On May 9, 2022 Sutro Biopharma, Inc. ("Sutro" or the "Company") (NASDAQ: STRO), a clinical-stage drug discovery, development and manufacturing company focused on the application ofprecise protein engineering and rational design to create next-generation cancer therapeutics, reported its financial results for the quarter ended March 31, 2022, its recent business highlights, and a preview of anticipatedselect milestones (Press release, Sutro Biopharma, MAY 9, 2022, View Source [SID1234613932]).
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"Sutro remains steadfastly dedicated to advancing next generation cancer therapeutics by leveraging the advantages of our proprietary platform," said Bill Newell, Sutro’s Chief Executive Officer. "We are pleased with the progress of our lead program, STRO-002, a FolRα-targeting antibody-drug conjugate. Our top priority is charting the course for a potential registrational trial for patients with advanced ovarian cancer. We are also expanding our clinical studies into endometrial cancer and have plans for non-gynecological indications, including NSCLC, to explore the possibility of treatment with STRO-002 for people who suffer from these debilitating cancers and have limited available treatment options."
Recent Business Highlights and Anticipated Select Milestones
STRO-002, FolRα-Targeting Antibody-Drug Conjugate (ADC): STRO-002 is being studied in the clinic, in both the United States and Europe, for patients with ovarian and endometrial cancers.
The Phase 1 dose-expansion cohort for patients with advanced ovarian cancer has completed enrollment and is ongoing. Sutro expects to report additional data on efficacy, safety, and durability from the dose-expansion cohort in the second half of 2022.
Regulatory discussions on a potential registrational study for patients with advanced ovarian cancer are planned for mid-year 2022.
The STRO-002 study in combination with bevacizumab for patients with advanced ovarian cancer is ongoing and the first patient was dosed in March 2022. A dose-expansion study of STRO-002 for patients with endometrial cancer continues to enroll patients.
Nonclinical data presented at the AACR (Free AACR Whitepaper) Annual Meeting 2022 in April demonstrated STRO-002’s ability to induce immunogenic cell death. Additionally, studies showed robust STRO-002 activity in endometrial and non-small cell lung cancer (NSCLC) patient-derived xenograft models with diverse levels of folate receptor alpha (FolRα) expression.
Sutro expects to initiate clinical trials for STRO-002 in NSCLC and other non-gynecologic solid tumors in the second half of 2022.
STRO-001, CD74-Targeting ADC: The Phase 1 study for patients with B‑cell malignancies, including patients withnon-Hodgkin’s lymphoma and multiple myeloma, continues in dose escalation.
Dose escalation is ongoing to achieve a recommended phase 2 dose (RP2D), with the last reported doses of 5.0 mg/kg in the multiple myeloma (MM) cohort and 5.0 mg/kg in the non-Hodgkin’s lymphoma (NHL) cohort.
Additional Pipeline Programs: Research and preclinical development are underway for several internal candidates.
Discovery and preclinical work on multiple programs are underway to determine Sutro’s next product candidates to advance to the clinic.
Sutro presented preclinical data for a novel immunostimulatory antibody-drug conjugate (iADC) at the 12th Annual World ADC Conference in March 2022. The iADC modality provides for dual mechanisms to attack the tumor, through cytotoxic killing as well as potentially building a protective immune response.
Corporate Updates: Sutro expands the strength of its leadership team with several appointments and promotions.
Venkatesh Srinivasan joined Sutro in April 2022 as Senior Vice President, Process and Analytical Development and part of the senior management team. Dr. Srinivasan brings more than 25 years of experience in bioprocess development, biologics manufacturing and tech transfer in the biopharmaceutical industry. He was most recently Vice President, Global Manufacturing Sciences & Technology at Bayer.
Kristin Bedard, Vice President of Discovery, who joined Sutro in February 2020, recently became part of the senior management team. Recent promotions within the senior management team include Brunilda Shtylla to Senior Vice President of Business Development and Annie Chang to Vice President of Investor Relations.
Collaboration Updates: Sutro continues to seek to maximize the value of its proprietary cell-free platform by working with partners on programs in multiple disease spaces and geographies and has received from collaborators an aggregate of approximately $456 million in payments, including equity investments, through March 31, 2022.
Sutro is manufacturing initial drug supply for the potential clinical development of the first molecule in the Merck cytokine derivative collaboration; clinical trial materials for Bristol Myers Squibb’s (BMS) CC-99712, a BCMA‑targeting ADC, for treatment of multiple myeloma, in Phase 1 studies; and clinical trial materials for M1231, a MUC1-EGFR-targeting bispecific ADC, for Merck KGaA, Darmstadt, Germany, known as EMD Serono in the U.S. and Canada (EMD Serono), in Phase 1 studies.
Sutro supplies cell-free extract to Vaxcyte for the manufacture of clinical trial materials for VAX-24, which is designed to prevent invasive pneumococcal disease. Vaxcyte announced in April 2022 that the first participants were dosed in the Phase 2 portion of the clinical study of VAX-24.
Sutro plans to support BioNova Pharmaceuticals (BioNova) in clinical trial initiations for STRO-001 in the Greater China market and provide clinical drug supply as needed.
In April 2022, Sutro and Tasly Biopharmaceuticals (Tasly) amended Tasly’s exclusive license to develop and commercialize STRO-002 in Greater China. Pursuant to the amended agreement, the upfront payment due from Tasly was changed to $25.0 million and $15.0 million will become payable to Sutro based on certain regulatory milestones. The amended agreement provides for additional potential payments to Sutro totaling up to $350.0 million related to development, regulatory and commercialization milestones. Sutro plans to support Tasly for initiation of clinical development activities in Greater China and provide clinical drug supply as needed.
First Quarter 2022 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of March 31, 2022, Sutro had cash, cash equivalents and marketable securities of $192.1 million, as compared to $229.5 million as of December 31, 2021, with projected cash runway into the second half of 2023, based on current business plans and assumptions. The above balances do not include the value associated with Sutro’s holdings of Vaxcyte common stock.
Unrealized Gain from Increase in Value of Vaxcyte Common Stock
As of March 31, 2022, Sutro held approximately 1.6 million shares of Vaxcyte common stock, with a fair value of $37.7 million. The non-operating, unrealized gain of $0.6 million in the first quarter of 2022 was due to the increase since December 31, 2021 in the estimated fair value of Sutro’s holdings 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’sstatements of operations.
Revenue
Revenue was $5.9 million for the quarter ended March 31, 2022, as compared to $14.7 million for the same period in 2021, related principally to the Merck, BMS, and EMD Serono collaborations. Future collaboration revenue from Merck, BMS, and EMD Serono, and from any additional collaboration partners, will fluctuate as a result of the amountand timing of revenue recognition of upfront, milestones, and other collaboration agreement payments.
Operating Expenses
Total operating expenses for the quarter ended March 31, 2022 were $45.0 million, as compared to $33.7 million for the same period in 2021. The first quarter of 2022 includes non-cash expenses for stock-based compensation of $7.0 million and depreciation and amortization of $1.3 million, as compared to $4.0 million and $1.3 million, respectively, in the comparable 2021 period. Total operating expenses for the quarter ended March 31, 2022 were comprised of research and development expenses of $30.0 million and general and administrative expenses of $15.0 million, which are expected to increase in 2022 as Sutro’s internal product candidates advance in clinical development and additional general and administrative expenses are incurred as a public company.