Expenses and Other Current Liabilities Breakdown | Accrual Type (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Vaxcyte-related accrual | $12,713 | $12,435 | | CMO-related accrual | $4,603 | $8,525 | | Clinical trials-related accrual | $3,007 | $6,263 | | Other | $17,830 | $4,027 | | Total | $38,153 | $31,250 | [8. Deferred Royalty Obligation related to the Sale of Future Royalties](index=29&type=section&id=8.%20Deferred%20Royalty%20Obligation%20related%20to%20the%20Sale%20of%20Future%20Royalties) This section details the deferred royalty obligation arising from the sale of future Vaxcyte royalties to Blackstone - **Sold 4% royalty interest** in future Vaxcyte product sales to **Blackstone** for a **$140.0 million upfront payment** in **June 2023**, recorded as a **deferred royalty obligation**[111](index=111&type=chunk)[112](index=112&type=chunk)[114](index=114&type=chunk) Deferred Royalty Obligation Details | Metric (in thousands) | June 30, 2025 | | :------------------------------------------------ | :------------ | | Liability related to sale of future Vaxcyte royalties - beginning balance | $180,809 | | Non-cash interest expense associated with the sale of future Vaxcyte royalties | $18,991 | | Amortization of issuance costs | $284 | | Liability related to the sale of future Vaxcyte royalties - ending balance | $200,084 | - The **effective interest rate used to amortize the liability is 20.06%**[115](index=115&type=chunk) [9. Segment Reporting](index=31&type=section&id=9.%20Segment%20Reporting) This section presents financial information for the company's single operating segment, focusing on its oncology development activities - The company operates in **one business segment** focused on developing **site-specific and novel-format ADCs**[118](index=118&type=chunk) Segment Financial Performance | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue | $63,745 | $25,706 | $81,144 | $38,714 | | Operating expenses | $(67,090) | $(74,391) | $(153,003) | $(143,990) | | Loss from operations | $(3,345) | $(48,685) | $(71,859) | $(105,276) | | Segment net loss | $(11,499) | $(48,018) | $(87,467) | $(106,231) | [10. Restructuring, and Related Costs](index=32&type=section&id=10.%20Restructuring,%20and%20Related%20Costs) This section details the financial impact of the company's March 2025 restructuring plan, including costs for program deprioritization and workforce reduction - The **Restructuring Plan**, announced in **March 2025**, led to **significant costs** related to **deprioritizing the luvelta program**, severance, and contract terminations[121](index=121&type=chunk) Restructuring and Related Costs Breakdown | Cost Type (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Clinical trial expense and other third-party costs for the deprioritization of luvelta program | $13,006 | $17,261 | | Severance and benefits expense | $3,862 | $12,372 | | Contract termination and other restructuring costs | $1,554 | $9,832 | | Total | $18,422 | $39,465 | - The company **expects to incur additional expenses for the deprioritization of the luvelta program and related costs, with a significant portion in 2025**[121](index=121&type=chunk)[123](index=123&type=chunk) [11. Stockholders' Equity](index=33&type=section&id=11.%20Stockholders'%20Equity) This section provides details on the company's common stock, options, restricted stock units, and shares reserved for issuance Stockholders' Equity Details | Metric | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Common stock shares issued and outstanding | 84,720,047 | 82,526,430 | | Common stock options issued and outstanding | 9,616,926 | 8,671,883 | | Restricted stock units issued and outstanding | 6,246,452 | 5,955,109 | | Total shares reserved for issuance | 21,670,050 | 17,594,294 | - **No preferred stock was issued or outstanding** as of **June 30, 2025**, and **December 31, 2024**[128](index=128&type=chunk) [12. Equity Incentive Plans, Equity Inducement Plans, Employee Stock Purchase Plan and Stock-Based Compensation](index=34&type=section&id=12.%20Equity%20Incentive%20Plans,%20Equity%20Inducement%20Plans,%20Employee%20Stock%20Purchase%20Plan%20and%20Stock-Based%20Compensation) This section outlines the company's equity compensation plans and the associated stock-based compensation expense - The **2018 Equity Incentive Plan** automatically increases shares reserved by **5% of outstanding capital stock annually**, **adding 4,126,321 shares** on **January 1, 2025**[129](index=129&type=chunk) - The **Amended and Restated 2021 Plan** reserved an additional **2,250,000 shares** in **May 2025**, bringing the total reserved to **4,250,000 shares**[133](index=133&type=chunk) Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Research and development expense | $1,433 | $3,072 | $3,717 | $6,246 | | General and administrative expense | $1,346 | $3,087 | $3,795 | $5,981 | | Restructuring and related costs | $2,484 | $— | $3,289 | $— | | Total | $5,263 | $6,159 | $10,801 | $12,227 | [13. Net Loss Per Share](index=36&type=section&id=13.%20Net%20Loss%20Per%20Share) This section presents the calculation of basic and diluted net loss per share, including the number of shares used in the computation Net Loss Per Share Calculation | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(11,499) | $(48,018) | $(87,467) | $(106,231) | | Shares used in computing net loss per share | 84,580,125 | 81,224,628 | 83,846,892 | 71,341,211 | | Net loss per share, basic and diluted | $(0.14) | $(0.59) | $(1.04) | $(1.49) | Common Stock Equivalents (as of June 30) | Common Stock Equivalents (as of June 30) | 2025 | 2024 | | :--------------------------------------- | :--- | :--- | | Common stock options issued and outstanding | 9,616,926 | 8,779,966 | | Restricted stock units issued and outstanding | 6,246,452 | 6,050,784 | | Warrants to purchase common stock | 127,616 | 127,616 | | Shares to be issued under employee stock purchase plan | 401,066 | 300,818 | | Total | 16,392,060 | 15,259,184 | [14. Subsequent Event](index=36&type=section&id=14.%20Subsequent%20Event) This section discloses significant events occurring after the balance sheet date, such as new tax legislation - The **One Big Beautiful Bill Act (OBBBA)** was enacted on **July 4, 2025**, bringing **significant changes to U.S. tax law**[141](index=141&type=chunk) - The company is currently **assessing the impact of the OBBBA on its financial statements**[141](index=141&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, detailed analysis of revenue and operating expenses, liquidity and capital resources, contractual obligations, and critical accounting policies [Overview](index=37&type=section&id=Overview) This section provides a high-level summary of the company's business, strategic priorities, recent restructuring, and key financial highlights - **Sutro Biopharma** is an **oncology company developing site-specific and novel-format ADCs** using its proprietary **XpressCF®** and **XpressCF+® platforms**[144](index=144&type=chunk) - **STRO-004**, a TF-targeting ADC, is the **highest priority wholly-owned product candidate**, with an **IND filing anticipated in the second half of 2025**[146](index=146&type=chunk) - A **strategic portfolio review in March 2025 resulted in deprioritizing luvelta, refocusing on the preclinical pipeline (STRO-004, STRO-006), exiting the San Carlos manufacturing facility by year-end 2025, and reducing the workforce by nearly 50%**[151](index=151&type=chunk) Key Financial Highlights | Metric | 6 Months Ended June 30, 2025 | December 31, 2024 | | :-------------------- | :--------------------------- | :---------------- | | Loss from operations | **$(71.9) million** | N/A | | Net loss | **$(87.5) million** | **$(227.5) million** | | Accumulated deficit | **$(874.3) million** | N/A | [Financial Operations Overview](index=39&type=section&id=Financial%20Operations%20Overview) This section analyzes the company's revenue and operating expenses, highlighting key changes and their drivers over the reporting periods - **Revenue** is generated principally from **collaboration and license agreements**, with **no commercial product sales to date**[153](index=153&type=chunk) - **Operating expenses** include **research and development, general and administrative, and restructuring and related costs**[157](index=157&type=chunk) Key Financial Operations Summary | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | Change (YoY) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Revenue | $63,745 | $25,706 | **148%** | $81,144 | $38,714 | **110%** | | Research and development | $38,325 | $62,020 | **(38)%** | $89,922 | $118,898 | **(24)%** | | General and administrative | $10,343 | $12,371 | **(16)%** | $23,616 | $25,092 | **(6)%** | | Restructuring and related costs | $18,422 | $— | * | $39,465 | $— | * | | Net loss | $(11,499) | $(48,018) | **(76)%** | $(87,467) | $(106,231) | **(18)%** | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, funding requirements, and cash flow activities from operations, investing, and financing Liquidity Position | Metric | June 30, 2025 | | :-------------------------------- | :------------ | | Cash, cash equivalents and marketable securities | **$205.1 million** | | Accumulated deficit | **$874.3 million** | - **Existing capital resources are expected to fund operations for at least the next 12 months**, but **additional financing will be required** for future development and operations[194](index=194&type=chunk)[195](index=195&type=chunk) Cash Flow Activities | Cash Flow Activity (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | Change (YoY) | | :-------------------------------- | :--------------------------- | :--------------------------- | :----------- | | Net cash used in operating activities | $(112,607) | $(55,286) | $(57,321) | | Net cash used in investing activities | $(13,678) | $(16,270) | $2,592 | | Net cash provided by financing activities | $6 | $93,061 | $(93,055) | - The **increase in cash used in operating activities for the six months ended June 30, 2025, was primarily due to a $63.4 million decrease in deferred revenue** from Ipsen's decision not to advance the **STRO-003 program**[198](index=198&type=chunk) [Contractual Obligations and Other Commitments](index=51&type=section&id=Contractual%20Obligations%20and%20Other%20Commitments) This section outlines the company's significant contractual obligations, including leases and other commitments - The company has **contractual obligations for leases and term loans**[204](index=204&type=chunk) - Agreements with CROs, CMOs, and other vendors are **generally cancelable upon written notice**[204](index=204&type=chunk) [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section describes the accounting policies and estimates that require significant management judgment and their potential impact on financial results - **Financial statements** require management to make **estimates and assumptions**, including for R&D periods, stock-based compensation, income taxes, and deferred royalty obligations[205](index=205&type=chunk) - **No material changes to critical accounting policies and estimates** were reported, other than those related to **restructuring and related costs**[206](index=206&type=chunk) [Recent Accounting Pronouncements](index=51&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to new accounting standards and their potential impact on the company's financial statements - Refer to **Note 2** for details on **recent accounting pronouncements**, including **ASU 2023-09** and **ASU 2024-03**[207](index=207&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate sensitivities, and its strategy for managing investments - The company's **primary market risk exposure is interest rate sensitivity**, with an investment objective to **preserve capital and maximize income without significant risk**[209](index=209&type=chunk) Cash, Cash Equivalents and Marketable Securities | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Cash, cash equivalents and marketable securities | **$205.1 million** | **$316.9 million** | - A **hypothetical 10% change in market interest rates** is **not expected to have a material impact** on the financial statements[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures, concluding their effectiveness, and reports on any changes in internal control over financial reporting during the quarter - As of **June 30, 2025**, **disclosure controls and procedures** were evaluated and deemed **effective at a reasonable assurance level** by the **CEO** and **CFO**[212](index=212&type=chunk)[213](index=213&type=chunk) - **No material changes in internal control over financial reporting** occurred during the quarter ended **June 30, 2025**[214](index=214&type=chunk) PART II. OTHER INFORMATION This part covers legal proceedings, risk factors, and other required disclosures for the reporting period [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) This section states that the company is not currently involved in any legal proceedings that would have a material adverse effect on its business, while acknowledging the potential negative impacts of litigation - The company is **not currently a party to any legal proceedings** that would have a **material adverse effect** on its business[217](index=217&type=chunk) - **Litigation can adversely impact the company** through **defense and settlement costs, diversion of management resources, and reputational harm**[217](index=217&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) This comprehensive section outlines the significant risks associated with investing in the company, covering its business operations, intellectual property, government regulation, and common stock [Summary of Risk Factors](index=54&type=section&id=Summary%20of%20Risk%20Factors) This section provides a concise overview of the primary risks, including financial losses, funding needs, development uncertainties, and regulatory challenges - The company has a **history of significant losses** and may **not achieve profitability**, requiring **substantial additional funding for product development**[220](index=220&type=chunk)[221](index=221&type=chunk) - Product candidates are in development and face risks from **competition, delays, and the unproven nature of novel technologies**[220](index=220&type=chunk) - **Dependence on IT systems, compliance with privacy laws, successful collaborations, and manufacturing capabilities** are **critical business risks**[220](index=220&type=chunk) - **Intellectual property protection, regulatory approval, and maintaining Nasdaq listing requirements** are **significant challenges**[220](index=220&type=chunk) [Risks Related to Our Business](index=55&type=section&id=Risks%20Related%20to%20Our%20Business) This section details the operational and strategic risks faced by the company, such as its early-stage nature, funding requirements, development uncertainties, competition, and the impact of restructuring - The company is an early-stage biopharmaceutical company with no commercial products, an **accumulated deficit of $874.3 million**, and expects to incur **significant future losses**[221](index=221&type=chunk)[222](index=222&type=chunk) - **Substantial additional funding** is required for product development, manufacturing, and commercialization, with **current capital expected to last only 12 months**[225](index=225&type=chunk)[226](index=226&type=chunk) - Product candidates (**STRO-004**, **STRO-006**) are in preclinical development, and their success is uncertain due to the **unproven nature of novel technologies** and potential for **delays or failures in clinical trials**[229](index=229&type=chunk)[242](index=242&type=chunk)[246](index=246&type=chunk) - The company faces **intense competition** from larger, well-funded biopharmaceutical companies and relies on **third parties for clinical trials and manufacturing**, introducing risks of **delays or non-compliance**[271](index=271&type=chunk)[272](index=272&type=chunk)[292](index=292&type=chunk) - The **March 2025 restructuring and workforce reduction** may **negatively impact employee retention, institutional knowledge, and operational efficiency**[299](index=299&type=chunk) [Risks Related to Intellectual Property](index=80&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This section addresses the challenges and uncertainties in obtaining, maintaining, and enforcing patent and other intellectual property protection for the company's platforms and product candidates - Success depends on obtaining, maintaining, and enforcing **patent and other IP protection** for **XpressCF®** and **XpressCF+® platforms** and product candidates[331](index=331&type=chunk) - Challenges include the **high cost, time-consuming, and unpredictable nature of patent prosecution**, with **no guarantee of broad or enforceable patents**[331](index=331&type=chunk)[332](index=332&type=chunk) - Risks include **third-party infringement claims**, the need for **costly licenses**, and potential **disputes over inventorship or ownership of IP**[354](index=354&type=chunk)[373](index=373&type=chunk) - **Trade secret protection** is vital but **vulnerable to breaches**, and **changes in U.S. and foreign patent laws** could diminish the value and enforceability of patents[338](index=338&type=chunk)[370](index=370&type=chunk) - **Patent terms may be inadequate** to protect competitive position due to **long development and regulatory review periods**[365](index=365&type=chunk)[368](index=368&type=chunk) [Risks Related to Government Regulation](index=89&type=section&id=Risks%20Related%20to%20Government%20Regulation) This section outlines the extensive and complex governmental regulations impacting product development, approval, and commercialization, including evolving policies and healthcare reforms - Product candidates are subject to **extensive and costly U.S. and foreign governmental regulations** for research, development, manufacturing, and commercialization[377](index=377&type=chunk) - **Regulatory approval is uncertain** and can be delayed by **evolving FDA policies** (e.g., **Project Optimus**, **Project FrontRunner**), **new EU regulations** (**IVDR**, **GDPR**), and **lack of precedent for cell-free manufacturing platforms**[379](index=379&type=chunk)[384](index=384&type=chunk) - Post-approval, products face **ongoing regulatory obligations**, **potential labeling restrictions**, **market withdrawal risks**, and **penalties for non-compliance**[385](index=385&type=chunk)[386](index=386&type=chunk) - **Healthcare legislative reforms** (**ACA**, **IRA**) and **price controls** in the U.S. and foreign markets could **adversely affect future profitability**[395](index=395&type=chunk)[403](index=403&type=chunk) - The company is exposed to **product liability risks**, **employee misconduct**, and **compliance with anti-bribery, fraud and abuse, and data privacy laws** (**HIPAA**, **CCPA**, **GDPR**), with potential for **significant penalties**[308](index=308&type=chunk)[407](index=407&type=chunk)[411](index=411&type=chunk) [Risks Related to Our Common Stock](index=102&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) This section discusses risks specific to the company's common stock, including price volatility, anti-takeover provisions, delisting risk, and potential dilution from future issuances - Quarterly and annual operating results may **fluctuate significantly**, leading to **stock price volatility**[438](index=438&type=chunk) - **Anti-takeover provisions** in charter documents and Delaware law, along with **exclusive forum provisions**, could **hinder acquisitions and limit stockholder claims**[439](index=439&type=chunk)[442](index=442&type=chunk)[445](index=445&type=chunk) - **No cash dividends are anticipated**, making capital appreciation the sole source of gain for stockholders[450](index=450&type=chunk) - The common stock does not meet **Nasdaq's minimum bid price requirement**, risking **delisting**, which could **negatively impact financing and liquidity**[454](index=454&type=chunk) - **Future equity or debt issuances will dilute share capital** and may cause the **stock price to decline**[456](index=456&type=chunk)[457](index=457&type=chunk) - **Unfavorable global economic conditions**, including **tariffs and geopolitical tensions**, could **adversely affect the business**[460](index=460&type=chunk)[462](index=462&type=chunk) - **Compliance with public company requirements** (e.g., Sarbanes-Oxley) **strains resources**, **diverts management attention**, and **increases legal and financial costs**[464](index=464&type=chunk)[465](index=465&type=chunk) [General Risk Factors](index=107&type=section&id=General%20Risk%20Factors) This section covers broader economic, market, and compliance risks that could affect the company's business and stock performance - **Unfavorable global economic conditions**, including **market volatility, tariffs, and geopolitical tensions**, could **adversely affect the business and capital-raising ability**[460](index=460&type=chunk)[462](index=462&type=chunk) - **Lack of research coverage or adverse analyst opinions** could lead to a **decline in stock price and trading volume**[463](index=463&type=chunk) - **Compliance with public company requirements** (e.g., Exchange Act, Sarbanes-Oxley) **strains resources**, **diverts management attention**, and **increases legal and financial costs**[464](index=464&type=chunk)[465](index=465&type=chunk) - The company may be subject to **expensive and distracting securities litigation** due to **stock price volatility**[471](index=471&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=109&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds,%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section indicates that there were no unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities to report for the period - **No unregistered sales of equity securities, use of proceeds, or issuer purchases of equity securities were reported**[472](index=472&type=chunk) [Item 3. Defaults Upon Senior Securities](index=109&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - **No defaults upon senior securities were reported**[473](index=473&type=chunk) [Item 4. Mine Safety Disclosures](index=109&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - **Mine Safety Disclosures are not applicable to the company**[475](index=475&type=chunk) [Item 5. Other Information](index=109&type=section&id=Item%205.%20Other%20Information) This section indicates that no other information was required to be reported - **No other information was reported**[477](index=477&type=chunk) [Item 6. Exhibits](index=110&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including an offer letter, certifications, and XBRL documents - The report includes various exhibits such as an offer letter, **certifications of principal executive and financial officers**, and **Inline XBRL documents**[479](index=479&type=chunk)[480](index=480&type=chunk) [Signatures](index=111&type=section&id=Signatures) This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the submission of the report - The report was signed by **Jane Chung (CEO)** and **Gregory Chow (CFO)** on **August 7, 2025**[485](index=485&type=chunk)

[Overview and Strategic Highlights](index=1&type=section&id=Overview%20and%20Strategic%20Highlights) Sutro advanced its ADC pipeline in Q2 2025, preparing for STRO-004 clinical trials and validating its dual-payload platform, supported by a strong cash position into early 2027 - On track to initiate a first-in-human (FIH) study for **STRO-004**, a potential best-in-class Tissue Factor ADC, in the **second half of 2025**[2](index=2&type=chunk) - Advancing **dual-payload ADCs**, with an IND-enabling toxicology study initiated for the first candidate under the **Astellas collaboration**, validating the platform's potential[2](index=2&type=chunk) - Appointed industry veteran **Greg Chow** as the new **Chief Financial Officer**[2](index=2&type=chunk)[9](index=9&type=chunk) - As of June 30, 2025, the company holds **$205.1 million** in cash, cash equivalents, and marketable securities, with a projected cash runway into **early 2027**[2](index=2&type=chunk)[7](index=7&type=chunk) [Pipeline and Collaboration Updates](index=1&type=section&id=Pipeline%20and%20Collaboration%20Updates) Sutro is advancing its wholly-owned pipeline, including STRO-004 and STRO-006, while progressing the Astellas collaboration and discontinuing the Ipsen partnership without financial impact [Wholly-Owned Pipeline](index=1&type=section&id=Wholly-Owned%20Pipeline) Sutro is advancing its wholly-owned ADC pipeline, with STRO-004 nearing clinical trials in H2 2025, STRO-006 planned for 2026, and a dual-payload IND filing anticipated in 2027 - **STRO-004**: IND preparations are underway for a first-in-human basket trial to begin in **H2 2025**, with a favorable preclinical safety profile in cynomolgus monkeys up to **50 mg/kg**[3](index=3&type=chunk) - **STRO-006**: A differentiated integrin beta-6 (ITGB6) ADC is expected to enter clinical development in **2026** for the treatment of multiple solid tumors[3](index=3&type=chunk) - **Dual-Payload Program**: The company's wholly-owned dual-payload ADC platform is progressing, with an IND filing anticipated in **2027**[3](index=3&type=chunk) [Next-Generation ADC Collaborations](index=1&type=section&id=Next-Generation%20ADC%20Collaborations) The Astellas collaboration advanced with a **$7.5 million** milestone payment, while Ipsen discontinued the STRO-003 program without impacting Sutro's cash runway - **Astellas collaboration**: A program for a dual-payload immunostimulatory ADC (iADC) entered an IND-enabling toxicology study, resulting in a **$7.5 million** milestone payment to Sutro[3](index=3&type=chunk)[4](index=4&type=chunk) - **Ipsen partnership**: Ipsen made a strategic decision not to advance the **STRO-003** program, a decision that does not impact Sutro's previously stated cash runway guidance[4](index=4&type=chunk) [Corporate and Scientific Updates](index=2&type=section&id=Corporate%20and%20Scientific%20Updates) Sutro appointed a new CFO, initiated an FDA research collaboration for ADC standards, and presented positive preclinical data for pipeline candidates at major conferences - Entered a research collaboration with the **U.S. FDA** in July to develop reference materials and enhance analytical methods for ADC drug development[9](index=9&type=chunk) - Presented positive preclinical data at several key conferences, including **World ADC Asia Summit** (dual-payload ADCs), **PEGS Boston Summit** (STRO-006), and **AACR Annual Meeting** (STRO-004 and dual-payload programs)[8](index=8&type=chunk) - Management will participate in the upcoming **Wells Fargo Healthcare Conference** from September 3-5, 2025[6](index=6&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Q2 2025 saw a significant revenue increase to **$63.7 million** and a narrowed net loss of **$11.5 million**, driven by collaboration revenue and a strong cash position extending into early 2027 [Financial Position and Liquidity](index=2&type=section&id=Financial%20Position%20and%20Liquidity) As of June 30, 2025, Sutro held **$205.1 million** in cash and equivalents, projecting a cash runway into early 2027 due to this balance and cost reductions Cash, Cash Equivalents and Marketable Securities (in millions USD) | Metric | June 30, 2025 | March 31, 2025 | | :--- | :--- | :--- | | Cash, Cash Equivalents and Marketable Securities | $205.1 | $249.0 | - The company's expected cash runway extends into **early 2027**, excluding potential future milestones from existing collaborations[7](index=7&type=chunk) [Statement of Operations Analysis](index=2&type=section&id=Statement%20of%20Operations%20Analysis) Q2 2025 revenue surged to **$63.7 million** from collaborations, while total operating expenses decreased to **$67.1 million** despite **$18.4 million** in restructuring costs, resulting in a net loss of **$11.5 million** or **$0.14 per share** - Revenue growth was principally related to the **Astellas collaboration** and the recognition of previously deferred revenue from the **Ipsen partnership**[8](index=8&type=chunk)[10](index=10&type=chunk) - The company incurred **$18.4 million** in restructuring and related costs during the quarter, primarily for the deprioritization of the **luvelta program**[12](index=12&type=chunk) Statement of Operations (in thousands USD, except per share) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | Revenue | $63,745 | $25,706 | +148.0% | | R&D Expenses | $38,325 | $62,020 | -38.2% | | G&A Expenses | $10,343 | $12,371 | -16.4% | | Total Operating Expenses | $67,090 | $74,391 | -9.8% | | Net Loss | $(11,499) | $(48,018) | +76.1% (Improvement) | | Net Loss Per Share | $(0.14) | $(0.59) | +76.3% (Improvement) | [Balance Sheet Analysis](index=5&type=section&id=Balance%20Sheet%20Analysis) As of June 30, 2025, total assets were **$262.4 million**, total liabilities **$294.5 million**, and stockholders' deficit **$32.1 million**, a shift from year-end 2024 equity of **$44.6 million** due to changes in deferred revenue and royalty obligations Balance Sheet (in thousands USD) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $262,355 | $387,207 | | Deferred Revenue | $18,870 | $82,319 | | Total Liabilities | $294,466 | $342,606 | | Total Stockholders' (Deficit) Equity | $(32,111) | $44,601 |

Core Insights - Sutro Biopharma is advancing its pipeline of novel antibody-drug conjugates (ADCs), with plans to initiate a first-in-human trial for STRO-004 in the second half of 2025, targeting solid tumors [1][6] - The company has generated significant preclinical data supporting the potential of its ADC candidates, particularly in the dual-payload ADCs, which are seen as transformative for cancer treatment [2][6] - Sutro has entered a research collaboration with the FDA to enhance regulatory standards for ADCs, indicating a commitment to improving drug development processes [1][14] Financial Highlights - As of June 30, 2025, Sutro reported cash, cash equivalents, and marketable securities totaling $205.1 million, down from $249.0 million as of March 31, 2025, providing a cash runway into early 2027 [1][9] - Revenue for the second quarter of 2025 was $63.7 million, a significant increase from $25.7 million in the same quarter of 2024, primarily driven by the Astellas collaboration [10] - Total operating expenses for the quarter were $67.1 million, a decrease from $74.4 million in the prior year, with R&D expenses at $38.4 million and G&A expenses at $10.3 million [11][18] Pipeline Developments - STRO-004 is on track for a clinical trial initiation in the second half of 2025, with a favorable preclinical safety profile observed [6][7] - STRO-006, targeting integrin beta-6, is expected to enter clinical development in 2026 for multiple solid tumors [6] - The dual-payload ADC program is progressing, with an IND filing anticipated in 2027, and a collaboration with Astellas has led to a $7.5 million milestone payment [6][10] Corporate Updates - Greg Chow has been appointed as Chief Financial Officer, indicating a strengthening of the management team [1][14] - The company is focused on implementing operational efficiencies to extend its cash runway while prioritizing pipeline execution to enhance shareholder value [2]

Core Insights - Sutro Biopharma has entered a collaboration with the FDA to develop reference materials aimed at improving regulatory standards and analytical methods for antibody drug conjugates (ADCs) [1][2] - The collaboration will utilize Sutro's cell-free XpressCF technology to engineer ADCs with specific attributes, enhancing the FDA's analytical capabilities for ADC characterization [1][2] Company Overview - Sutro Biopharma focuses on the discovery and development of precisely designed cancer therapeutics, leveraging its cell-free XpressCF technology to improve patient outcomes [3] - The company is advancing a robust early-stage pipeline of novel exatecan and dual-payload ADCs, supported by high-value collaborations and industry partnerships [3]

Sutro Biopharma (STRO) Conference Call Summary Company Overview - **Company**: Sutro Biopharma (STRO) - **Industry**: Biotechnology, specifically focusing on Antibody-Drug Conjugates (ADCs) Key Points and Arguments Strategic Reprioritization - Sutro Biopharma is undergoing a strategic reprioritization to maximize the value of its unique ADC platform, emphasizing the optimization of all components from antibody to linker to payload [3][5][9] Technology and Product Differentiation - The company has made significant improvements in product design and manufacturing, particularly with a proprietary beta glucuronidase linker that cleaves more in tumors and less outside, reducing toxicities like neutropenia [6][9] - Sutro's platform allows for the combination of multiple payloads, enhancing the ability to target complex biological systems, which is referred to as "protein engineering on steroids" [7][8][9] Pipeline and Clinical Programs - Sutro plans to deliver three Investigational New Drug (IND) applications over the next three years, with a focus on: 1. Tissue Factor Program (DAR8 exatecan) 2. Integrin Beta-Six Program (DAR8 exatecan) 3. Dual Payload ADCs [12][14] - The Tissue Factor program is highlighted as the lead, showing a 50-fold increase in exposure compared to existing approved agents, with a high non-severe toxic dose (HNSTD) of 50 mg/kg [16][18] Safety and Efficacy - Sutro's ADCs are designed to avoid engaging Fc gamma receptors, which helps in reducing ocular toxicities associated with other ADCs [21][22] - The company aims to demonstrate clinical differentiation through higher dosing and improved safety profiles compared to existing therapies [18][41] Competitive Landscape - Sutro is positioning itself against competitors by focusing on the safety and efficacy of its ADCs, particularly in lung cancer, where it aims to avoid introducing lung toxicity [42][43] - The company is also exploring the potential of dual payload ADCs to overcome resistance seen in single payload therapies, which is a growing area of interest in the industry [50][55] Partnerships and Financial Outlook - Sutro has strategic collaborations with Ipsen and Astellas, which could provide up to $2 billion in potential milestones and royalties [71] - As of Q1, Sutro reported cash reserves of approximately $250 million, extending its runway into early 2027, not including anticipated milestones from collaborations [72] Future Directions - Sutro is committed to advancing its dual payload ADCs, with an IND expected in 2027, and is actively working on preclinical models to establish the safety and efficacy of these new therapies [61][64] Additional Important Information - The decision to deprioritize the Ryvelta program was based on strategic considerations rather than safety or data issues, indicating a shift towards next-generation products [67][68] - The company is focused on addressing unmet needs in oncology, particularly for patients unresponsive to current immunotherapies [60] This summary encapsulates the key insights from the conference call, highlighting Sutro Biopharma's strategic direction, technological advancements, clinical pipeline, competitive positioning, and financial outlook.