On May 7, 2021 Sutro Biopharma, Inc. (NASDAQ: STRO), a clinical-stage drug discovery, development and manufacturing company focused on the application of precise protein engineering and rational design to create next-generation cancer and autoimmune therapeutics, reported its financial results for the quarter ended March 31, 2021, its recent business highlights, and provided a preview of anticipated selected milestones in 2021 (Press release, Sutro Biopharma, MAY 7, 2021, View Source [SID1234579487]).
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"We are enthusiastic about the meaningful clinical benefit of STRO-002, our FolRα-targeting Antibody-Drug Conjugate (ADC), for women with advanced ovarian cancer, as demonstrated by the Phase 1 dose-escalation data, and look forward to providing follow-up data at ASCO (Free ASCO Whitepaper)," said Bill Newell, Sutro’s Chief Executive Officer. "We continue to enroll patients for the dose-expansion portion of the Phase 1 study and we have activated additional clinical sites. STRO-002 is one of the four product candidates in the clinic that were discovered, developed, and are manufactured using our proprietary and integrated cell-free protein synthesis platform. We intend to continue creating value by leveraging our platform to deliver on therapeutics that are precise, rationally designed, and homogenous, for a broad set of patients with unmet medical needs."
Recent Business Highlights and Expected 2021 Milestones
STRO-002, FolRα-targeting ADC: Ongoing enrollment in dose-expansion trial for patients with advanced ovarian cancer
The dose-escalation portion of the Phase 1 trial, in patients with advanced ovarian cancer, completed enrollment as of August 31, 2020. Follow-up data will be presented as a poster at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Virtual Annual Meeting being held in the second quarter of 2021.
Abstract Number: 5550
Session: Gynecologic Cancer
Title: Phase 1 dose-escalation study of STRO-002, an antifolate receptor alpha (FRα) antibody drug conjugate (ADC), in patients with advanced, progressive platinum-resistant/refractory epithelial ovarian cancer (EOC)
Presenter: R. Wendel Naumann, M.D., Professor & Director of Gynecologic Oncology Research at Levine Cancer Institute, Atrium Health
The enrollment for the dose-expansion portion of the Phase 1 trial, in a less heavily pre-treated patient population, is ongoing with additional sites activated in the US and a CTA approved by the Spanish Agency for Medicine and Health Products to intiate the study in Spain.
The initial data for dose-expansion is expected to be reported in the second half of 2021; the data is expected to inform regulatory interactions and registration strategy and enable the identification of the broadest patient population that may benefit from STRO-002.
STRO-001, CD74-targeting ADC: Continuing enrollment in Phase 1 dose-escalation for patients with B-cell malignancies
The dose-escalation trial is enrolling patients with lymphoma and multiple myeloma and the maximum tolerated dose has not yet been reached.
Interim data from the dose-escalation portion of the trial in patients with non-Hodgkin lymphoma and preclinical data from our collaboration with Fred Hutchinson Cancer Research Center were presented at the 62nd American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting in December 2020.
STRO-003: Preclinical development underway and product candidate expected to be unveiled in the second half of 2021
Merck collaboration on cytokine derivatives: Moving towards the clinic on the first cytokine derivatives program for cancer and autoimmune disorders
In April 2021, Merck initiated IND-enabling toxicology studies for the first program under the July 2018 cytokine derivatives collaboration, for which Sutro earned a $15 million milestone payment.
In August 2020, Sutro entered into a supply agreement with Merck, providing Sutro with responsibility for manufacturing pre-clinical and clinical supply for products emerging from the collaboration.
Merck has exclusive worldwide rights to therapeutic candidates derived from the collaboration. Sutro is eligible to receive contingent payments for each of the target programs selected by Merck, assuming the development and sale of the therapeutic candidate and all possible indications identified under the collaboration. In addition, Sutro is eligible to receive tiered royalties ranging from mid-single digit to low teen percentages on worldwide sales of any commercial products that may result from the collaboration.
BMS collaboration on CC-99712, BCMA-targeting ADC: Ongoing enrollment for Phase 1 trial for patients with multiple myeloma
Since the Phase 1 trial initiation in the second half of 2019, Bristol Myers Squibb (BMS) has been enrolling patients in a dose-escalation/expansion trial to assess treatment of relapsed and refractory multiple myeloma, with the last reported dose level at 3.0 mg/kg, as reported in June 2020.
CC-99712 was granted Orphan Drug Designation by the FDA for multiple myeloma.
BMS is responsible for the worldwide clinical development and commercialization of CC–99712. Sutro is responsible for clinical supply manufacturing and certain development services for CC-99712 and is entitled to development and regulatory contingent payments and tiered royalties ranging from mid to high single digit percentages on worldwide sales of any commercial products that may result from the collaboration.
EMD Serono collaboration on M1231, Bispecific ADC-targeting MUC1-EGFR: Entered Phase 1 clinical trial in the first quarter 2021
Merck KGaA, EMD Serono (EMD Serono) began enrolling patients in a Phase 1 dose-escalation trial in the first quarter of 2021 for patients in the dose-escalation portion of a Phase 1 trial of M1231 for treatment of metastatic solid tumors, including non-small cell lung cancer (NSCLC) and esophageal squamous cell carcinoma.
Sutro is responsible for manufacturing early clinical supply of M1231 and is eligible for milestone or contingent payments and tiered royalties ranging from low to mid single digit percentages, along with certain additional one-time royalties, on worldwide sales of any commercial products that may result from the collaboration.
Vaxcyte relationship on conjugated vaccines: Utilization of Sutro’s cell-free technology
Under a license from Sutro, Vaxcyte has the right to use the XpressCF and XpressCF+ platforms to discover and develop vaccine candidates for the treatment or prophylaxis of infectious diseases.
Vaxcyte is progressing their broad spectrum pneumococcal conjugate vaccine (VAX–24) through preclinical development.
Sutro is eligible to receive four percent (4%) royalties on worldwide net sales of any licensed vaccine candidates. Sutro retains the right to discover and develop vaccines for treatment or prophylaxis of any disease not caused by an infectious pathogen, including cancer.
In June 2020, Vaxcyte completed an initial public offering of its common stock. Sutro owns approximately 1.6 million shares of Vaxcyte common stock as of March 31, 2021.
First Quarter 2021 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of March 31, 2021, Sutro had cash, cash equivalents and marketable securities of $294.9 million, as compared to $326.5 million as of December 31, 2020, with projected runway into the second half of 2023, based on current business plans and assumptions and not including the value associated with Sutro’s holdings of approximately 1.6 million shares of Vaxcyte common stock. As of March 31, 2021, the fair value of the Vaxcyte common stock held by Sutro was $31.0 million.
Unrealized Loss from Decrease in Value of Vaxcyte Common Stock
The non-operating, unrealized loss of $10.7 million for the quarter ended March 31, 2021 was due to the decrease since December 31, 2020 in the estimated fair value of Sutro’s holdings of approximately 1.6 million shares of Vaxcyte common stock. Vaxcyte common stock held by Sutro will be remeasured at fair value based on the closing price of Vaxcyte’s common stock on the last trading day of each reporting period, with any non-operating, unrealized gains and losses recorded in Sutro’s statements of operations.
Revenue
Revenue was $14.7 million for the quarter ended March 31, 2021, compared to $7.2 million in the corresponding 2020 quarter, related principally to the Merck, BMS, and EMD Serono collaborations. Future collaboration revenue from Merck, BMS, and EMD Serono, and from any future collaboration partners, will fluctuate as a result of the amount and timing of revenue recognition of upfront, milestones and other collaboration agreement payments.
Operating Expenses
Total operating expenses for the quarter ended March 31, 2021 were $33.7 million, compared to $26.3 million in the corresponding 2020 quarter, including non-cash stock-based compensation of $4.0 million and $2.7 million, and depreciation and amortization expense of $1.3 million and $1.1 million, in the 2021 and 2020 quarters, respectively. Total operating expenses for the first quarter of 2021 were comprised of research and development expenses of $22.6 million and general and administrative expenses of $11.1 million, which are expected to increase in 2021 as Sutro’s internal product candidates advance in clinical development and additional general and administrative expenses are incurred as a public company.