| --- | --- | --- | |---------------------------------------------------------------|-------|-------| | | | | | | | | | | | | | Company Overview November 2022 Sutro Biopharma NASDAQ: STRO | | | Forward-Looking Statements This presentation and the accompanying oral presentation contain "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements other than statements of historica ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed interim financial statements for Sutro Biopharma, Inc. as of September 30, 2022, and for the three and nine months then ended, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes [Condensed Balance Sheets](index=2&type=section&id=Condensed%20Balance%20Sheets) As of September 30, 2022, total assets increased to $400.7 million from $341.4 million, driven by cash and marketable securities, while total liabilities rose to $171.0 million from $88.8 million due to deferred revenue, and total stockholders' equity decreased to $229.7 million from $252.6 million Condensed Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $96,779 | $30,414 | | Marketable securities | $190,560 | $199,118 | | Total current assets | $346,553 | $218,515 | | **Total assets** | **$400,700** | **$341,408** | | **Liabilities & Equity** | | | | Deferred revenue - current & non-current | $90,652 | $5,496 | | Total current liabilities | $58,288 | $41,736 | | **Total liabilities** | **$170,974** | **$88,844** | | **Total stockholders' equity** | **$229,726** | **$252,564** | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) For the nine months ended September 30, 2022, revenues increased to $59.1 million from $51.2 million, operating expenses rose to $138.9 million from $114.7 million due to higher R&D, and the net loss widened to $84.6 million, or ($1.74) per share, from $67.4 million, or ($1.46) per share Statement of Operations Summary (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Revenues | $59,140 | $51,226 | | Research and development | $94,036 | $74,473 | | General and administrative | $44,825 | $40,241 | | Loss from operations | ($79,721) | ($63,488) | | **Net loss** | **($84,610)** | **($67,413)** | | **Net loss per share, basic and diluted** | **($1.74)** | **($1.46)** | [Condensed Statements of Cash Flows](index=6&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash provided by operating activities significantly improved to $27.4 million from $60.1 million used in 2021, primarily due to an $85.2 million increase in deferred revenue, with cash, cash equivalents, and restricted cash increasing to $97.7 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $27,413 | ($60,099) | | Net cash provided by (used in) investing activities | $2,860 | ($118,096) | | Net cash provided by financing activities | $36,092 | $2,750 | | **Net increase (decrease) in cash** | **$66,365** | **($175,445)** | | **Cash at end of period** | **$97,651** | **$31,579** | [Notes to Unaudited Interim Condensed Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Financial%20Statements) This section details the company's accounting policies and financial activities, covering liquidity, revenue recognition from collaboration agreements, fair value measurements, debt, lease commitments, and stock-based compensation - The company believes its unrestricted cash, cash equivalents, and marketable securities of **$287.3 million** as of September 30, 2022, are sufficient to fund operations for at least 12 months from the filing date[25](index=25&type=chunk)[26](index=26&type=chunk) - During the nine months ended September 30, 2022, the company sold **7,463,845 shares** through its At-the-Market (ATM) facility, generating net proceeds of approximately **$40.9 million**[22](index=22&type=chunk)[23](index=23&type=chunk) - Subsequent to the quarter end, from October 1 to November 7, 2022, the company sold an additional **2,821,315 shares** under its ATM Facility for net proceeds of **$15.3 million** and sold **1,033,434 shares** of Vaxcyte common stock for net proceeds of **$28.1 million**[145](index=145&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and results of operations, providing an overview of its business, clinical programs, and collaborations, analyzing key financial performance drivers, liquidity sources, capital resources, funding requirements, and cash flow activities [Overview](index=27&type=section&id=Overview) Sutro Biopharma is a clinical-stage oncology company developing ADCs using its XpressCF® platforms, with lead candidates STRO-002 and STRO-001 in Phase 1 trials, multiple collaborations, and an accumulated deficit of $418.0 million as of September 30, 2022 - The company's lead product candidates are **STRO-002** (anti-FolRα ADC) and **STRO-001** (anti-CD74 ADC), both in Phase 1 clinical trials[149](index=149&type=chunk) - Sutro has multi-target collaborations with **Astellas**, **Merck**, **BMS**, **EMD Serono**, **BioNova**, and **Tasly**, which are key to its strategy and revenue generation[154](index=154&type=chunk) - The company had a net loss of **$84.6 million** for the nine months ended September 30, 2022, and an accumulated deficit of **$418.0 million**[156](index=156&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For Q3 2022, revenue increased 195% to $25.1 million, driven by new collaborations and a Merck milestone, while nine-month revenue grew 15% to $59.1 million, boosted by a Tasly upfront payment, and R&D and G&A expenses rose 26% and 11% respectively Revenue by Collaborator - Nine Months Ended Sep 30 (in thousands) | Collaborator | 2022 | 2021 | | :--- | :--- | :--- | | Bristol Myers Squibb (BMS) | $8,774 | $7,784 | | Merck Sharp & Dohme (Merck) | $11,367 | $38,175 | | EMD Serono | $2,200 | $2,844 | | Astellas Pharma Inc. | $4,985 | $0 | | Vaxcyte | $2,814 | $2,423 | | BioNova Pharmaceuticals, Ltd. | $4,000 | $0 | | Tasly Biopharmaceuticals Co., Ltd. | $25,000 | $0 | | **Total revenue** | **$59,140** | **$51,226** | - The increase in nine-month revenue was primarily due to a **$25.0 million** upfront payment from Tasly, **$5.0 million** from the new Astellas collaboration, and **$4.0 million** from the BioNova agreement[183](index=183&type=chunk) - The decrease in Merck revenue for the nine-month period was due to the recognition of a **$15.0 million** milestone and other items in 2021 that did not recur in 2022, partially offset by a new **$10.0 million** milestone in Q3 2022[183](index=183&type=chunk) - R&D expenses for the nine months increased by **$19.6 million (26%)** to **$94.0 million**, driven by higher personnel costs, lab supplies, and clinical development expenses[184](index=184&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, Sutro had $287.3 million in cash, cash equivalents, and marketable securities, plus $36.9 million in Vaxcyte equity, sufficient to fund operations for at least twelve months, with major liquidity sources including upfront payments from Astellas and Tasly, a Merck milestone, and ATM stock sales - The company received a **$90.0 million** upfront payment from Astellas in Q3 2022[191](index=191&type=chunk) - The company received a net payment of **$22.5 million** from Tasly in Q2 2022 after a **$2.5 million** withholding tax on the **$25.0 million** upfront payment[192](index=192&type=chunk) - Net proceeds from the At-The-Market (ATM) facility were **$40.9 million** for the nine months ended September 30, 2022[190](index=190&type=chunk) Cash Flow Summary - Nine Months Ended Sep 30 (in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $27,413 | ($60,099) | | Net cash provided by (used in) investing activities | $2,860 | ($118,096) | | Net cash provided by financing activities | $36,092 | $2,750 | [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on investments and debt, and equity price risk from its $36.9 million Vaxcyte common stock holdings, where a 10% price decrease would result in a $3.7 million fair value loss, though debt interest rate changes are not expected to have a material impact - The company's primary market risks are interest rate sensitivity and equity price risk related to its investment in Vaxcyte common stock[217](index=217&type=chunk) - As of September 30, 2022, the company held **$36.9 million** in Vaxcyte common stock. A hypothetical **10% price decrease** would result in a **$3.7 million loss** in fair value[218](index=218&type=chunk)[219](index=219&type=chunk) - The company's outstanding debt of **$19.3 million** has a floating interest rate, but management does not expect interest rate changes to have a material impact[221](index=221&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022[223](index=223&type=chunk) - No material changes to the company's internal control over financial reporting occurred during the quarter ended September 30, 2022[224](index=224&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that management believes would have a material adverse effect on its business - Sutro is not presently a party to any legal proceedings that would have a material adverse effect on its business[226](index=226&type=chunk) [Risk Factors](index=39&type=page&id=Item%201A.%20Risk%20Factors) This section details significant investment risks, including a history of losses, uncertainty of future profitability, reliance on early-stage product candidates and unproven novel technologies, the need for substantial additional funding, and potential impacts from the COVID-19 pandemic, alongside competition, manufacturing, collaboration, intellectual property, regulatory, and market volatility challenges [Summary of Risk Factors](index=39&type=section&id=Summary%20of%20Risk%20Factors) The company highlights key risks including its limited operating history, significant losses, ongoing COVID-19 impact, need for substantial additional funding amid unfavorable capital markets, dependence on early-stage product candidates STRO-001 and STRO-002, unproven novel technology platforms, potential development delays, cybersecurity threats, reliance on collaborations, manufacturing complexities, and intense competition - The company has a history of significant losses (**$418.0 million** accumulated deficit as of Sep 30, 2022) and may never achieve profitability[229](index=229&type=chunk)[230](index=230&type=chunk)[232](index=232&type=chunk) - Business success is highly dependent on its two proprietary clinical-stage product candidates, **STRO-001** and **STRO-002**, which are based on novel and unproven technology platforms (**XpressCF®** and **XpressCF+®**)[229](index=229&type=chunk) - Substantial additional funding is required, and unfavorable market conditions, inflation, and interest rate fluctuations may make it difficult to access capital[229](index=229&type=chunk) - The company relies on third-party collaborations (e.g., **Astellas**, **Merck**, **BMS**) and third-party manufacturing, which introduces risks related to performance and compliance[229](index=229&type=chunk) [Risks Related to Our Business](index=41&type=section&id=Risks%20Related%20to%20Our%20Business) This subsection details business-related risks, including a history of significant losses, uncertain future profitability, ongoing COVID-19 operational risks, capital-intensive nature requiring substantial additional funding, success hinging on early-stage candidates and unproven platforms, development delays, competition, reliance on collaborators and third-party manufacturers, and the need for organizational growth - The company's product candidates are in early development stages and may fail, face delays, or be impacted by competitive products, materially harming their commercial viability[246](index=246&type=chunk) - The company's **XpressCF®** and **XpressCF+®** platforms are novel technologies, and no product manufactured on a cell-free platform has been approved by the FDA, creating regulatory uncertainty[255](index=255&type=chunk)[271](index=271&type=chunk) - The company relies on a hybrid manufacturing model, using both internal facilities and third-party CMOs. Any inability to manufacture sufficient quantities, loss of suppliers, or failure to comply with cGMP would materially harm the business[288](index=288&type=chunk) - The company faces intense competition from well-funded biopharmaceutical companies with greater resources and experience in developing ADCs, cytokine derivatives, and other cancer therapies[305](index=305&type=chunk)[306](index=306&type=chunk) [Risks Related to Intellectual Property](index=65&type=section&id=Risks%20Related%20to%20Intellectual%20Property) This subsection outlines intellectual property risks, emphasizing the company's dependence on obtaining, maintaining, and enforcing patents and protecting trade secrets, with potential challenges including failing to secure broad patent protection, challenges to existing patents, infringement of third-party patents, evolving legal landscapes, and difficulties in global IP protection - The company's ability to develop and commercialize products may be adversely affected if it cannot obtain and enforce sufficient patent protection for its technologies[336](index=336&type=chunk) - The company may face litigation or need to obtain licenses from third parties if its products are found to infringe on others' patents, which could be costly or unavailable on reasonable terms[352](index=352&type=chunk) - Failure to protect the confidentiality of trade secrets through non-disclosure agreements and other measures could harm the company's competitive position[343](index=343&type=chunk) - Changes in U.S. and international patent laws could diminish the value of patents and impair the ability to protect products[364](index=364&type=chunk) [Risks Related to Government Regulation](index=73&type=section&id=Risks%20Related%20to%20Government%20Regulation) This subsection covers risks associated with government regulation, including the lengthy, expensive, and uncertain clinical development and approval process, ongoing regulatory obligations, potential pricing controls, healthcare reform measures, and complex compliance with anti-kickback, fraud, and data privacy laws - Clinical development is a long, expensive process with an uncertain outcome, and failure can occur at any stage. Early positive results are not predictive of later-stage success[367](index=367&type=chunk)[368](index=368&type=chunk) - Even if approved, products will be subject to ongoing regulatory review, which may result in significant expenses, marketing restrictions, or market withdrawal[383](index=383&type=chunk) - Healthcare legislative reforms, such as the **ACA** and the **Inflation Reduction Act (IRA)**, could lead to unfavorable pricing regulations, reimbursement policies, and increased downward pressure on prices[391](index=391&type=chunk)[400](index=400&type=chunk)[402](index=402&type=chunk) - The company is subject to complex federal, state, and foreign laws regarding data privacy and security (e.g., **HIPAA**, **GDPR**, **CCPA**), and failure to comply could result in significant penalties and reputational harm[406](index=406&type=chunk)[408](index=408&type=chunk)[413](index=413&type=chunk) [Risks Related to Our Common Stock](index=88&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) This subsection discusses risks for common stock investors, including high stock price volatility due to clinical, regulatory, and market factors, fluctuating operating results, anti-takeover provisions, no anticipated dividends, future equity sales causing dilution, and potential negative impacts from a lack of analyst coverage - The company's stock price is subject to high volatility due to clinical, regulatory, and market factors, and operating results may fluctuate significantly[442](index=442&type=chunk)[452](index=452&type=chunk) - Anti-takeover provisions in the company's charter and under Delaware law could make a potentially beneficial acquisition more difficult[445](index=445&type=chunk) - The company does not plan to pay cash dividends in the foreseeable future, so capital appreciation is the sole potential source of gain for investors[451](index=451&type=chunk) - Future sales of common stock, including through the "at the market" offering program, will dilute existing stockholders and could adversely affect the stock price[455](index=455&type=chunk)[458](index=458&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 001-38662 SUTRO BIOPHARMA, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 47-0926186 (State ...

| --- | --- | --- | |-----------------------------------------------------------|-------|-------| | | | | | | | | | | | | | Company Overview June 2022 Sutro Biopharma NASDAQ: STRO | | | Forward Looking Statements This presentation and the accompanying oral presentation contain "forward-looking" statements that are based on our management's beliefs and assumptions and on information currently available to management. Forward-looking statements include all statements other than statements of historical fact c ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Sutro Biopharma reported a net loss of **$39.1 million** for Q1 2022, an increase from **$30.4 million** in Q1 2021, due to decreased revenue and higher operating expenses [Condensed Balance Sheets](index=3&type=section&id=Condensed%20Balance%20Sheets) As of March 31, 2022, total assets decreased to **$303.7 million** from **$341.4 million** at year-end 2021, primarily due to reduced marketable securities and stockholders' equity Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $28,901 | $30,414 | | Marketable securities (current & non-current) | $163,199 | $199,118 | | Total current assets | $228,742 | $218,515 | | Total assets | $303,675 | $341,408 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $38,760 | $41,736 | | Total liabilities | $83,303 | $88,844 | | Total stockholders' equity | $220,372 | $252,564 | | Total Liabilities and Stockholders' Equity | $303,675 | $341,408 | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) For Q1 2022, revenues significantly decreased to **$5.9 million** from **$14.7 million** year-over-year, leading to a wider net loss of **$39.1 million** Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Revenues | $5,897 | $14,660 | | Research and development | $29,990 | $22,562 | | General and administrative | $15,039 | $11,107 | | Loss from operations | ($39,132) | ($19,009) | | Net loss | ($39,110) | ($30,359) | | Net loss per share, basic and diluted | ($0.84) | ($0.66) | [Condensed Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss for Q1 2022 increased to **$39.9 million** from **$30.5 million** in Q1 2021, driven by a higher net loss and unrealized losses on securities Comprehensive Loss Summary (in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net loss | $(39,110) | $(30,359) | | Unrealized loss on available-for-sale securities | $(838) | $(129) | | **Comprehensive loss** | **$(39,948)** | **$(30,488)** | [Condensed Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) Total stockholders' equity decreased by **$32.2 million** to **$220.4 million** as of March 31, 2022, primarily due to the net loss for the quarter - Stockholders' equity declined by **$32.2 million** during Q1 2022, mainly due to a net loss of **$39.1 million**[15](index=15&type=chunk) [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was **$35.3 million** in Q1 2022, resulting in a **$1.5 million** net decrease in cash and equivalents Cash Flow Summary (in thousands) | Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(35,255) | $(30,430) | | Net cash provided by (used in) investing activities | $32,982 | $(121,730) | | Net cash provided by financing activities | $760 | $1,826 | | **Net decrease in cash, cash equivalents and restricted cash** | **$(1,513)** | **$(150,334)** | [Notes to Unaudited Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) The notes detail the company's accumulated deficit, liquidity, revenue sources, and the renegotiation of the Tasly License Agreement post-quarter end - The company has an accumulated deficit of **$372.5 million** as of March 31, 2022, but believes its unrestricted cash, cash equivalents, and marketable securities of **$192.1 million** are sufficient to fund operations for at least the next 12 months[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) Revenue by Collaborator (in thousands) | Collaborator | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Bristol Myers Squibb Company ("BMS") | $2,165 | $1,239 | | Merck Sharp & Dohme Corporation ("Merck") | $1,064 | $11,883 | | EMD Serono | $1,897 | $220 | | Vaxcyte | $771 | $1,318 | | **Total revenue** | **$5,897** | **$14,660** | - The company did not recognize the **$40.0 million** upfront payment from the Tasly License Agreement as of March 31, 2022, because Tasly requested to renegotiate terms in February 2022[97](index=97&type=chunk) - Subsequent to the quarter end, on April 18, 2022, the Tasly agreement was amended, changing the upfront payment to **$25.0 million** with an additional **$15.0 million** in escrow contingent on regulatory milestones[128](index=128&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q1 2022 revenue decrease to lower Merck collaboration revenue and explains increased operating expenses due to higher headcount and clinical development activities - The company's two most advanced wholly-owned product candidates are STRO-002 for ovarian and endometrial cancers, and STRO-001 for B-cell malignancies[133](index=133&type=chunk) Financial Results Comparison (in thousands) | Metric | Q1 2022 | Q1 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $5,897 | $14,660 | (60)% | | Research and development | $29,990 | $22,562 | 33% | | General and administrative | $15,039 | $11,107 | 35% | | Loss from operations | $(39,132) | $(19,009) | 106% | - The decrease in revenue was primarily due to a **$10.8 million** decrease from Merck, related to the completion of performance obligations under the 2018 agreement[156](index=156&type=chunk) - As of March 31, 2022, the company had **$192.1 million** in cash, cash equivalents, and marketable securities, which is believed sufficient to fund operations for at least the next twelve months[162](index=162&type=chunk)[169](index=169&type=chunk) - The COVID-19 pandemic is causing increased costs and delays in material availability, though patient enrollment and treatment remain on track[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily interest rate sensitivities on its investment portfolio and equity price risk from its Vaxcyte common stock holding - The company's primary market risks are interest rate sensitivity and equity price risk from its investment in Vaxcyte common stock[185](index=185&type=chunk) - As of March 31, 2022, the company held **$37.7 million** in Vaxcyte common stock, where a hypothetical 10% decrease in market price would reduce fair value by **$3.8 million**[186](index=186&type=chunk)[187](index=187&type=chunk) - The company's outstanding debt of **$25.3 million** bears a floating interest rate, but a 100 basis point change would not materially impact interest expense[189](index=189&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes in internal control over financial reporting - The CEO and CFO concluded that as of March 31, 2022, the company's disclosure controls and procedures were effective at a reasonable assurance level[191](index=191&type=chunk) - No changes in internal control over financial reporting occurred during Q1 2022 that materially affected, or are reasonably likely to materially affect, internal controls[192](index=192&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that management believes would have a material adverse effect on its business - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business[194](index=194&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) The company outlines significant risks including its history of losses, dependence on early-stage product candidates, need for additional funding, and challenges with its unproven platform and manufacturing - The company has a history of significant losses (**$372.5 million** accumulated deficit as of March 31, 2022) and may never achieve profitability[197](index=197&type=chunk)[200](index=200&type=chunk) - The business is highly dependent on the success of its proprietary product candidates, STRO-001 and STRO-002, which are in early stages of clinical development[197](index=197&type=chunk)[217](index=217&type=chunk) - The COVID-19 pandemic is impacting the availability of routine materials, causing sourcing difficulties and modified manufacturing schedules, which could potentially delay clinical trials[197](index=197&type=chunk)[201](index=201&type=chunk)[205](index=205&type=chunk) - The company's approach is based on novel XpressCF® and XpressCF+® platforms, which are unproven and may not result in marketable products, as no cell-free platform product has FDA approval[223](index=223&type=chunk)[239](index=239&type=chunk) - The company relies on third-party manufacturers for components and faces risks related to their compliance, quality, and supply capacity, as well as risks in scaling its own internal manufacturing[201](index=201&type=chunk)[253](index=253&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=88&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the quarter[427](index=427&type=chunk) [Defaults Upon Senior Securities](index=88&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - There were no defaults upon senior securities[427](index=427&type=chunk) [Mine Safety Disclosures](index=88&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[428](index=428&type=chunk) [Other Information](index=88&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - None[429](index=429&type=chunk) [Exhibits](index=89&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906, as well as Inline XBRL documents[432](index=432&type=chunk)

STRO-002 Clinical Trial Results and Strategy - In the dose expansion cohort of the STRO-002 trial for ovarian cancer, an overall response rate (ORR) of 333% was observed in all 33 evaluable patients[52] - A higher ORR of 471% was seen in patients starting at the 52 mg/kg dose level[52] - Exploratory analysis suggests that a tumor proportion score (TPS) > 25% correlated with higher response, demonstrating a 400% ORR (10 out of 25 patients)[68, 76] and 538% ORR (7/13) in patients at the 52 mg/kg starting dose[76] - 855% of treatment-emergent adverse events (TEAEs) were Grade 1-2, indicating a manageable safety profile[72, 76] - The company plans to initiate a pivotal trial in ovarian cancer by year-end 2022 and has dosed the first patient in the endometrial cancer cohort in November 2021[13] STRO-001 Clinical Trial and Development - STRO-001 is undergoing Phase 1 dose escalation studies, with the latest reported dose levels at 50 mg/kg in both multiple myeloma (MM) and non-Hodgkin's lymphoma (NHL) cohorts[91] - In the NHL cohort, the median number of prior therapies was 5 (range 1-12)[94] - Interim data from the NHL cohort showed partial responses in two DLBCL patients who had progressed on CAR-T therapy[96] Financial Position and Partnerships - The company reported $2295 million in cash, cash equivalents, and marketable securities as of December 31, 2021[99] - Projected cash runway extends into the second half of 2023, based on current business plans and assumptions[99] - Funding received from collaborators totaled approximately $446 million through December 31, 2021[99]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-38662 SUTRO BIOPHARMA, INC. (Exact Name of Registrant as Specified in Its Charter) Delaware 47-0926186 (State or other jurisdiction o ...

STRO-002 Clinical Trial Updates - Interim data from the dose expansion cohort of the STRO-002 Phase 1 study in advanced ovarian cancer showed a 333% objective response rate (ORR) in all 33 evaluable patients, unenriched for FolRα expression[52] - A higher response rate of 471% ORR was observed in patients starting at the 52 mg/kg dose level of STRO-002[52] - Exploratory analysis suggests that a Tumor Proportion Score (TPS) > 25% correlated with a higher response rate, demonstrating a 400% ORR (10/25) in patients at the 52 mg/kg starting dose[68, 76] - The company plans to initiate a pivotal trial in ovarian cancer by year-end 2022[13] - First patient dosed in endometrial cancer cohort in November 2021[13] - First patient dosed in bevacizumab combination trial in Q1 2022[13] STRO-001 Clinical Trial Updates - STRO-001 is undergoing Phase 1 dose escalation study with NHL update at ASH 2020[88] - As of October 2021, the last reported doses levels were of 50 mg/kg in the multiple myeloma (MM) cohort and 42 mg/kg in the non-Hodgkin's lymphoma (NHL) cohort[91] Financial Status - The company reported $2542 million in cash, cash equivalents, and marketable securities as of September 30, 2021[99] - Projected cash runway into 2H 2023, based on current business plans and assumptions[99] - Funding received from collaborators of approximately $434 million through September 30, 2021[99]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number: 001-38662 SUTRO BIOPHARMA, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisd ...

Financial Performance - The company reported a net loss of $36.5 million for the six months ended June 30, 2021, with an accumulated deficit of $264.4 million as of the same date [138]. - The company reported a net loss of $6.2 million for the three months ended June 30, 2021, compared to a net income of $29.9 million in the same period in 2020, representing a decrease of $36.0 million [155]. - The company reported a net cash decrease of $149.8 million for the six months ended June 30, 2021 [192]. - Cash used in operating activities for the six months ended June 30, 2021, was $35.7 million, reflecting a net loss of $36.5 million [193]. - Cash provided by financing activities for the six months ended June 30, 2021, was $1.8 million, primarily from $1.4 million of proceeds from common stock options [197]. - Cash provided by financing activities for the six months ended June 30, 2020, was $107.1 million, mainly from $91.4 million of net proceeds from a public offering [198]. Revenue and Collaborations - The company has no products approved for commercial sale and has not generated any revenue from commercial product sales [140]. - The company derives revenue primarily from collaboration agreements, with no revenue from commercial product sales to date [141]. - Total revenue increased by $18.6 million, or 196%, during the three months ended June 30, 2021, compared to the same period in 2020, reaching $28.0 million [155]. - Total revenue increased by $26.1 million, or 157%, during the six months ended June 30, 2021, compared to the same period in 2020, driven by a $22.0 million increase from Merck [169]. - Revenue from Merck Sharp & Dohme Corporation increased by $12.9 million, or 184%, during the three months ended June 30, 2021, totaling $19.9 million [156]. - The company earned a $15.0 million contingent payment from Merck in Q2 2021 for initiating an IND enabling toxicology study [177]. - The company has entered into collaborations with Merck, Celgene (BMS), and EMD Serono to develop multi-target product candidates [131]. Expenses - Research and development expenses for the three months ended June 30, 2021, were $25.3 million, an increase of $8.1 million or 47% compared to $17.2 million in the same period in 2020 [160]. - Total operating expenses for the six months ended June 30, 2021, were $71.5 million, an increase of $19.3 million or 37% compared to $52.2 million in the same period in 2020 [166]. - Research and development expense rose by $13.0 million, or 37%, during the six months ended June 30, 2021, primarily due to higher personnel-related expenses and clinical trial costs [171]. - General and administrative expenses rose to $12.5 million for the three months ended June 30, 2021, reflecting an increase of $3.9 million or 45% compared to $8.6 million in the same period in 2020 [161]. - General and administrative expense increased by $6.3 million, or 36%, during the six months ended June 30, 2021, mainly due to higher personnel-related expenses and facility-related costs [172]. - The company expects significant increases in operating expenses as it continues to develop product candidates and seek regulatory approvals [138]. - The company expects research and development expenses to increase in the future as it advances product candidates through clinical trials and expands its pipeline [146]. Clinical Trials - The Phase 1 trial for STRO-001 has enrolled patients and is ongoing, with no ocular toxicity signals observed and the maximum tolerated dose not yet reached [132]. - As of April 23, 2021, the Phase 1 trial for STRO-002 had enrolled 39 ovarian cancer patients, with 31 patients evaluable for RECIST responses [133]. - In the STRO-002 trial, 10 out of 31 evaluable patients met criteria for response, including 1 complete response and 9 partial responses [136]. - The median duration of response for confirmed responders in the STRO-002 trial was 5.8 months, with a median progression-free survival of 7.2 months [136]. - The COVID-19 pandemic has caused minor delays in clinical trial enrollment but overall patient treatment remains on track [139]. Cash and Securities - As of June 30, 2021, the company had cash, cash equivalents, and marketable securities totaling $283.4 million, with an outstanding debt of $24.8 million [176]. - As of June 30, 2021, the company had cash, cash equivalents, and marketable securities totaling $283.4 million, down from $326.5 million as of December 31, 2020 [208]. - The company held equity securities valued at $35.3 million as of June 30, 2021, consisting solely of common stock of Vaxcyte [208]. - A hypothetical 10% decrease in the market price of equity investments as of June 30, 2021, would decrease the fair value by $3.5 million [209]. - The company had $24.8 million in debt outstanding as of June 30, 2021, with a floating interest rate that could be as high as 8.07% [211]. - The debt matures on March 1, 2024, and will be interest-only through March 1, 2022 [211]. Future Outlook - The company anticipates needing additional financing to advance its product candidates and fund operations in the foreseeable future [190]. - The company is classified as an emerging growth company and expects to cease this status by December 31, 2021 [202]. - The company has not entered into any off-balance sheet arrangements [199]. - There have been no material changes to critical accounting policies since the last annual report [204].