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

Good morning, everyone. We're excited to be continuing the JPMorgan Healthcare Conference this morning. My name is Denise, and I am on the health care investment banking team here. And it is my pleasure this morning to introduce Sutro Biopharma. With us today is Jane Chung, CEO of Sutro, and we'll also have time for Q&A at the end, and we'll be joined by Jonathan Fawcett, Head of Clinical Development. So with that, I'll turn it over to Jane.

Thanks, Denise. It's an honor and a privilege to present the new Sutro story at JPMorgan this year. I'm Jane Chung. I'm the CEO of Sutro since March of 2025. With the strategic pivot we did last year, we have done the hard work to really transform our business by redefining our strategy and rightsizing our team, extending the runway and accelerating our pipeline. And with the first program, getting us back into the clinic with tissue factor ADC within just 6 months of our strategic pivot. And in addition to that, making Sutro a clinical oncology company yet again with several more programs to go into the clinic this and next year. I will be making forward-looking statements as outlined here. For the new Sutro, we're on a mission to deliver the next generation of ADCs to drive value today as well as shaping the future of the ADC field. We have a very differentiated technology, ADC technology, that enables us to uniquely optimize every component of an ADC to really dial up the differentiation of the medicines that we're trying to make and deliver for patients. We have built a very exciting ADC pipeline, developing multiple programs in parallel to deliver 3 INDs over the next 3 years, and we're on track to deliver on that goal. We also extended our runway 3 times this year now to the middle of 2027, which does not include any of -- all of our collaboration milestones, which can further extend our runway and give us more time to data. And I think what's new in our company is actually, we have a new leadership team that has deep ADC experience that bring also fresh perspective from outside Sutro. This is a new company with a new strategy and a new team and a new focus on execution and discipline to rapidly advance programs where Sutro is uniquely positioned to deliver differentiated medicines for patients. Our ADC pipeline consists of both single payload and dual payload ADCs. Our single payload ADCs are meant to really optimize. We've actually incorporated our optimized design for our new linker payload system with the beta-glucuronidase, TOPO-1, exatecan DAR8 platform. And I'll explain to you the benefits and advantages of that. But really, the single payload ADCs are meant to really validate the technology and the platform and move us quickly into the dual payload ADCs, which have the potential uniquely so to overcome resistance, drive deeper clinical responses, delay progression and set a whole new standard of care for the ADC field. We are already in the clinic with our STRO-004 program, our tissue factor ADC. And with the best-in-class profile that is emerging in our preclinical data, we intend to expand the benefit of a tissue factor ADC beyond cervical into multiple tumor areas. We have a very ambitious but very smart plan to get to initial top line data by middle of this year. We only got into the clinic last November, and so we are moving at pace to get to quality data. What we're excited about is actually seeing a very high safety window. We have actually seen -- in our GLP tox study, an HNSTD or highest non-severe toxic dose of 50 milligrams per kilogram. This is one of the highest we've seen with an ADC, which gives us a greater safety window to actually dose higher to therapeutic areas and therapeutic relevance. Our next single payload ADC is STRO-006. It's an Integrin-Beta 6 targeting ADC. This is a very interesting target that's already been validated in lung cancer, which is a significant clinical opportunity for us. And we are also seeing this program well tolerated at 25 milligrams per kilogram, and we're on track for IND later this year. Moving on, we've actually announced and revealed that our first target for our first dual payload program will be a PTK7. PTK7 is a target that's also been clinically validated with the first-generation payload ADC, and with room for improvement on both safety and efficacy. And we're on track. We've actually moved up the IND entry into the clinic from late second half '27 into later this year or early 2027. And here, we're really excited about the potential of the program actually being tolerated at 25 milligrams per kilogram. So while we're getting to higher DAR, which these dual payloads are, now it's a DAR of 10, 8 exatecans plus 2 MMAEs, we're not seeing that we're taking a hit on safety. And the ability to deliver these safely is actually the critical step in actually delivering greater potency with the dual payload approach. So we're excited for the acceleration, the execution of our pipeline, which then bodes well to make this a very exciting year for Sutro. So what makes Sutro really unique is our design capabilities. We can, as I said, optimize every component of an ADC, the antibody, the linker, the payload and actually, every which way this can be combined. We have optimized our payload system to a DAR8 exatecan platform that is consistently delivering DAR8. We've even gone as high as DAR16 without compromising PK, which is not an easy thing to do. And the higher -- this advance actually enables us to get to higher DAR and incorporate multiple payloads in the ADC design, which then allows us to deliver greater potency and activity. In addition, we've optimized our linker strategy with the beta-glucuronidase linker, which has further stabilized with our nonnatural amino acids on the with click chemistry on our cell-free platform. This also allows for better tumor cleavage unless cleavage outside the tumor, also improving the safety profile of our products. And then on the antibody side, we make our antibodies in a cell-free system. So inherently, they are Fc-silent. We don't engage and activate the Fc-gamma receptors. They're not glycosylated. And so you avoid certain liabilities that are associated with conventional ADCs like ILD and pneumonitis, further improving the safety profile of our programs. And really, this whole design feature is really meant to address the unmet need that still exists with ADCs, and that is that efficacy is limited by toxicity. And altogether, our Sutro's far greater design capabilities allow us to actually drive ADC exposure up by two to threefold higher than conventional ADCs, which we fundamentally believe that if you can actually deliver more exposure to ADCs, this fundamentally is driving greater safety and greater efficacy for our programs. So we're excited to get into the clinic with STRO-004 already. We have our Phase I trial active and ongoing and incorporating all the improvements and advantages of cell-free ADC design into our program. We've designed STRO-004 for actually to drive greater exposure to drive greater safety and efficacy. We're actually seeing in our preclinical data that we're driving a 50-fold higher exposure than the approved tissue factor ADC which is quite remarkable. We've optimized the linker payload here to the new beta-glucuronidase, TOPO-1, exatecan DAR8 configuration. And our antibody here is actually designed for high affinity for tissue factor target as well as not interfering with the coagulation -- normal coagulation processes. Our antibodies are Fc-silent, so they also reduce ILD risk as well. We've done a PDX trial. We're looking at how to derisk this program in terms of what we expect to see in the clinic. And to do that, we've done some very robust work to look at all areas where tissue factor is expressed. So in this, we're looking at PDX models in head and neck, lung, pancreatic and colorectal cancer. And this is activity -- antitumor activity after a single dose of STRO-004 and you see clearly robust activity across the board with best responses at 73% and partial responses seen in all tumor types tested so far. Our Phase I trial will include tumors that we know express tissue factor target already. These are the 7 tumors will be including lung cancer, colorectal, bladder, endometrial, head and neck, pancreatic and cervical. And with our higher HNSTD of 50 milligrams per kilogram, we've actually disclosed that our starting dose for the Phase I trial will be 1 milligram per kilogram. And we're actually excited about that because we are seeing this to be an active dose in the preclinical studies already. So if you're starting at 1 milligram per kilogram and able to get to even more active therapeutically relevant doses rather quickly, we'll be able to get to data soon. And so this is this anticipation and expectation for us moving forward with this program. Okay. Our next single payload ADC is STRO-006. It's an Integrin-Beta 6 ADC. We also have designed this for high exposure, selectivity, safety and stability. It has the same sort of linker payload system, the beta-glu, DAR8 exatecan format. And for the antibody here, it's -- this is an antibody that took Pfizer almost 10 years to actually make. It's not an easy antibody to design. First and foremost, because you have to make it very specific for this alpha-v beta-6 heterodimer that is involved primarily in the tumor genesis process without impacting the rest of the TGFß signaling in the normal processes. Our antibodies, again, are Fc-silent to reduce the risk of ILD, and this is especially important if this is actually going after an opportunity in lung cancer, and our IND is on track for later this year. Here is a snapshot of the same PDX trial that we're doing for STRO-004, also for STRO-006. And after a single dose of STRO-006, we're able to see very robust antitumor activity on the left here. And we've actually benchmarked this against the surrogate competitive program with a DAR4 MMAE that may be in the clinic. And so here, you're seeing superior activity from best response, but also on the right, you're seeing the spider [ plot ] or spaghetti plot showing durable activity after a single dose, even 40 days out after the tumors have been treated. And then we're actually particularly excited about our dual payload ADCs and how the dual payload ADCs can overcome resistance to resistance to single payload ADCs, and really set a new standard of care for delivering targeted chemo combination. Despite the advances been made with ADCs, there's still significant unmet need for improving cancer treatment as well as ADCs. We know that resistance is actually driven out by the target, but by the payload class. And there's new emerging data that -- real-world data that suggests that exatecan ADC is followed by a subsequent exatecan ADC with the same or different target actually shows limited benefit versus chemotherapy. So we know that the window of all these exatecan ADCs coming out of China may actually close at some point. So what is next? We know also that chemo combination is more effective than single-agent chemotherapy and dual payload ADCs are nothing more than just delivering these combination therapies in a targeted way. But this does require some more sophisticated protein engineering to enable this to be delivered in a very safe way. So we believe that the dual payload for Sutro programs are highly differentiated in 3 ways: one, we're well ahead of other companies in terms of the multiple payloads we have in-house. We have the TOPO-1s, we have the tubulins, we have the DDRis or the ATRis and PARP inhibitors, but we also have immunostimulatory agents, and we also have a payload class we have not actually disclosed publicly that has been valued very at a premium in the private sector. Even more important to the number of different modalities of payload is the tailoring and the control of the ratio of these payloads as they attach to the antibody. And here, this is where Sutro excels and has a clear advantage. We can actually control the ratios of these 2 different payload systems Imagine when you're introducing 2 different payload systems where they have to attach to the same linger or the same cysteine or lysine attachment on the antibody, things can get really messy. So having a tight control of these ratios actually helps us deliver a more safer product. And we have not 1 nonnatural, but 2 nonnatural amino acids that we introduced in the cell-free system that further stabilize our linker payload system to get to these ratios. And what's exciting here is that we now have data that shows that our safety is that these programs are well tolerated at 25 milligrams per kilogram with 2 cytotoxic payloads and that's really compelling because that's comparable to what you would expect in a single payload exatecan ADC. So in HER2, some of you may know is that 30 milligram per kilogram [indiscernible] at 10 milligram per kilogram. So we're actually right in that neighborhood to be able to deliver this very safe. We've announced that our first dual payload into the clinic later this year or early next year, we'll be going after the PTK7 target. PTK7 is a target that's expressed both on stem cells as well as tumor cells across multiple tumors, triple-negative breast cancer, ovarian as well as lung. There has been clinical validation in the first-generation payload ADC, with an MMAE payload. And yet there's still improvement to really improve the safety as well as the efficacy. Here, you see on the right, a breast xenograft model where we've seen a dual payload delivering very strong response in a breast cancer model, with the PTK7 with the format of a DAR8 exatecan plus 2 MMAEs and how that outperforms a single payload for the MMAE in light blue and a TOPO single payload in pink. Now we have achieved proof of concept in house at Sutro on the impact and value of the dual payloads in 2 different tumor resistant models. The one on the left here, we have actually treated tumors to resistance. Here's a HER2 tumor where we've treated on a weekly basis in HER2 and actually treated 2 progression and resistance. And then we follow that up treating that same tumor with a tubulin inhibitor and also treated 2 resistance. So now these tumors are now doubly resistant to both classes of payload. And then we introduce them to a dual payload ADC, which now shows really impressive antitumor activity in the blue to a doubly resistant tumor. And this is not a single dose. This is weekly doses until progression in these mice or rats are living now 400 days out. So they're living a long life. And then on the right here, we're actually looking at a resistant tumor colorectal xenograft, which is classically or historically resistant to tubulin or MTI inhibitors as seen in this green line, which is the lack of response to an MTI payload ADC. And at the same dose, you see a moderate response to an exatecan ADC and a single payload ADC and then more robust superior antitumor activity seen with the dual payload ADC with the DAR8 exatecan in 2 MMAEs. We have an exciting collaboration also with Astellas Pharma. it Is our iADC program. It is an example of a dual-payload ADC program, where they combine an immunostimulatory agent with a cytotoxic payload and deliver that and actually trying to achieve activity in tumors that are unresponsive to immunotherapy. We're excited to hear that our partners are actually getting into the clinic early this year. So it's another program into the clinic for Sutro and a validation opportunity for us on the science and the platform. So we're very excited about our next-generation ADCs, highly differentiated programs that we've built in STRO-004, STRO-006 and STRO-227 and even STRO-00Y that we have not yet announced and all incorporating the optimization that we've made in the -- with cell-free design advantages. And then now with one program already in the clinic as of last year for our tissue factor ADC and now with 2 or 3 more programs going into the clinic this and next year, we are really trying to drive more benefit to patients and more value for shareholders and really turning around this company. Finally, and in closing, I just want to give a big thanks to the entire Sutro team as well as our partners for the amazing focus on the execution to really drive the pivot and help us make this fast pivot and drive more execution to make the delivery of the new innovation and the new story for Sutro possible. Thanks for your attention, and we'll open it up for Q&A.

We do have a microphone to pass around if anyone has questions. Here in the front.

Very nice job, and congrats on turning the company around and making it work in such a quick period of time. I was struck by your dual payload concept. I'm just trying to think in terms of -- and then maybe I missed it, but your tissue factor, highest non-severely toxic dose is 50 mgs per kg. But your dual payload is 25. I'm assuming that's probably because of the MMAE payload. So my question is, clinically, you want to get to this high of a dose as possible, but aren't you going to be tapped out because of the MMAE-mediated toxicities like neuropathy and other MMA approaches. That's question number one. Question number two, you clearly have an efficient way to make a cell-free antibody and have figured out the manufacturing. Why not just do 2 combos with mono payloads? Wouldn't that be cheaper and faster as compared to dual payloads and then you can address the clinical toxicity?

So maybe I'll try to address the second question first because I remember it. So I think it's a great question, why not just simply combine 2 single payload ADCs. We've seen that actually happen in the clinical setting. What happens is that the toxicity is too much because whether you're going after the same target or a different target, so it's whether it's delivering it efficiently to the right place. But when you've got a DAR4 MMAE and a DAR8 exatecan and combining that with 2 different programs, the patients are just not able to tolerate that for a long period of time, right? So we've seen that those programs had to reduce the dose for each of those programs to get to a safer combination. But then you're actually going back in your dose escalation to figure out what is the right dose that can be tolerated between the 2. So from a regulatory path, there's a little bit different kind of requirement that's needed to get that happening. I think for us, if you can tailor that, we've seen that a DAR4 plus a DAR8 -- DAR4 MMA plus a DAR8 exatecan is maybe too toxic in general. So being able to get to a DAR2 MMAE -- and there aren't that many out there that are just single ADCs with a DAR2 MMAE and being able to tailor that within one product can actually get to the sweet spot, if you will, in terms of maximizing the therapeutic window. So that's the second question. The first question was again...

Why can't you get to the [indiscernible].

Okay. Yes, yes. So -- right, right. So every program is going to be a little bit different in terms of the HNSTD that they're going to be able to achieve and how high you can actually dose it. It really depends on the -- there's a payload contribution, but there's also the target contribution, right? Where does the target go? Does it go into the heart? Does it go into different areas? So tissue factor, we -- because the expression is and we're able to design it away from the liabilities of coagulation and ocular, we're able to kind of dial up the payload and the dose safely. I think for other targets, you look at Integrin-Beta 6, it is involved in GI stomatitis even as a single payload. And HER2 -- targeting HER2 is actually goes to the heart and has cardiac issues. So the maximum tolerated dose comes down, right? So even on a single payload, most of the exatecan ADCs get you anywhere from 10 to 30 milligrams per kilogram. So the fact that we're able to deliver 2 payloads getting to that same neighborhood of 25 milligrams per kilogram is actually very important for us.

If I could just add a little bit from a clinician's perspective. The dual payload proposition is essentially a combination chemo. And the big problem when systemic combination chemo is used is getting the ratio of drugs correct, especially when there's issues of overlapping tox. So you've hit upon a really important question with dual payload is what is the ratio of payloads. And there's behind the STRO-227 work, which Jane didn't have time to elaborate on today, has been a lot of work dialing up and down the ratio of the 2 different payloads. So behind that 8 plus 2 lies a bunch of preclinical work to suggest that this is going to be the correct payload. And this is -- this is a chance to highlight one of the advantages of the Sutro platform is that because of being able to position as many nonnatural amino acids, where you like in the sequence of the antibody, you can dial up and down the ratio of payloads really very, very easily, and you can test a whole bunch of these assets before you ever get to the clinic.

Yes. I would also add that we mapped out all the companies that really can have shared that they can do dual payloads. Many of them actually do just a 1:1 ratio because that's the easiest thing to do. But when you actually think about those that can really fine-tune the ratios, you're down to a handful of companies that can really do that with a sophisticated protein engineering required. And so this is where we feel that Sutro is uniquely positioned and has less competition to really explore and maximize this opportunity for Sutro.

Jane, congrats for the leadership in the company. I do have a question about your dual payload, the [ level ] studies. So you're using the same -- when you compare the single payload ADC versus your dual payload, are you dosing the same level, same amount?

We are -- yes, we're doing the same kind of incremental dosing for both of the programs, yes. You will likely in the -- we're not in the clinic just yet for the first dual payload program. We'll likely have to start at a lower dose to be able to make sure that we're at a safety window.

Okay. The second question is really similar because tubulin and TOPO are now that your typical chemo combination, right? So have you -- in your study, have you compared the chemo combo as a control?

You're right. They typically aren't combined, but there's no reason to expect that they can't work together. And we have them. This is our starting point for dual payload. We actually have a whole dual payload pipeline, looking at a whole range of combination agents. But this is -- because these are both validated payloads. So to kick off dual payload it's a good starting point to start with 2 validated payloads, and we'll take it from there. There's a long way to go in the evolution of dual payload, but we think that this is a very strong -- very strong place to get into it.

Yes. We're almost looking at it from a backwards, right? We're looking at where these 2 payloads are active, and how they can actually show activity in different tumors. And then what can actually be -- which tumors are more responsive to a combination of those 2 tumors to really set the path forward for the development plan.

Yes. So I appreciate the great point about validated payload. In classical chemotherapy combinations, the ones that do really well, for example, R-CHOP are characterized by agents that have nonoverlapping toxicities, example, rituximab, Vincristine, cyclophosphamide. Vincristine, tubulin agent but that does not have hematological toxicity in its -- so looking forward in your selection of future payloads, are you factoring these into consideration?

Yes. Yes. I mean that's -- you raised an important point. Again, this is an early lesson of combination chemotherapy was to -- I mean, one of the reasons for combination was, of course, to avoid overlapping tox. And also to avoid competing mechanisms of action, too. So that's very much on our radar. This is our starting point. One thing you mentioned the overlapping tox, the obvious area of overlapping tox is bone marrow toxicity. And one of the advantages of the Sutro system in beta-glucuronidase cleavable system, and being able to use it in a very stable fashion with click chemistry linkage to nonnatural immuno acids, we get very little release of payload in the bone marrow. So we think the low release of payload in the bone marrow will limit the prospects for bone marrow tox.

But for MMAE, the main issue is not tissue-directed release, right? It's the free payload.

Correct. And our level of free payload is about 2 logs lower than nearly all -- I think actually all of our competitors.

Yes. We think what's driving our higher HNSTD is the fact that we are getting rock-solid PK and actually having a lot less free payload out there with the nonnatural within our click chemistry and cell-free further stabilizes that linker payload so that doesn't fall off. And so that's really what's driving a greater safety window for us.

I would love to ask a question. Regarding your partnership with Astellas, can you share a little bit more about exactly what our iADC and what does the partnership look like?

Yes. So immune stimulatory agents, I know Daiichi is now really excited about their staying payload. It's sort of revisiting that opportunity. The iADC is, like we just mentioned, incorporating 2 different payloads with 2 different MOAs, right, and making sure that you're going after the cancer in multiple MOAs. And I think what we can see with this program, we've actually made a similar program with a HER2 ADC -- HER2 target because HER2 is actually well characterized. People understand HER2 target. And what we've also done is a similar iADC sort of payload system. And we were very impressed to see the results, 8 out of 8 responses in a preclinical data set that really actually drove superior activity even beyond a single payload STING or a single payload exatecan. So we're encouraged by what we see. And I think Astellas team has done a fabulous job to really get their first program into the clinic early this year.

Maybe pivoting a little bit more to the business. I know early on, you mentioned the cash runway gets you into, I think, mid-2027. So between now and then, what does that cash runway allow Sutro to accomplish?

Yes. So as I mentioned earlier in the presentation, we have extended our cash runway now 3 times. So we're doing the hard work to streamline our efforts. We've reduced 2/3 of our team, which was not easy to do, painful actually but the right thing to do at this point. We've also reduced 2/3 of our expenses. And at the same time, we're delivering incredible value getting into the clinic with programs that are in a faster time line than what folks have expected. And so I think for that cash runway that we've guided, we've been very conservative in terms of what we include in terms of milestones there. It does not include all of our collaboration milestones from Astellas as well as from backside which can further extend the runway and give our data more time. But we're already in the clinic with STRO-004. We will be able to get into the clinic with STRO-006 as well as our first dual payload ADC, and also see the iADC programs into the clinic. So that's a lot of clinical validation that can come with our runway.

With respect to -- sorry, question in the audience?

I don't mean to be a question hog, but I want to expand a little bit on the Chair's point about strategic decision-making and would love to get your feedback on how does this tiny little biotech with limited resources make strategic decisions. Your tissue factor ADC is moving in at 1 mg per kg, you want to explore multiple tumor types. But why not double down and see if you can have activity in cervical cancer, to limit resource -- to conserve resources so you could bring your dual payload forward. Another idea I was thinking about was Pfizer already has a beta 6 and they've got 3 shots on goal with MMAEs, DAR8, how would Sutro differentiate from that approach and within the world of limited resources? How do you make those tough decisions as a leadership team?

Yes. It's a great question. We have a very exciting pipeline, and we know we can't do everything ourselves, right? So we will be looking to partnerships as we have in the past in some of our programs. The design of STRO-004 is very similar to the design of STRO-006. And so the question is do we even need to do STRO-006? Because it will be a positive readthrough of STRO-004 is successful, right? The 80% of the linker payload design is pretty much the same. And we are looking at different ways in which we can still continue to develop the program, but with maybe perhaps looking at different geographies and where we might do the trial so that it could reduce and manage our burn along the way. I think to your specific question around tissue factor and whether it makes sense to pursue cervical. Cervical, we know to be about $130 million commercial opportunities. So it's not huge. And then there's quite an investment to actually get there. Now we know that 50% of patients because of the eye tox don't actually get the drug. So maybe it's double or triple that. but still like a limited return potentially. So we are including cervical patients in our Phase I trial to get to a POC. And some of them may even have had Tivdak so that we could see responses in patients who have already received Tivdak because it's a different payload system. So it's not off the table completely. We will continue to evaluate the development plan to see what is the best way to maximize value for Sutro. But there are many tumors that actually express tissue factor pancreatic, highly expressed tissue factor as well as head and neck that's already seen some clinical validation there that could be even bigger clinical unmet needs. So we're going to be looking at all of those things to map out the best plan to move forward.

I mean, we are bullish about the other indications outside of cervical cancer. I mean we know that from proof of concept with the MirakuGen MRG04 tissue factor ADC, that there's activity against pancreas. So this tissue factor is a great target beyond cervical. And to some extent, there's a bit of a competition because if you want to go after a cervical in Phase I, you really have to set up a study specifically to look at that. Whereas the other indications can be captured often in Phase I sites in one study -- one set of sites very easily. So in terms of prioritizing maximizing potential, we've gone for the Phase I sites that can give us all the indications and we'll happily take cervical as well.

I think if no other questions, Jane, Jonathan, thank you so much for a wonderful presentation and thank you to the entire Sutro team.

Thank you, Denise.

Thank you so much.

Thanks everyone for the questions.