Sutro Biopharma(STRO) - 2021 Q2 - Quarterly Report

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].