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

Thanks for joining our next session at the Bank of America Healthcare Conference. My name is Jeremiah Lorentz. I'm an equity research associate here at Bank of America. It is my pleasure to introduce our next presenting company, Sutro Biopharma. Today, we have CEO, Jane Chung; as well as CSO, Hans Peter Gerber. They will provide a brief overview of the company. Take it away.

Thank you. Thank you, Jeremiah. Hello. I'm Jane Chung, the new CEO of Sutro Biopharma, and I appreciate the opportunity to be here with you today. We will be making forward-looking statements as indicated here on the slide. On March 13, we did make an announcement of a strategic reprioritization of our new portfolio and set a new strategy for the company. We decided to deprioritize our late-stage program for Luveltamab tazevibulin. This was a difficult decision for the company. But let me tell you why we are still very excited about the future pipeline and the potential of our technology and science to truly transform what's possible above and beyond conventional ADCs. We have one of the most powerful ADC technologies that can optimize every component of the ADC. And our corporate strategy for our next-generation ADCs is not to deliver the same as the conventional ADCs, but to make -- to do more and to make medicines that can, not really be easily made through conventional means, which will ensure our commercial differentiation and viability in the future. With Luvelta, we proved we can make a drug, a clinically active product with our platform. And we've learned a lot of good lessons with the program, including improving the ADC discovery and design, incorporating the best core elements of ADCs for the antibody, the linker and the payload. In addition, externalizing fully our ADC manufacturing now that we've built up a CDMO -- external CDMO network, capable of making Luvelta that can be leveraged for our early pipeline to improve the cost efficiency and speed and in addition, innovating our clinical plans to accelerate our POC, time lines to POC. All of which will be leveraged to achieve our clinical strategy of delivering 3 INDs over the next 3 years, starting with STRO-004, our tissue factor ADC in the clinic in the second half of this year and followed by STRO-006, our Integrin-Beta 6 ADC in 2026, and our first dual payload ADC in 2027. So to differentiate from conventional ADCs, we are developing ADCs that are targeting hard-to-reach targets instead of more common targets. This will ensure our commercial viability moving forward in the future. And behind HER2, the FR alpha target is actually one of the most common targets that companies are actually pursuing. And this makes the FR alpha landscape with Luvelta more congested and less commercially viable. In contrast, you'll see on the left here, our STRO-004 and STRO-006, we're actually designing these ADCs to reach hard to make targets that are more complex, and this will ensure our commercial viability moving forward. And these targets are widely expressed across solid tumors. And these are hard to make targets because they are actually associated with on-target and off-target liabilities. You'll see that the product candidates here that we mentioned, will have markedly higher HNSTD or highest non-severe toxic doses and in NHP and associated industry best PK in preclinical studies that can translate into bigger benefits for patients. On the right, we have our dual payload ADCs, and this can be the next wave of innovation for ADCs in the field. These have the potential to overcome resistance of single payload ADCs and very few companies can actually have the protein engineering and the design capabilities to make these dual payloads with different modalities and different ratios. And so this is something that will be really game-changing for the field. With the new strategy, our runway extends into 2027, which does not include potential milestones from our collaborations, which can extend the runway even further. Astellas is advancing a form of the dual payload ADCs by incorporating an immunostimulatory agent in their dual payload ADCs. Ipsen is advancing a high potential solid tumor program with the ROR1 ADC and Vaxcyte is advancing the next generation of vaccines really enabled by the same XpressCF platform that is enabling our ADCs. So let's get into why we believe Sutro's next-generation ADCs will lead and be differentiated by design. The goal of ADCs or any treatment for that matter is really to achieve a wider therapeutic index by increasing the delta between the minimum effective dose and the maximum tolerated dose. For ADCs, only 1% of these ADCs gets into the tumor. And so Sutro's technology has this ability to actually -- and 99% actually work outside the tumor. So Sutro's capabilities to be able to unlock the promise of what works on the 99% include the linker payload design, the click chemistry, the site-specific conjugation and antibody engineering. To increase the effectiveness inside the tumor, we can dial up the potency with higher DAR, combining dual payloads and including integrating immunostimulatory agents. These are all the different ways in which our platform can really make the ADCs unique and give Sutro's platform a competitive advantage. Some of these to highlight is the ability to go dial up the potency with higher DAR, improve the linker technology with the beta glucuronidase linker that can actually be cleaved better inside the tumor versus outside the tumor, increasing the safety profile. All of the products that we make are Fc silent or we don't engage in Fc gamma receptors, which are expressed on the normal tissue like eye, lung and skin, and so we can avoid additional toxicities. And here, this is just all the ways in which this gives the Sutro ADCs a competitive advantage. And this final slide really just speaks to the potential of our early pipeline. You'll see here the Sutro ADCs we have plotted on this graph, the PKs for Sutro ADCs compared to all conventional ADCs along 2 different dimensions: conjugated payload exposure on the Y-axis, the higher you go, the better and the payload dose at the HNSTD, the further the right you go is the better. And so the upper right-hand quadrant is really the sweet spot in terms of where you want these products to be positioned. And really, this is not rocket science. This is actually rational science to see and really compelling for us to actually pursue the higher the PK, the greater the exposure and the reason to believe and have the conviction to study these in human studies. With that, I'd like to pass it over to Dr. Hans-Peter Gerber, our CSO.

Yes. Thank you, James. So my name is Hans-Peter Gerber. I'm the CSO. And I've been developing ADCs since more than 25 years, starting all the way back at Genentech, Seattle Genetics, Pfizer and now more recently, Sutro. And what you just saw that PK slide, is actually my favorite slide because the higher you are on the upper right corner of the graph, the more likely you will see better antitumor responses in the clinic. And here's a deep dive here with STRO-004, our program we are going to -- be in the clinic later this year. On the right is the PK parameter Cmax, we're 17-fold above the currently approved tissue factor ADC, [ VCMME ], tisotumab. And the exposure in xenos at HNSCC is 50-fold higher compared to conventional ADCs. This usually translates into improved antitumor activity. And again, the reason why we can go so high is because each of those 6 different elements that Jane just walked you through, we lined it up over the last 10 years to get the best exposure. Very often, when you just change 1 or 2 of these, you don't get to this kind of quantum leap in overall exposure at HNSTD and xeno. And on the left are these elements that we built in here and again, upcoming milestones later this year, we're getting to an IND filing. So this is some of the efficacy study. We get very potent activity at a very low dose, less than 1 milligram. It's 0.12 mg per kg. The point here to be made is actually the DAR 8 gets better antitumor activity at half the dose compared to the DAR 4. And so that's why we decided for DAR 8, we can get patients with lower tissue factor expression on their tumor and that can be up to 50% in different indications. And one more explanation why we actually didn't see eye inflammation in our pilot xeno tox or skin toxicity is shown here when we compared eye tox in vitro, the orange line is the comparator, the tisotumab on both cases and what we show on the Y-axis is cell death. You can see much less cell death induced by switching the payload from a tubulin inhibitor to a Topo1 in skin as well as in the eye. And here is a deeper look at the PK. We actually were able to dose at 100 mg per kg for DAR 4, Topo1 ADC with tissue. You don't see those numbers. Usually, there's maybe one report where they dose at similar levels. So again, emphasizing we have industry best PK. And you can see that 6 to 7 lock difference between ADC payload on the antibody in circulation that usually translates into lower platform toxicity. And maybe most important, and this data hasn't been shown to the outside world. This is the first time we actually show this data. Where we use on the left is actually a clinical trial in mice, where we use the PDX model, patient-derived xenografts, which are most predictive for clinical outcome. And we dosed them with our own ADC in purple or the competitive tisotumab in orange, and we looked at the tumor regression with the line, the dotted line at PR. And what we saw is that actually for tisotumab, we only saw activities in cervical cancer. And when we look back to actually what they've reported in Phase I, among all these indications, they actually only saw responses in cervical cancer. So this is quite reflective of what they saw in the clinic. And you can see with our DAR 8, you can see antitumor activity in non-small cell lung, head and neck, esophageal, but also cervical. And maybe the most important piece of this slide is the dosing is a clinically relevant dose. It's now known what that is, and we applied these. And so we have confidence that hopefully, this will translate into better benefit in patients in the clinic as well. On the right is just a little detail. The more target antigen you express the better your ADC works. And that is usually good news for clinical development because you can select your patients that respond best. Here's the expression of the target across 5 different indications, non-small cell lung, very prevalent, head and neck, pancreatic, but also colorectal at the end. And here is our second program. We're planning to go into an IND in 2026. It's SRO-006, Integrin-Beta 6, also known as [ TAT ]. And here, we, again, use the advantage of our manufacturing system to actually screen a lot of antibodies very quickly to make sure we're only binding to the alpha v beta 6 complex that's shown on the lower left panel on this slide. Integrins are a hugely diverse group of very complex biology targets. So we made sure we only hit that alpha v beta 6 to avoid normal tissue targeting. And on the right, in addition to the [ dimer formation ], also different confirmational formations. Integrins have a different shape when they are expressed on the tumor compared to normal tissue. So we made sure we got an antibody that only binds to that alpha v beta format to the complex that expressed on tumors. And just to give you an inkling here, our diversity of the library, the pool where we can find for this antibody is about 1 million time larger than what you use usually for CHO cell derived. So we have an edge. That's why we are with 2 programs where almost there's no competition out there compared to us because we can make these very complex target antibodies more rapidly and more precisely. So here is the overall expression of Integrin-Beta 6 across different tumor indications. And here, the second slide that we haven't presented, that's actually the antitumor activity of our DAR 8 molecule compared to tisotumab, which is shown here in orange. And again, at comparable dose, clinically relevant dose, we see profoundly more antitumor activity at a clinically relevant dose of our program compared to the competitor in lung, bladder and head and neck. So this makes us very positive for the future of these programs in the Phase I that will start soon. Now the second part here, dual payload ADC. This is the next big thing in ADC. We've seen at AACR this year, the longest crowd in front of the poster were in dual payload posters. And here is the advantage why our big pharma and us and other ADC familiar people focusing now on dual payloads. It's shown here on the right is a dual payload ADC that we can do very easily compared to combining an ADC with chemotherapy on the left side or 2 ADCs together. So both on safety and efficacy, there's significant advantages of doing that. There's regulatory simplicity if you just develop 1 compound versus 2 and need to combine 2 and even the combination study simplicity at the end of the day, you want to combine your ADC with a PD-1. It's easier to do that with 1 single ADC with 2 payloads than combining 3 compounds. And here is some of the early efficacy data showing that whenever we have a dual payload ADC in the purple line, we can improve -- reduce tumor growth more significantly than single payload ADCs shown in blue and purple and that translates in better survival of animals receiving a dual payload ADC and a better time to tumor quadrupling -- and just to remind everybody, we already have a dual payload ADC in collaboration with Astellas. It's an immune activator combined with an exatecan, the same platform. I just showed you the Astella data, and this is advancing very well and very rapidly. We're very happy with this collaboration. Here, the advantages of using a Sutro IGC shown on the left row here in this panel compared to other immunotherapy modalities and unlist them all, there is CAR-T cells, there are ISACs that are just immunoactivators, no exatecan on the antibody or even compared to vaccines or STING toll-like receptor agonist. And so there's many advantages of having 2 compounds on 1 antibody. First and foremost, immune checkpoint inhibitors work best when you have a debulk tumor. So you come in with the exatecan to debulk the tumor and you use your immune activator to get the T cell into the tumor. This is the sweet spot for both compounds. So putting both on an ADC is the way to go. Obviously, Astellas is very enthusiastic about that approach as well. So to summarize again, not only do we have the Topo1 tubulin dual payload ADCs on the left, we're also working with DNA double-strand repair inhibitors combined with Topo1 or then what I just showed you with Topo1 and immunoactivators. And there's some very strong clinical evidence for each one of those compounds, combining them on an ADC as shown here. And with that, I give it back to Jane to give you the overview on the pipeline again.

Thank you, Dr. Gerber. So we have an innovative pipeline, and we are all about execution. And so these are the deliverables in terms of getting to 3 INDs over the next 3 years, given the limited time, these slides will be available on our corporate website. Again, here's a complete portfolio for Sutro-owned programs as well as partner programs, and we have an exceptional team leading the next phase of Sutro, most of whom have joined in recent years, last 2 years with the extensive ADC oncology experience to drive the success of Sutro in the next chapter. Thank you.