On March 18, 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 year ended December 31, 2020, its recent business highlights, and provided a preview of anticipated selected milestones in 2021 (Press release, Sutro Biopharma, MAR 18, 2021, View Source [SID1234576885]).
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"2020 was a highly productive year for Sutro as we advanced the clinical development of our programs and navigated through the pandemic. Four product candidates that have now entered the clinic, two of which are partnered programs, were discovered and developed using our cell-free protein synthesis platform, showcasing its strength and versatility," said Bill Newell, Sutro’s Chief Executive Officer. "We were particularly encouraged to see meaningful clinical benefit for women with advanced platinum-resistant and refractory ovarian cancer who were part of the Phase 1 dose-escalation study for STRO-002, our FolRα-targeted ADC. We dosed the first patient in dose-expansion in January 2021 and are rapidly moving this program forward. Additionally, we are progressing well on our partnerships – our Bristol Myers Squibb and EMD Serono collaboration programs are enrolling patients in Phase 1 studies and we are continuing to work with Merck on the cytokine derivatives collaboration to bring its first program to the clinic. We look forward to continued progress on our clinical programs and utilizing our industry leading cell-free platform to advance additional product candidates to benefit patients with unmet medical needs."
Recent Business Highlights and Expected 2021 Milestones
STRO-002: Continued progress in Phase 1 trial of STRO-002, folate receptor-alpha (FolRα)-targeted antibody-drug conjugate (ADC) for patients with recurrent platinum resistant or refractory ovarian cancer.
Dose-escalation portion of the Phase 1 trial completed enrollment as of August 31, 2020 and interim data as of October 30, 2020 were presented by key opinion leaders (KOL) and management at the KOL Discussion of STRO-002 Data Event in December 2020.
Additional data from dose-escalation, with extended follow-up on patients remaining on study, is expected in the first half of 2021.
Dose-expansion portion of the Phase 1 trial began enrolling patients in January 2021 and initial dose-expansion data is expected to be reported in the second half of 2021.
Dose-expansion data is expected to inform regulatory interactions, potentially accelerate development of our registration strategy, and enable identification of the broadest population that may benefit from STRO-002.
STRO-001: Phase 1 dose-escalation continues for STRO-001, a CD74-targeted ADC for development in B-cell malignancies.
Dose-escalation in the Phase 1 trial enrolling patients with lymphoma and multiple myeloma is ongoing 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.
The dose-expansion portion of the Phase 1 trial is expected to begin enrolling patients in the second half of 2021.
Merck collaboration: Working collaboratively with Merck to advance two cytokine derivative programs towards the clinic.
Sutro is continuing to work with Merck to discover new therapeutics for cancer and autoimmune diseases. The collaboration is advancing two cytokine-derivative programs through the research phase.
In March 2020, Merck extended by one year the research term of the collaboration’s first program, which included a $5.0 million payment to Sutro.
In August 2020, Sutro entered into a supply agreement with Merck, giving Sutro responsibility for manufacturing pre-clinical and clinical supply for products emerging from the collaboration.
Bristol Myers Squibb (BMS) collaboration: Phase 1 trial for CC-99712, a BCMA-targeted ADC, is continuing to enroll multiple myeloma patients.
Since initiation of Phase 1 in the second half of 2019, 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.
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 milestone or contingent payments and tiered royalties on sales ranging from mid to high single digit percentages.
Merck KGaA, EMD Serono (EMD Serono) collaboration: Phase 1 trial for M1231, a first-in-class bispecific ADC targeting MUC1–EGFR for development in solid tumors, was initiated in the first quarter of 2021.
EMD Serono is enrolling 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.
Vaxcyte relationship: Potential vaccine application demonstrates the power of Sutro’s cell-free technology in conjugated vaccines.
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 broader 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 December 31, 2020.
Key 2020 financings
In May 2020 and December 2020, Sutro closed public offerings of its common stock, with gross proceeds of approximately $98.0 million and approximately $144.9 million, respectively.
Sutro ended 2020 with cash, cash equivalents & marketable securities of $326.5 million, with projected runway into the second half of 2023, based on current business plans and assumptions, and not including the value of its holdings of Vaxcyte common stock.
Full Year 2020 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of December 31, 2020, Sutro had cash, cash equivalents and marketable securities of $326.5 million, as compared to $133.5 million as of December 31, 2019, which represents a net cash increase of $193.0 million during 2020. The cash, cash equivalents and marketable securities balance noted above does not include the value associated with Sutro’s holdings of approximately 1.6 million shares of Vaxcyte common stock. As of December 31, 2020, the fair value of the Vaxcyte common stock held by Sutro was $41.6 million.
Unrealized Gain from Increase in Value of Vaxcyte Common Stock
The non-operating, unrealized gain of $41.5 million in 2020 consisted of $41.6 million due to the increase in the estimated fair value of Sutro’s holdings of approximately 1.6 million shares of Vaxcyte common stock, partially offset by approximately $0.1 million in adjustments related to revaluations of certain Vaxcyte equity items. Vaxcyte common stock held by Sutro will be measured 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 $42.7 million in each of the year ended December 31, 2020 and the year ended December 31, 2019, 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 year ended December 31, 2020 were $113.8 million, as compared to $98.2 million in 2019, including non-cash stock-based compensation of $11.9 million and $10.3 million, and depreciation and amortization expense of $4.3 million and $4.8 million, in 2020 and 2019, respectively. Total operating expenses for 2020 were comprised of research and development expenses of $77.0 million and general and administrative expenses of $36.8 million, which are expected to increase in future periods as Sutro’s internal product candidates advance in clinical development and additional general and administrative expenses are incurred as a public company.