On August 14, 2019 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 oncology therapeutics, reported its financial results for the three and six months ended June 30, 2019 (Press release, Sutro Biopharma, AUG 14, 2019, View Source [SID1234538728]).
Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:
Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing
Schedule Your 30 min Free Demo!
"During the second quarter of 2019, we presented encouraging interim safety data from our Phase 1 trial for STRO-001 at the EHA (Free EHA Whitepaper) Congress and continued to advance our pipeline of product candidates and programs," said Bill Newell, Sutro’s Chief Executive Officer. "We believe our proprietary technology allows us to rapidly and precisely create optimally designed, next-generation protein therapeutics candidates for cancer and autoimmune disorders. At Sutro, we hold ourselves to the highest standards and set ambitious goals for ourselves which we have been meeting and exceeding."
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
Phase 1 dose-escalation, with dose expansion, clinical trial enrolling patients with multiple myeloma and non-Hodgkin lymphoma, with initial safety data presented at the EHA (Free EHA Whitepaper) Congress on June 15, 2019 and initial efficacy data expected by year end 2019
STRO-002 Clinical Program
Potential best-in-class ADC directed against folate receptor-alpha, which is highly expressed in ovarian cancer
Phase 1 dose-escalation, with dose expansion, clinical trial enrolling women with advanced ovarian and endometrial cancers, with initial safety data expected by year end 2019
BCMA ADC Clinical Program and Celgene Collaboration
Celgene received FDA clearance on its IND application for an ADC targeting B-cell maturation antigen ("BCMA") for the treatment of multiple myeloma. This is the third product candidate to originate from Sutro’s proprietary discovery and manufacturing platform to enter clinical development since early 2018, and for which Celgene has worldwide development and commercialization rights. Sutro is entitled to development and regulatory milestone payments and tiered royalties ranging from mid to high single digit percentages from Celgene for this BCMA ADC.
Existing pipeline was bolstered as Sutro gained back rights to three bispecific assets from the collaboration with Celgene. Sutro holds U.S. development and commercialization rights targeting BCMA-CD3, PD1-LAG3 and PD1-TIM3. For any products resulting from these three programs, Celgene will own ex-U.S. development and commercialization rights and will be obligated to pay Sutro development and regulatory milestone payments and tiered royalties.
Second Quarter 2019 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of June 30, 2019, Sutro had cash, cash equivalents and marketable securities of $168.2 million, as compared to $204.5 million as of December 31, 2018, which represents net cash usage of $36.3 million during the six months ended June 30, 2019.
Revenue
Revenue was $10.5 million and $19.2 million for the three and six months ended June 30, 2019, respectively, compared to $5.7 million and $11.5 million for the same periods in 2018. The 2019 periods included collaboration revenue from Celgene, Merck and EMD Serono. On January 1, 2019, Sutro adopted Accounting Standards Update No. 2014-09 Revenue from Contracts with Customers (Accounting Standards Codification Topic 606). For more information on the impact of the adoption of the new revenue standard, see "Notes to Unaudited Interim Condensed Financial Statements" contained in Part I, Item 1 of Sutro’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2019. 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 three and six months ended June 30, 2019, were $24.2 million and $47.1 million, respectively, compared to $17.8 million and $35.3 million for the same periods in 2018, including non-cash stock-based compensation of $2.5 million and $0.2 million, and depreciation and amortization expense of $1.2 million and $1.1 million, in the 2019 and 2018 second quarters, respectively. Total operating expenses for second quarter 2019 were comprised of research and development expenses of $16.1 million and general and administrative expenses of $8.1 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.