Release Date: March 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sutro Biopharma Inc (NASDAQ:STRO) has prioritized three wholly owned pre-clinical programs in its next-generation ADC pipeline, indicating a focused strategic direction.

• The company's cash runway has been extended into at least Q4 of 2026, providing financial stability for the near future.

• Sutro Biopharma Inc (NASDAQ:STRO) has established external manufacturing partnerships, allowing for scalable production capabilities.

• The company's proprietary technology enables precise design of ADCs, offering unique advantages over conventional methods.

• Sutro Biopharma Inc (NASDAQ:STRO) has attracted world-class partners such as Astellas and Ipsen, highlighting the potential and credibility of its platform.

Negative Points

• Sutro Biopharma Inc (NASDAQ:STRO) is reducing its workforce by nearly 50%, which may impact employee morale and operational capacity.

• The company has deprioritized the development of Levelta due to limited resources, potentially missing out on its full potential.

• There is a challenging macro environment affecting Sutro Biopharma Inc (NASDAQ:STRO)'s ability to advance certain programs independently.

• The decision to externalize manufacturing capabilities may lead to dependency on external partners for production.

• The company faces competition from other firms, such as Pfizer, in the ADC space, which could impact its market position.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with STRO.

Q: How should we see the value of Levelta being realized through partnerships, and what is the ideal next step? A: We are deprioritizing Levelta but are in active discussions with potential partners to realize its full potential. We have exciting data to share at SGO, and our decision is not due to a lack of belief in Levelta but rather to find a partner who can fully realize its potential. - Jane Chung, CEO

Q: What data can we expect this year to support the R&D of the tissue factor program, and what should we expect next year? A: We are encouraged by preclinical data showing best-in-class potential for Stro 4. We plan to file an IND and start first-in-human trials this year, with initial clinical data expected by 2026 and 2027. - Jane Chung, CEO, and Dr. Hans Peter Gerber, CSO

Q: Regarding the layoffs, were they mostly in the discovery area, and is there still a clinical effort in place for ADCs? A: The majority of layoffs are tied to Levelta workstreams. We are reallocating resources to align with new strategic priorities and externalizing manufacturing. We continue to engage in partnership discussions for Levelta and other pipeline candidates. - Jane Chung, CEO