Sutro Biopharma Q4 2024 Earnings Call Transcript

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March 13, 2025

There are 8 speakers on the call.

Operator

Welcome to the Sutro Biopharma twenty twenty five Business Update Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Jane Chung, Chief Executive Officer of Sutro.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good afternoon and thank you all for joining us on the call today. Here with me are Doctor. Hans Peter Gerber, our Chief Scientific Officer and Ed Albini, our Chief Financial Officer. Earlier today, we issued a press release reviewing the details of our strategic restructuring.

Speaker 1

You can find this release as well as the presentation from today's webcast on our website. Next slide. Before we begin, I want to remind you, we will be making forward looking statements in this presentation as referenced here. Next slide. Today, the Sutro Board and executive management team have announced the completion of a strategic portfolio review, resulting in the prioritization of three wholly owned preclinical programs in its next generation exotecan and dual payload ADC pipeline with plans to submit three INDs in three years, starting in 2025 with STROV4 and exotecan ADC targeting tissue factor.

Speaker 1

While we are very excited to see the promise of our growing next generation ADC pipeline, the strategic portfolio review also resulted in the deprioritization of additional investment in development of Lavelta bisutro. This decision was not taken lightly, but given the challenging macro environment we find ourselves in, with our limited resources, we will not be able to bring Lavelta forward to realize its full potential on our own and move full speed ahead with our potentially best in class next generation pipeline. We are continuing to explore global out licensing opportunities for Lavelta as we still believe in its life changing potential for patients of unmet need with many difficult to treat cancers. Further, Sutro is reducing our workforce by nearly 50% by year end and will fully externalize our cell free manufacturing capabilities now that we have established external partners that can manufacture at scale. With these changes, the company's cash runway extends into at least Q4 of twenty twenty six.

Speaker 1

Now this does not include anticipated milestones from existing collaborators or non dilutive capital we may receive from potential additional business development. Next slide. We remain deeply grateful for the many contributions of our departing employees and of course to Bill for his many years of dedication and leadership. Having joined Sutro with over twenty years of commercial, operational and strategic leadership experience in both Big Pharma and Biotech at Genentech, Onex and AstraZeneca, and as the previous COO at Sutro, I'm enthusiastic about leading the next phase of Sutro alongside an exceptional leadership team with deep industry, oncology and ADC experience to successfully execute on our strategy and clinical plans. This team has the collective experience, execution track record and SUTRO technology know how to rapidly advance our ADC candidates in this strategic reprioritization, ultimately to benefit patients.

Speaker 1

Of note is my colleague, Doctor. Hans Peter Gerber, who is a pioneer in the ADC field and has been instrumental in securing the approvals of numerous life changing ADCs at Seagen, Pfizer and Genentech among others. Next slide. Sutra's proprietary technology enables precise design of ADCs not possible with other conventional methods. The platform is highly flexible and scalable to commercial needs under good manufacturing practices.

Speaker 1

We can mix and match different payloads in different locations on the antibody and in different ratios using non natural amino acids in a way that is not efficiently possible with cell bound approaches or CHO based manufacturing. Our ADCs have unique design features like click chemistry and site specific conjugation that lead to key advantages of improving the tolerability profile, PK and efficacy, also enables us to develop antibodies for challenging targets and overcome resistance. These qualities differentiate our ADC candidates to move beyond current standards of care and treat a broader range of patients. Next slide. Now given our passion for transforming what science can do for patients, combined with the unique design features of our ADCs, we are excited about the next generation pipeline of ADCs.

Speaker 1

In addition, our platform innovation has attracted world class partners such as Astellas and Ipsen, and we remain enthusiastic about the long term potential to continue attracting such partnerships in the future. We have reached a stage where our sell free platform has been optimized, making this a crucial time to advance our innovative, highly differentiated ADCs. Next slide. So, let's take a closer look at our three wholly owned ADC programs and why we believe they are highly differentiated. The unique capabilities of our Express CF platform allows us to harness complex biology and pursue harder to treat targets with a differentiated product profile and in doing so ensuring future commercial viability.

Speaker 1

GROH4 has been optimally designed to drive higher drug exposure and efficacy than first generation tissue factor ADCs, while avoiding both on target and off target liabilities in the eye, skin and coagulation, positioning this candidate with best in class potential. Next is STRO6 revealed here for the first time is our integrin beta six ADC designed for improved safety and efficacy. Historically, this has been a difficult target to reach and we have successfully identified a selective antibody that has the potential to treat multiple tumor types with high unmet need. Lastly is our dual payload program. We are particularly excited about this program because of its potential to be game changing for the field of ADCs.

Speaker 1

Dual payload ADCs enable delivery of not just targeted chemotherapy, but targeted chemo combination therapy and allowing us to go after any identified targets, both old and new. By combining payloads, we have the opportunity to overcome resistance to single payload ADCs, drive deeper and more durable responses and provide greater control over drug delivery. In partnership with Acelis, our dual payload program is already advancing towards the clinic as an immunostimulatory ADC or IADC, combining a cytotoxin and immune stimulator, potentially providing new treatment options for cold tumors and patients who are unresponsive to existing immunotherapies. And already Astellas has selected two IADC programs to advance. This is just the beginning and there is a lot of momentum on the clinical side with a significant number of programs on the horizon giving us the potential to be highly selective in the programs we pursue and the optionality for business development.

Speaker 1

We are confident in our ability to deliver this growth based on our sell free platform and strong R and D team. Next slide. Now we have a lot of work ahead of us, but we are very excited about this opportunity to advance what we believe will be very important and very differentiated additions to the ADC treatment landscape. As I mentioned earlier, STRO4 will be our first clinical program for which we will file an IND and initiate a first in human study in the second half of this year with initial clinical data in '26 and '27. INDs for STROW six and dual payload ADCs will follow in '26 and '27 as well.

Speaker 1

Throughout this transition, we remain deeply committed as we always have to improving patient outcomes and believe these decisions will ultimately lead to transformative treatments that deliver the greatest benefit to patients. Thank you for your time and attention. And with that, we have time to take a few questions. So I'll turn it back over to the operator. Operator?

Operator

Thank Our first question comes from the line of Roger Song from Jefferies.

Speaker 2

Okay. Yes. Thanks for taking the question, Jen. So maybe the question relates to the Livalca. What should we know and think of the next step for LYVELTA?

Speaker 2

How much the value can be realized through the partnership? Thank you.

Speaker 1

Roger, can you repeat the question? I think you're coming in very low volume.

Speaker 2

Sorry about that. Can you hear me now?

Speaker 1

Yes, we can hear you now.

Speaker 2

Excellent. So my question is related to the LOVALTA. So how should we see the value will be realized through the partnership and then what will be the ideal situation for the LOVELTA next step? Thank you.

Speaker 1

Yes. So we are for us at Sutro, I mean, we're looking to deprioritize and wind down our additional investment in LOVELTA. But at the same time, we're in active discussions with potential partners. We want to find the right partner that could realize the full potential of Lavelta. We have actually some exciting data that will be shared over the weekend at SGO And I encourage everybody to go check it out.

Speaker 1

And our decision here in deprioritizing Lavelte is not because we don't believe in Lavelte and the potential of it benefiting patients. And that's what makes it further challenging to make the decision, but we want to make sure that a partner can actually fully realize the potential.

Speaker 2

Excellent. Just quick follow-up on the follow-up question on the tissue factor O4. So as you're moving to the IND and then clinical, how much data will we see this year to support IND? And then also what should we see the data the initial data next year? Thank you.

Speaker 1

Yes. So tissue factor is our next generation DAR8 exotecan ADC. We selected the STROV-four as our lead candidate because we're highly encouraged by the preclinical data which points to its best in class potential. And based on its optimal design, we believe the treatment with STROV4 may result in improved clinical benefits. We will be filing an IND and going to first in human trials later this year and hope to share sort of initial clinical data by 2026 and then 2027?

Speaker 1

And also maybe HP, would you like to further expand on the tissue factor program?

Speaker 3

Yes, happy to do that, Jane. This is Hans Peter Gerber, the CSO. And as Jane explained, we are filing an IND later this year and we have reported the preclinical data on this program previously at various meetings and we'll be doing that throughout the remainder of the year. We are particularly encouraged by the improvements we could do in the safety area for this ADC compared to benchmark ADCs that are already approved with this target tissue factor, but also in the efficacy sector of that IND. So we are highly encouraged because of that superior TI to move as quickly as we can with this program towards an IND filing.

Speaker 4

Thank

Operator

you. One moment for our next question. Our next question comes from the line of Edward Tenthoff from Piper Sandler.

Speaker 5

Great. Thank you. When it comes to some of the layoffs, were these mostly in the discovery area? And how much of a clinical effort is still in place as you guys take these exciting ADCs into the clinic? And then my second question is, with SUTOs track record of success for partnerships, would you look at partnering either these three now lead ADCs or doing other discovery type deals, is that still an effort or is the primary focus on partnering Lavelta?

Speaker 5

Thank you.

Speaker 1

Okay. I think, Lavell, Ed, your question first was on the impact on the restructuring for us. Yes, primarily the majority of the folks and individuals that will be impacted in this restructuring will be tied to Lavelte work streams. And this is really wanting to make sure that we pivot and reallocate resources to align our resources to the new strategic priorities around the early pipeline. In addition, we will be externalizing our manufacturing and decommissioning our operations of San Carlos later this year as well, once we have made production of our early pipeline.

Speaker 1

In terms of the second question on partnership, we are in active discussions, partnering discussions now with Lavelta and we want to continue those. And as far and when we have an update, we will share that. And then with respect to the pipeline and platform, we have always been successful in partnering our product candidates and we'll continue to do that as a way to secure non dilutive capital.

Speaker 5

Okay. Thank you very much and good luck.

Operator

Thank you. Thank you. One moment for our next question. Our next question comes from the line of Jay Olson from Oppenheimer.

Speaker 4

Hey, thanks for providing this update and thanks for taking the questions. Can you describe how the deprioritization of LULUVELTA will work in terms of study enrollment? Are you pausing anything? How much you need to continue spending on Louveta as it's paused? And then when it's partnered, will you be seeking a partnership where the partner will take over the clinical development, including the expenses or how will that look?

Speaker 4

And then I have a follow-up, if I could please.

Speaker 1

Thanks Jay for the question. Yes, so in terms of the deprioritization, we are looking to deprioritize and wind down our expenses as it relates to the development of Lavelta. At the same time, as you mentioned, we are actively in partner discussions and we are seeking a partner that can actually take over and lead the development of Lavelta in the future.

Speaker 4

Okay. Thank you. That's helpful. And then with regards to six, it seems like Pfizer is moving a competing program that they acquired from CGen into Phase three. Can you just talk about any points of differentiation or areas of development that you want to focus on with six that would be great?

Speaker 4

Thanks.

Speaker 1

Yes. We are aware of the program for Pfizer's CEGENS program for six integrin beta six ADC. And we recognize that the data for this target has been shown validated in lung cancer. But why don't I pass it over to HP to elaborate more on the opportunity there?

Speaker 3

Yes. Thank you, Jane. And Jay, yes, we have been looking at this program developed by Pfizer very carefully, and we recognize that this is a target, integrin beta six, that has a very complex target biology. So the differentiation of Sutro is here that we were able to raise antibodies that bind to integrin beta six and the specific confirmation of that integrin that is present on the tumor cells and which can be used that antibody can be used to effectively shuttle the payload into the tumor cells, but not to interfere with target biology. And we benchmarked our antibody against competitor antibodies, and we ended up with compounds and ADC that we think has all the attributes needed to be competitive in this space in particular, as you know, because we switched from a tubulin inhibitor payload to an exotecan.

Speaker 3

In fact, it is that difficult to get these antibodies right that we currently don't see any competitor on this target with an antibody with a DAR8 exotecan or any kind of exotecan of any kind of DAR. So we were encouraged to actually move very quickly because of our ability to develop these antibodies that don't interfere with target biology so efficiently and rapidly.

Speaker 4

Great. Thank you so much for that explanation. That's super helpful and thanks for taking the questions.

Speaker 1

Thank you, Jay.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Reni Benjamin from Citizens Bank.

Speaker 6

Hey, good afternoon guys. Thanks for taking the questions and congratulations Jane on this new role as Sutro kind of restarts its efforts, if you will, some big shoes to fill, but you'll do great. Maybe just to hone in a little bit more on the learnings regarding the LOVELTA program. Can you maybe talk about, I guess, the key reasons for discontinuing the LOVELTA program? And which of those kind of key criteria would you definitely want checked as you kind of move four through clinical development?

Speaker 6

And then I have a follow-up.

Speaker 1

Yes. So, Rene, thank you for the question and for the congrats. As I mentioned, we recently completed a strategic portfolio review, portfolio review, made the decision to redirect resources to our next generation pipeline. Our decision here to deprioritize Lavelte is based on capital required to take Lavelte to market, not as a result of any clinical findings. So I think in terms of learnings, there's making sure that we have the capital funds in place to advance the programs.

Speaker 1

In fact, as I said earlier, our data is actually for Lavelte are going to be shared at SGO and it is quite encouraging. So I think for four, key criteria for moving four, we want to make sure that it is the product profile is clearly differentiated. We recognize that the ovarian space is getting more crowded and that because and we're being very strategic here and how we're picking our ADCs on a single payload to be those that have a bit more complex biology not easily made by other companies. And so we're going to be very strategic in how we select those, tissue factor being the first, and then integrin beta six. And that ensures that commercial viability by the time we can actually advance into the clinic and get to meaningful data.

Speaker 1

I hope that helps.

Speaker 6

Yes, it does. And just a follow-up. I've been kind of dancing around this, I'm just going to ask it like directly. How much should R and D and SG and A be going down this year? Because I mean kind of based on your hay up until the fourth quarter of twenty twenty six, how long our cash should last, at least.

Speaker 6

It seems like you're going to be burning around $150,000,000 or so for the next years, which still seems kind of steep to me. And so can you maybe just help us understand or maybe guide us a little bit as to how much how long it will take, how quickly you can wind down operations so that you can implement these savings this year and maybe how much longer this current cash position could last?

Speaker 1

Yes. Thanks for the question, Ren. Actually, Ed has been waiting for somebody to ask that question. So I will hand it over to Ed.

Speaker 7

Ren, thanks for the question. As Jane mentioned, so you probably saw our financial results for 2024 where in rough sense our expenditures were around $300,000,000 And the only quantification further clarity on the quantification is the majority of that, the clear majority of that was for Luvelda and Luveelta related. So I can't help you more specifically on your math. I will have you think about the fact that we spent on Luveelta in Q1, largely all of Q1 since we're almost through Q1. And then also you'll see the disclosure there where there's an estimated $40,000,000 to $45,000,000 of restructuring related charges.

Speaker 7

So you should factor that into 2025. We do expect again without quantifying it for you, we do expect a dramatic decrease in overall expenditures for the remainder of 2025 and into 2026 and beyond.

Speaker 6

Great. Thanks for taking the questions and good luck.

Operator

Thank you. At this time, I would now like to turn the conference back over to Jane Chung for closing remarks.

Speaker 1

Okay. Well, thanks to everyone. Again, I sincerely appreciate your time today. This was a very difficult decision to deprioritize additional investments in Lavelta development as we continue to seek a partner. We're making this strategic pivot not because we don't believe in Lavelta, rather this is being made in favor of prioritizing our early stage pipeline, which represents the potential for realizing the advances we have made in our ADC platform.

Speaker 1

We're excited about the future of Sutro and the promise of our next generation ADCs, and we look forward to continuing the dialogue and seeing many of you at upcoming conferences. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now

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