On April 1, 2019 Sutro Biopharma, Inc. (NASDAQ: STRO), a clinical-stage drug discovery, development and manufacturing company focusedon the application of precise protein engineering and rational design to create next-generation oncology therapeutics, reported its financial results for the year ended December 31, 2018 (Press release, Sutro Biopharma, APR 1, 2019, View Source [SID1234534813]).
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"This last year was a landmark one for Sutro. Our initial clinical trial for our first internal program, STRO-001 for the treatment of patients with multiple myeloma and non-Hodgkin’slymphoma, commenced in April 2018. Importantly, we also advanced our second clinical program, STRO-002 for the treatment of ovarian and endometrial cancers, to its clinical trial initiation in March 2019. On the business front, we entered a significant collaboration with Merck and completed our IPO in the second half of 2018," said Bill Newell, Sutro’s Chief Executive Officer. "In 2019, we look forward to the continued advancement of our internal programs, while working with our partners on progressing the collaboration product candidates."
Recent Business Highlights and Developments
STRO-001 Clinical Program
Potential first-in-class and best-in-class antibody-drug conjugate (ADC) directed against CD74, which is highly expressed in many B cell malignancies
Phase1 dose-escalation, with dose expansion, clinical trial enrolling patients with multiple myeloma and non-Hodgkin’slymphoma, with initial safety data expected to be presented at the European Hematology Association (EHA) (Free EHA Whitepaper) Congress in June 2019 and initial efficacy data expected by year end 2019
STRO-001 granted Orphan Drug Designation by the U.S. Food and Drug Administration (FDA) for the treatment of multiple myeloma
STRO-002 Clinical Program
Potential best-in-class ADC directed against folate receptor-alpha, which is highly expressed in ovarian cancer
Phase1 dose-escalation, with dose expansion, clinical trial enrolling women with advanced ovarian and endometrial cancers, with initial safety data expected by year end 2019
Corporate Highlights
Collaboration and licensing agreement with Merck signed in July 2018 to discover and develop novel immune-modulating therapies for cancer and autoimmune disorders
Initial public offering (IPO) that closed on October 1, 2018, provided Sutro with gross proceeds of $85.0 million, before deducting underwriting discounts and commissions and offering expenses. Additionally, Sutro received proceeds of $10.0 million from Merck in a private placement of common stock concurrent with the IPO
Full Year 2018 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of December 31, 2018, Sutro had cash, cash equivalents and marketable securities of $204.5 million.
Revenue
Revenue was $38.4 million for the year ended December 31, 2018, which included collaboration revenue of $32.4 million recognized primarily from Celgene, Merck andEMD Serono, in addition to other revenue of $6.0 million. During the third and fourth quarters of 2018, Sutro began recording revenue from Merck, primarily from the $60.0 million upfront payment received by Sutro under the July 2018 collaboration and licensing agreement, which revenue will be recognized over multiple years. Future collaboration revenue from Celgene, Merck 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, 2018, were $75.6 million compared with $71.0 million for the same period in 2017, including non-cash stock-based compensation of $2.9 million and $1.4 million, and depreciation and amortization expense of $4.5 million and $5.0 million, in the year 2018 and 2017, respectively. Total operating expenses for the year 2018 were comprised of research and development expenses of $54.3 million and general and administrative expenses of $21.4 million, with both expense types expected to increase in 2019 as Sutro’s internal product candidates advance in clinical development and additional general and administrative expenses are incurred as a public company following its IPO that closed on October 1, 2018.
Net Loss Per Share Calculation
Sutro financial statements following September 30, 2018, including share and per share amounts, give effect to common stock shares issued in the IPO and the Merck concurrent private placement, and common stock from the conversions of Sutro’s previously outstanding redeemable convertible preferred stock, as these transactions were completed on October 1, 2018.