Sutro Biopharma, Inc. (STRO) Earnings Call Transcript & Summary

Hello, everyone. Welcome to the 43rd Annual JPMorgan Healthcare Conference. Today, we are pleased to have with us Bill Newell, CEO, Sutro. For logistic purposes, please hold on to your questions until the end of the presentation. With that, we'll let Bill have the stage.

Thank you so much. Thank you to everyone who's here this afternoon. It's a pleasure to be able to present at the JPMorgan Healthcare Conference from January 2025. I'm going to talk about Sutro. And in the course of today's presentation, I, like many other speakers, will be making forward-looking statements. The text here highlights some of those forward-looking statements and directs you to where you can learn more about the forward-looking statements I'm making and risks associated with investing in Sutro securities. Sutro has been building with intentionality of both a product portfolio, a partnership track record as well as our own proprietary technology leading to next-generation exciting medicines. All of this is with a goal of creating long-term value creation in a sustainable business model. I'll get into all of the aspects in this slide as we move forward in the presentation. Sutro has been able to generate near-term opportunities for value creation and perhaps more importantly, future growth drivers as well. The near-term opportunities really relate to Luvelta, which is in the midst of 2 ongoing registration-directed studies. REFRaME-O1, which is a registration study directed towards platinum-resistant ovarian cancer and then also an ultrarare pediatric AML CBF/GLIS2. That is also an ongoing registration study. We've had prior data in endometrial, which I'll allude to in a minute, and we're evaluating expansion options there. We think about the future and life cycle management. And so we've got data on bevacizumab, Luvelta combo that I will touch on as well today, that's designed to allow us to move from the platinum-resistant setting to earlier lines of therapy, platinum-sensitive and maybe even first-line therapy in a maintenance mode. Importantly, we've also come to view the opportunity because the target expression in non-small cell lung cancer could be very exciting. And so we are working to enroll patients in a Phase II study of non-small cell lung cancer. Beyond Luvelta, though, we are committed to delivering 3 INDs over the next 3 years. And we have a plan to do so to improve the functionality of the ADCs, either by increasing the ADC potency with a higher DAR, doing dual payload ADCs to overcome resistance and deliver safer antitumor activity or combining a cytotoxin and an immune stimulator. We'll talk about all of that in the course of today's presentation. Underpinning all of the things that we've been doing is a unique cell-free protein synthesis platform that really delivers bespoke ADCs that have the potential for improved safety, higher dosing for enhanced efficacy and addressing a broader patient population than perhaps current agents do. All of this really is made possible because we've been able to scale this technology and recently announced a 4,000-liter run of antibody for our Luvelta medicine, which is the largest manufacturing cell-free run ever done to date. We are extremely well capitalized even in a difficult market. We have a track record of partnering and finding ways to access alternative capital. We have over $2 billion in terms of potential future milestones plus royalties. And we announced last fall that we're continuing to think about ways in which to add to this capital. And one of those strategies is to see if now is the right time to part with Luvelta because we think the data sets that we have provided allow us to engage in some very interesting conversations, and this is a good time of year to be extending those conversations, which we are doing in addition to being here. Let's talk a little bit about our lead asset, Luvelta. When we decided to go after ovarian cancer, we were doing so with intentionality. We felt like the molecule that was ahead of us and is now the first approved folate receptor alpha ADC had certain liabilities in terms of its design, which limited its potential to treat women with advanced stage ovarian cancer. We went after a tubulin inhibitor payload. At the time, that was standard in terms of what you might think to use in an ovarian cancer patient. Others are looking at other payloads. But right now, the tubulin inhibitors are the validated payloads for this cancer. We wanted to go after something that was a higher potency because of the homogeneous design and induce immunogenic cell death. We wanted to -- in certain death, it was a low PGP substrate as well so that once we did penetrate the tumor, we were able to stay there without being pumped out and the competitor molecule seems to be pumped out much more rapidly two- to threefold more rapidly than the molecule that we designed. So when we were thinking about Luvelta, we thought, well, the approved agent addresses a limited segment of the ovarian cancer market. And we've got promising data. I'll touch on some of it today that suggests that we can actually go beyond that 30% market that the proved agent has to get to 80% of women with platinum-resistant ovarian cancer. And as I indicated, the opportunity to move to earlier lines of therapy in the future in combination with bevacizumab. Pediatric AML, we've talked on briefly non-small cell lung cancer, endometrial and a whole host of other cancer types express folate receptor alpha. So we're really at the tip of the iceberg in terms of understanding what the application of this molecule could be. Having said that, we do know that the platinum-resistant ovarian cancer market is a large one, and the approved ADC, as you'll see here, is really an agent that can benefit 35% of women with this diagnosis. And that's because in order to be efficacious and hit a reasonable safety window, they have -- the patients have to express highest levels of folate receptor alpha, whereas for us, as we've demonstrated through the progressive clinical development strategy that we've been employing, we can actually address women whose tumors express 25% of the antigen or above. And it doesn't matter what the intensity of the staining is because we see good efficacy across all of the ranges of intensity as well as folate receptor alpha expression. So what we see right now is an opportunity that is substantial in the platinum-resistant ovarian cancer setting, and we have projected that we would be in a position to file for accelerated approval in the mid-2027 time frame. So addressing a broader market, improved tolerability, we do not see any of the ocular damage signals or pancytopenias or ILD that other agents see. And our neutropenia as you'll see from more recent data that we released in December has now reached a manageable level. When we look back at the overall development of Luvelta, we think about the fact that it's a journey that you go on, trying to understand what the right patient population is for your molecule, what the right dose is, what's the tolerability profile. And to the extent there are safety signals, how do you manage those safety signals. When we step back from that journey, though, and look at over 100 women who've been dosed at a variety of different levels of Luvelta -- with Luvelta, what we see is demonstrated efficacy across a wide range of doses. This lets us understand we have a wider therapeutic index than the approved agent and we have now got the optimized dose, which is part of our pivotal trial for Luvelta, which is presently ongoing. REFRaME-O1 is that pivotal trial, and we are doing nicely in terms of meeting our enrollment projections. Today, we are active in 7 countries. Over the course of the next year, we will add another 17 countries. Virtually all of those will be added in the first half of 2025. So by mid-2025, we expect to have peak site activation of over 200 sites, and I'm pleased that we have a strong support from the oncology syndicates that exist in the U.S. and Europe and in the Asia Pacific region. I'm going to pause for a minute because the data on this slide is data that we presented through a press release in early December of this year. REFRaME-O1 has 2 parts to it. Part 1 was a dose optimization portion of the trial, and that was really driven by the FDA's project Optimus. We had done optimization and dose expansion, but FDA wanted to see an additional 50 patients optimized between 5.2 mg per kg dose for 2 cycles dropping down to 4.3 versus just 4.3 and the 5.2 mg per kg dose was supported by prophylactic G-CSF during those 2 cycles. Importantly, as we work through the data sets that allowed us to choose the 5.2 mg per kg starting dose is the optimized dose, we came to understand that consistent with prior data sets that we had presented in the development of Luvelta, we had an ORR of 32% in the evaluable patient population. Importantly, because we are lowering the bar for patients who can be eligible for Luvelta, we saw consistent response rates across all levels of folate receptor alpha expression. What this means is that not only do we benefit patients who are high, but there are equal benefits for patients who are medium and lower expressers as well. It's important to understand that we also had a very high disease control rate, almost 96% or at 96%, which is remarkable because it suggests that even if you're not responding to the therapy, we're able to control your disease and that's a good harbinger when you think about progression-free survival endpoints. Importantly, given all the women that we've studied this in, it was good to see that there were no new safety findings. And as I said on our journey before, we had understood that neutropenia and the risk of high-grade neutropenia Grade 3 or higher was something that we would need to figure out how to manage. The use of prophylactic G-CSF and better practice management guidelines allowed us to reduce the amount of Grade 3 neutropenia to 32%, and there is no febrile neutropenia seen in this data set. It's important to remember that neutropenia is a lab value. It is something that ovarian cancer patients often experience because of the different treatments that they get, and there is no physical manifestation in the patient. So as a consequence, it's a relatively benign side effect as opposed to side effects that might be blurred vision or keratopathies or interstitial lung disease. So we're in a nice position. TPS greater than 25% gives us 8 and 10 women in the platinum-resistant ovarian cancer market. We have a tolerable safety profile, and we are comparing ourselves importantly not against the approved agent. We're comparing ourselves with FDA's blessing against chemotherapy. And the chemotherapy response rates are dramatically lower than the response rates we're showing here, which are going to be the basis for accelerated approval. Now if you only have data in one cancer type, you have to wonder how is it that it works here, but doesn't work in other cancer types that express the target because, in fact, if it's a targeted therapy, it ought to work and it's a properly designed molecule, it ought to work in other areas as well. And in fact, it does. I alluded to the endometrial data, which we had previously presented. The bevacizumab combination data in ovarian cancer is going to be very important for us in terms of paving way to earlier lines of therapy. This very unique RAM phenotype AML that I referred to is a hematologic malignancy. It's highly aggressive and yet based on the data that we show here, which is from a series of patients who are treated on a compassionate use basis, we have a dramatic effect on children who are otherwise expected to have about a 15% chance of a 2-year life expectancy after diagnosis. We've got some exciting preclinical data shown here in non-small cell lung cancer, and that was the basis for starting our Phase II trial in non-small cell lung cancer, which is a huge commercial opportunity. Beyond Luvelta, though, we have STRO-004, which is a tissue factor ADC and a whole new generation of ADCs that I really want to spend a few moments on with you. So when you think about how can we improve ADCs as medicines? The question is, can you widen the gap between the minimal effective dose and the maximum tolerated dose. Because if you can do that, then you have the opportunity to dose the patient at a way that is going to have more control for their tumor. And the question is, how do you achieve that? And our answer is we want to pay attention to the properties of the molecule when it's outside the tumor because only 1% of any ADC that is dosed actually makes it to the tumor. So you want to make it as tolerable outside the tumor to the extent it doesn't penetrate the tumor. And you can do that with linker and payload design using click chemistry, so you've got a robust bond using site-specific conjugation so you can choose the best sites and the best ADC and then highly skilled antibody engineering to make certain that you're getting as much internalization opportunity as possible. Inside the tumor, you want to think about increased potency, and that means higher DAR. Even beyond DAR8, we're working on DAR12 and DAR16 molecules. You want to think about overcoming resistance with dual payload ADCs, and then if you can combine immune activation with a cytotoxic payload as we do with our ADCs, now you've got yet another vehicle to control the cancer. A lot of people say that they have platform technologies that allow them to think about next-generation ADCs. But I challenge you, and this slide really is an example of that, to come up with another company that does all the things that we do in this slide. Yes, a lot of companies make DAR8 ADCs with exatecans, we do too. Can they go beyond DAR8? They are only 8 cysteins. We can go beyond DAR8 because we don't rely on cysteines, we rely on a proprietary nonnatural amino acid as a point of linkage for our linker warhead. Do they have the best linkers out there? Linker technology has evolved and the next-generation linker, the one that we have been working on, and there are a few other companies that have recently adopted it is a beta-glucuronidase linker. It is less susceptible to cleavage in the bone marrow, and we think it's rock solid when you have a click chemistry application to bond it. Can you get to a dual payload? Some companies can, we can. Can you add an immune stimulating agent in a site-specific manner? We can, a few other companies can, but not in an ADC. Mostly, it's in the ISAC space. Are you site specific? That's important. And more importantly, you have to know the right site. Are you not activating Fc gamma because that's a mediation for toxicity? Can you make bispecifics? And is your whole technology platform amenable to high throughput screening? We check all those boxes as you see the others do not. I'm going to pause for a moment on our tissue factor targeting ADC. This is a DAR8 topoisomerase ADC. This is a hard antibody to make because the target of the antibody is also implicated in the coagulation cascade and can cause bleeding. It took us several years to figure out how to design the antibody in the right way so that it avoided that side effect profile. But that's only the beginning. You now have to have the right linker, you have to have the right warhead and you have the right DAR. And more importantly, because of the emerging understanding of payload resistance, you actually also have to have the right opportunity to be first in class. So the approved agent is not an exatecan, it's a tubulin inhibitor. And we want to be the first-in-class with a filing an IND and starting clinical development in the second half of this year. The safety profile of this molecule is quite remarkable in our research forum. We talked about safety shown in the [ Sino ] up to 50 mg per kg. I'm going to say that again, up to 50 mg per kg. That is a remarkable safety profile for an ADC. I challenge other companies to demonstrate that they can do that on a routine basis. We're able to get a 16-fold higher Cmax than the approved agent and a 50-fold higher AUC than the approved agent. And all that translates -- what that means is that we have the opportunity for enhanced exposure and therefore, better efficacy, but we haven't left tolerability on the side because of the safety profile I referred to. Tissue factor is broadly expressed in multiple tumor types. And when we talk about our study design later this year, we'll be exploring this in a pan-tumor trial, but we have nice and interesting data, not only in cervical cancer, but head and neck, pancreatic cancer and other cancers. So stay tuned. This is going to be a broadly applicable agent. Importantly, when we look at this DAR8 exatecan, what we saw was sustained tumor regression in xenograft models for non-small cell lung cancer and head and neck at low doses. So these curves are, as you have come to used to seeing, progressive increase in doses. And the bottom line, the one closest to controlling the tumor for the long duration on a single dose is only 1 mg per kg. We're obviously going to be dosing much higher in patients. It's also important to avoid some of the toxicity issues that you see in the approved ADC. Eye inflammation and skin toxicities are part of the label of the approved agent. And yet as you can see here, our DAR8 exatecan STRO-004 really avoids those liabilities. And that's due to the design of the ADC. Now beyond STRO-004, we think about where is the future going? There are a lot of companies that are developing exatecans, and we've got a second one we'll talk about later in this year. But there are only so many targets and only so many companies can be first to market with an exatecan that's DAR8. So now you have to think about where do we go beyond what's in the clinic today and what people are working on. And the answer is dual payloads, particularly if you've got an ability to overcome the approach to resistance. So instead of one ADC and then combining it with a different ADC, what if you could put the 2 of them together and get the synergistic benefit of both of them with an opportunity for reduced toxicity, clearly reduced clinical complexity and overcoming resistance mechanisms. So today, for the first time, I'm going to share some of the preclinical data that we have generated on a dual payload. Now this is a trastuzumab targeted DAR8 topoisomerase and a DAR4 tubulin inhibitor. And what you see is vehicle control doesn't do much in terms of tumor control, as you would expect. The tubulin inhibitor does a little better. The DAR8 topoisomerase does a little bit better, and yet the best is the combination of the DAR8 topoisomerase and the DAR4 tubulin inhibitor. This is a single dose. And this is the same data presented 3 ways. One, are we controlling the tumor growth? You see that in the left panel. Two, are we improving survival? In fact, we are as you do the combination to, and that's useful for OS predictability. And three, are we able to delay the time to tumor quadrupling, which is a early signal for progression-free survival. Now the models that we ran here were not resistant to an exatecan payload. That's the next study that we're doing, and we should see even more dramatic results. But this is a strong indicator that molecule that has both payloads on it can be very efficacious as well. I've talked briefly about Astellas and our iADCs. That's a deal that we did a few years ago. We have 2 programs moving forward with them. This is really an opportunity to design a novel molecule that will take cold tumors and give them a chance to be attacked both by a cytotoxic agent and an immune stimulating cell. We're looking forward to Astellas moving these forward into the clinic and then being able to talk exactly about what the molecules are and why they're unique and why we think they hold such promise for us. Basically, what we've been trying to do is to bridge the innate and adaptive immune systems to provide broad protection in a single molecule. And one of the things you need to avoid is FcR gamma mediated uptake into the myeloid cells, many ISACs suffer that problem, we've been able to avoid that. But in order to optimize the molecule, you need direct tumor cell killing. You need tumor antigen presentation. You need to prime and activate antigen-presenting cells and you need to show T cell recruitment to the tumor. These are other modalities that attempt to try to do the same thing. We're able to accomplish all of them in the context of the iADC, and so we've delivered the whole package to Astellas. And as I said, as these programs mature, the opportunity for more presents itself very soon. It's important to remember that when I joined Sutro back in 2009, the scale that we were at was 100-liter scale. That isn't a commercial scale. But over time, we've been able to develop and scale up the cell-free protein synthesis technology to a scale that is worthwhile for the antibody drug conjugates and other therapeutics that we and our partners are working on. It's also at a similar scale for Vaxcyte for purposes of their pneumococcal conjugate vaccines and their other vaccines. So when people that I talked to in 2009 said we would never achieve this, I'm here to say that earlier this month, we announced batches of the Luvelta antibody produced under GMP conditions at Boehringer Ingelheim's facility in the 4,500 liter range. That is a remarkable achievement. It's the first time any cell-free technology has ever been able to do that. And that's just the beginning for us from a commercial production scale. I'm going to close now with our broad pipeline. We are folate receptor alpha focused and looking for opportunities, not only in platinum-resistant ovarian cancer, the other types of cancers that I mentioned and then moving forward into earlier lines of therapy. Tissue factor is our next play as a proprietary asset. We have one more exatecan beyond that, that we're projecting for 2026. And then beyond that, we're going to be looking at dual payloads. We've got some great collaborations with Vaxcyte, with Ipsen and Astellas. And as I indicated, we're looking for partnerships with respect to Luvelta to add to our mix of partnered programs. Through the years, we've been able to raise almost $1 billion in partnership revenue. These are not biobucks. This is money that fuels the development of our programs and our assets, and we believe we've got the ability to continue to do that as we move forward. So with that, I want to thank everyone for their attention today. That ends my formal presentation, and I believe I'm now open for questions.

Thank you, Bill. Now we'll open it up for questions.

Parag Mehta [indiscernible]. Can you comment a bit more on your head and neck cancer program, cervical cancer program? At what stage they are? And what is the target they are going after?

Yes. So those are things that are going to be part of our tissue factor, DAR8 exatecan antibody drug conjugate. There is an approved agent that is for cervical cancer at this point in time. It is a tubulin inhibitor-based agent. And what we've seen historically is that exatecans tend to outperform tubulin inhibitors. Now we've also seen some data for tissue factor programs in the head and neck space. And what we've been able to do is work through a series of preclinical models to suggest that we have really an exciting opportunity to be best-in-class for that tumor type as well with this target. So we will be entering the clinic in the second half of this year, and those will be some of the cancer types for our tissue factor ADC that we will be looking at as we do clinical development for that asset.

A quick follow-up. In the head and neck cancer [indiscernible] metastatic population you're going after or...?

Yes. Okay. Thank you.

Great. Do we have any other questions? If not, I can just get the ball rolling. What are your thoughts on the platinum-resistant ovarian cancer landscape? And where do you think Luvelta fits in?

Platinum-resistant ovarian cancer has been an unmet need for many women for a number of years. And I think there was some excitement that the PARP inhibitors might provide a solution. In fact, they've disappointed and there's only a small subset of patients for whom the PARP inhibitors are available. I think it was a great breakthrough for women with this cancer to have a new agent, probably the first agent in about 10 years in the approved agent that is now part of the AbbVie portfolio. The regrettable thing is that, that agent is only available to about 35% of those women who have platinum-resistant ovarian cancer. And that really is due to the design of the molecule and the fact that you have to have the highest expressing tumors in order to be able to get benefit from that molecule. And so when we set about designing Luvelta, we wanted to do both more and less. We wanted to make the therapy available to more women, and we wanted to improve the tolerability profile so there were less side effects. So the more has been delivered and the fact that we've reduced the level of target expression that patients need in order to benefit from our folate receptor alpha antibody drug conjugate from 75% down to 25%. That unlocks another 50% of the commercial opportunity in the platinum-resistant ovarian cancer patient. And we've done less in terms -- we've reduced the tolerability profile from the current agent, which has a black box warning for blurred vision, keratopathy and some other things to one that we think has every potential to be a much more tolerable therapy for women in the platinum-resistant setting. So we're excited to be the next company. We believe we'll be the first to have an agent, a medicine approved for women with medium and low expression of folate receptor alpha. And that's an important advancement for women who have that disease.

Great. In terms of the registrational trial, how is that going now, now that ELAHERE is available to patients.

Yes. We've embarked on a global study. ELAHERE is approved in the United States, and they've -- there are some good initial sales of that medicine. It's been approved in Europe, but there is still reimbursement that needs to happen before that molecule, that medicine is widely available in Europe and it's not approved elsewhere at this point in time. So from our standpoint, because this is a global study, we will be able to enroll many women who would be ELAHERE eligible if they were in the United States, but they are not in the United States. So we'll have data on women who are ELAHERE eligible, but we'll also have data on women who are ELAHERE ineligible. And that will be the focus of the data set that we use for our initial accelerated approval filing. So we've not seen any delays in patient recruitment. As I indicated, we are on our target perhaps a bit ahead such that we do anticipate getting to an enrollment status and then getting the data set to allow for a mid-2027 filing for accelerated approval.