On March 16, 2020 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 year ended December 31, 2019 and provided a preview of its planned activities for 2020 (Press release, Sutro Biopharma, MAR 16, 2020, View Source [SID1234555576]).
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"We were looking forward to sharing updated safety and efficacy data from our Phase 1 trial for STRO-002 during the AACR (Free AACR Whitepaper) Annual Meeting 2020 as a follow up to the encouraging interim safety data we presented at the AACR (Free AACR Whitepaper)-NCI-EORTC Molecular Targets and Cancer Therapeutics Conference in late October 2019," said Bill Newell, Sutro’s Chief Executive Officer. "With the cancellation of the AACR (Free AACR Whitepaper) meeting, we are considering alternative opportunities to present these data in the second quarter. STRO-002 and STRO-001 are our two proprietary antibody drug conjugate (ADC) product candidates progressing in Phase 1 clinical trials. Additionally, each of our three current collaborations has yielded novel oncology product candidates in three distinct therapeutic protein formats that are either in clinical development or in the late stages of preclinical development. All of these candidates are based on our proprietary and integrated cell-free protein synthesis platform XpressCF and site-specific conjugation platform XpressCF+, which allows us to rapidly and precisely create optimally designed, next-generation protein therapeutics candidates."
Recent Business Highlights and Developments
STRO-002 Clinical Program
STRO-002 is a potential best-in-class ADC directed against folate receptor-alpha (FolRα), which is highly expressed in ovarian cancer.
Phase 1 dose-escalation, with dose expansion, clinical trial that is enrolling women with advanced ovarian and endometrial cancers, had initial safety and efficacy data presented at the AACR (Free AACR Whitepaper)-NCI-EORTC Molecular Targets and Cancer Therapeutics Conference on October 29, 2019.
Based on the reported data to date in heavily pre-treated patients who have not been pre-selected based on FolRα expression levels, STRO-002 has been generally well-tolerated. No ocular toxicity signals have been observed, with no patients receiving prophylactic corticosteroid eye drops.
Dose escalation in the Phase 1 trial is continuing and the maximum tolerated dose has not yet been reached.
Additional Phase 1 dose-escalation phase safety and efficacy data was accepted as a late-breaking abstract to be presented at the AACR (Free AACR Whitepaper) Annual Meeting, which was cancelled recently. We plan to release updated data in the second quarter of 2020.
Phase 1 dose expansion trial is expected to begin enrolling patients in the second half of 2020.
STRO-001 Clinical Program
STRO-001 is a potential first-in-class and best-in-class ADC directed against CD74, which is highly expressed in many B cell malignancies.
Phase 1 dose-escalation, with dose expansion, clinical trial that is enrolling patients with multiple myeloma and non-Hodgkin lymphoma, had initial safety data presented at the EHA (Free EHA Whitepaper) Congress in June 2019. A safety data update that included several additional patients was released in an abstract in association with the American Society of Hematology (ASH) (Free ASH Whitepaper) Conference on November 6, 2019.
Based on the reported data to date in heavily pre-treated patients, STRO-001 has been generally well-tolerated and no ocular toxicity signals have been observed, with no patients receiving prophylactic corticosteroid eye drops.
Dose escalation in the Phase 1 trial is continuing and the maximum tolerated dose has not yet been reached.
Additional Phase 1 dose-escalation phase safety and efficacy data is expected in the second half of 2020.
Phase 1 dose expansion trial is expected to begin enrolling patients in the first half of 2021.
Cytokine-Derivative Programs (Collaboration with Merck & Co.)
Sutro is collaborating with Merck on two research programs to discover new therapeutics for cancer and autoimmune diseases. Merck has the right to nominate a third program under this collaboration.
In March 2020, Merck extended by one year the research term of the collaboration’s first program, which includes a payment to Sutro. The collaboration is advancing Sutro’s novel cytokine-derivative product candidate towards IND-enabling studies.
BCMA ADC Clinical Program (Collaboration with Bristol Myers Squibb; formerly Celgene)
BMS received FDA clearance on its IND application for CC-99712, a novel ADC therapeutic targeting B-cell maturation antigen (BCMA), for the treatment of multiple myeloma in the second quarter of 2019.
BMS is currently enrolling patients in a Phase 1 trial focused on patients with relapsed and refractory multiple myeloma.
BMS will be responsible for the worldwide clinical development and commercialization of CC-99712. Sutro is entitled to development and regulatory milestone payments and tiered royalties ranging from mid to high single digit percentages from BMS.
Bispecific ADC Clinical Development Candidate (Collaboration with EMD Serono)
In the third quarter of 2019, EMD Serono designated an undisclosed bispecific ADC as a clinical development candidate with approval to advance to IND-enabling studies, which triggered a financial milestone received by Sutro.
Sutro will manufacture the bispecific ADC for the early clinical supply of the candidate and is eligible for further milestones and royalties. EMD Serono will be responsible for the drug product, clinical development and commercialization of this clinical development candidate.
24-Valent Pneumococcal Conjugate Vaccine (SutroVax Relationship)
Under a license from Sutro, SutroVax has right to use the XpressCF and XpressCF+ platforms to discover and develop vaccine candidates for the treatment or prophylaxis of infectious diseases.
SutroVax is progressing their broader spectrum pneumococcal conjugate vaccine (SVX-24) through the late stages of preclinical development and is targeting an IND filing for 2021.
SutroVax is responsible for performing all research and development activities while Sutro provides technical support and supplies XtractCF and other materials to SutroVax under a supply agreement.
Sutro is eligible to receive four percent (4%) royalties on worldwide net sales of any licensed vaccine candidates for human health use. Also, Sutro retains the right to discover and develop vaccines for treatment or prophylaxis of any disease not caused by an infectious pathogen, including cancer.
Sutro Unveiled Innovative Cancer Therapy Approach Using Precise Tumor Targeted Immunostimulant ADCs at World ADC London
On March 4 at the World ADC London meeting, Sutro announced it has expanded its ADC technology platform to include tumor targeting immunostimulant ADCs, or IADCs.
Sutro’s XpressCF+ Platform has enabled a groundbreaking technology to engineer homogeneous, dually conjugated ADCs with both immunostimulant and cytotoxic warheads on a single ADC molecule.
Sutro’s novel IADCs are designed to deliver two different drugs directly to the tumor, and not only kill tumor cells but also locally prime an immune response to the patient’s particular tumor cells. Sutro believes that its IADC approach creates a new therapeutic opportunity by combining the best features of an ADC with the biology of a personalized vaccine.
Full 2019 Financial Highlights
Cash, Cash Equivalents and Marketable Securities
As of December 31, 2019, Sutro had cash, cash equivalents and marketable securities of $133.5 million, as compared to $204.5 million as of December 31, 2018, which represents net cash usage of $16.9 million and $71.0 million during the fourth quarter and year ended December 31, 2019, respectively.
On February 28, 2020, Sutro entered into a loan and security agreement, under which Sutro borrowed $25.0 million, with approximately $9.6 million of such amount used to repay the outstanding principal, interest and final payment fees under a prior loan with the same lenders.
Revenue
Revenue was $42.7 million for the year ended December 31, 2019, compared to $38.4 million for 2018, principally related to the Merck, BMS, and EMD Serono collaborations. 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 Financial Statements" contained in Part II, Item 8 of Sutro’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2020. 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, 2019, were $98.2 million, compared to $75.6 million in 2018, including non-cash stock-based compensation of $10.3 million and $2.9 million, and depreciation and amortization expense of $4.8 million and $4.5 million, in 2019 and 2018, respectively. Total operating expenses for 2019 were comprised of research and development expenses of $65.6 million and general and administrative expenses of $32.6 million, with both expense types expected to increase in 2020 as Sutro’s internal product candidates advance in clinical development and additional general and administrative expenses are incurred as a public company.