8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event Reported): November 14, 2018

 

 

SUTRO BIOPHARMA, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-38662   47-0926186

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification Number)

310 Utah Avenue, Suite 150

South San Francisco, California, 94080

(Address of Principal Executive Offices) (Zip Code)

(650) 392-8412

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On November 14, 2018, Sutro Biopharma, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2018. A copy of the press release is attached as Exhibit 99.1 to this report.

The information furnished with Item 2.02 of this report, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Exchange Act or under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits

 

Exhibit

Number

  

Exhibit Title or Description

99.1    Press release issued by Sutro Biopharma, Inc. regarding its financial results for the quarter ended September 30, 2018, dated November 14, 2018.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Sutro Biopharma, Inc.
Date: November 14, 2018     By:   /s/ Edward Albini
      Edward Albini
      Chief Financial Officer
EX-99.1

Exhibit 99.1

Sutro Biopharma Reports Third Quarter 2018 Financial Results

- STRO-001 Received Orphan Drug Designation for Treatment of Multiple Myeloma

- STRO-002 to Begin Phase 1 Trial for Patients with Ovarian and Endometrial Cancers in Early 2019

SOUTH SAN FRANCISCO, Calif., Nov. 14, 2018 – Sutro Biopharma, Inc. (NASDAQ: STRO), a clinical-stage drug discovery, development and manufacturing company focused on the application of precise protein engineering and rational design to create next-generation oncology therapeutics, today reported its financial results for the third quarter ended September 30, 2018.

“This has been an outstanding third quarter for Sutro. We have completed our initial public offering and achieved multiple milestones in the development of our own clinical programs for treatment of multiple myeloma and ovarian cancer,” said Bill Newell, Sutro’s Chief Executive Officer. “We look forward to working with our newest partners and collaborators as the Sutro team continues to execute at a high level to advance our vision of transforming the lives of patients.”

Business Highlights and Recent Developments

STRO-001 Clinical Program

 

   

STRO-001 granted Orphan Drug Designation by the U.S. Food and Drug Administration (FDA) for the treatment of multiple myeloma.

 

   

The Leukemia & Lymphoma Society® (LLS) agreed to contribute clinical development funding for STRO-001 through its Therapy Acceleration Program, which forges collaborations with biotechnology companies to help bring innovative therapies to patients faster.

 

   

Potential first-in-class antibody-drug conjugate (ADC) directed against CD74 is currently being studied in a Phase 1 clinical trial enrolling separate dose escalation cohorts for myeloma and B-cell lymphoma.

STRO-002 Clinical Program

 

   

The FDA has concluded their 30-day review of Sutro’s Investigational New Drug (IND) application for STRO-002, a targeted antibody-drug conjugate directed against folate receptor-alpha. Sutro expects to commence a Phase 1 clinical trial focused on ovarian and endometrial cancers in early 2019.

Corporate Highlights

 

   

Collaboration and licensing agreement signed with Merck to discover and develop novel immune-modulating therapies for cancer and autoimmune disorders.

 

   

Sutro is primarily responsible for preclinical research and Merck will obtain exclusive worldwide rights to therapeutic candidates derived from the collaboration.

 

   

Sutro received from Merck an upfront payment of $60 million, a $20 million investment in its Series E preferred stock, and $10 million investment in a private placement of common stock concurrent with the IPO.


   

Sutro is eligible for milestone payments totaling up to $1.6 billion, assuming the development and sale of all therapeutic candidates and all possible indications identified under the collaboration, as well as tiered royalties ranging from mid-single digit to low teen percentages on worldwide sales of commercial products that may result from the collaboration.

 

   

The initial public offering (IPO) that closed on October 1, 2018, provided Sutro with gross proceeds of $85.0 million, before deducting underwriting discounts and commissions and offering expenses. Additionally, Sutro received proceeds of $10.0 million from Merck in a private placement of common stock concurrent with the IPO.

 

   

Appointment of Stephen Worsley as Chief Business Officer and Linda Fitzpatrick as Chief People and Communications Officer.

Third Quarter 2018 Financial Highlights

Cash, Cash Equivalents and Marketable Securities

As of September 30, 2018, Sutro had cash, cash equivalents and marketable securities of $123.0 million.

In October 2018, Sutro announced the closing of its IPO of 5,667,000 shares of its common stock at a price of $15.00 per share. The gross proceeds to Sutro from the IPO, before deducting underwriting discounts and commissions and offering expenses, were $85.0 million. In addition to the IPO, Sutro concurrently sold in a private placement to Merck Sharp & Dohme Corp. (Merck) additional shares of common stock at the IPO offering price for gross proceeds of $10.0 million. Proceeds from the IPO and the concurrent private placement are not reflected in Sutro’s September 30, 2018 balance sheet.

Revenue

Revenue was $7.8 million for the third quarter of 2018, which included collaboration revenue of $6.9 million recognized primarily from Merck, Celgene and EMD Serono, in addition to other revenue of $0.9 million. During the third quarter of 2018, Sutro began recording revenue from Merck primarily from the $60.0 million upfront payment received by Sutro under the July 2018 collaboration and licensing agreement, for which revenue is being recognized ratably over an approximate four-year period. Future collaboration revenue from Merck, Celgene and EMD Serono, and from any future collaboration partners, will fluctuate as a result of the timing and amount of upfront, milestones and other collaboration agreement payments.

Operating Expenses

Total operating expenses for the third quarter of 2018 were $18.0 million, comprised of research and development expenses of $12.6 million and general and administrative expenses of $5.4 million. Total operating expenses for the quarter included non-cash stock-based compensation expense of $0.3 million and depreciation and amortization expense of $1.1 million. In future quarters, Sutro expects to incur additional general and administrative expenses as it operates as a public company following its IPO that closed on October 1, 2018.

Net Loss Per Share Calculation

The financial statements as of September 30, 2018, including share and per share amounts, do not give effect to the IPO, or the conversion of the redeemable convertible preferred stock, as the IPO and such conversions were completed on October 1, 2018. Relatedly, the weighted-average shares used in calculating net loss per share for the third quarter of 2018 include only common stock outstanding prior to the IPO.


About Sutro Biopharma

Sutro Biopharma, Inc., located in South San Francisco, is a clinical-stage drug discovery, development and manufacturing company. Using precise protein engineering and rational design, Sutro is advancing next-generation oncology therapeutics.

Sutro’s proprietary and integrated cell-free protein synthesis and site-specific conjugation platform, XpressCF+™, led to the discovery of STRO-001 and STRO-002, Sutro’s first two internally-developed antibody-drug conjugates, or ADCs. STRO-001 is a potentially first-in-class ADC targeting CD74, a protein highly expressed in multiple myeloma and non-Hodgkin’s lymphoma, and is currently in a Phase I study. STRO-002 is a potentially best-in-class ADC targeting folate receptor alpha, a cell-surface protein highly expressed in gynecological cancers.

Sutro is dedicated to transforming the lives of cancer patients by creating medicines with improved therapeutic profiles for areas of unmet need.

To date, Sutro’s drug discovery efforts have focused on antibody-drug conjugates, cytokine-based immuno-oncology therapies, and bispecific antibodies primarily directed at clinically-validated targets for which the current standard of care is suboptimal.

Sutro’s platform allows it to accelerate discovery and development of potential first-in-class and best-in-class molecules through rapid and systematic evaluation of protein structure-activity relationships to create optimized homogeneous product candidates.

In addition to developing its own oncology pipeline, Sutro is collaborating with select pharmaceutical and biotech companies to discover and develop novel, next-generation therapeutics. As the pace of clinical development accelerates, Sutro and its partners are developing therapeutics designed to more efficiently kill tumors without harming healthy cells.

Follow Sutro on Twitter, @Sutrobio, and at www.sutrobio.com to learn more about our passion for changing the future of oncology.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, anticipated clinical development activities, potential benefits of the company’s product candidates and platform and anticipated financial trends. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. Although the company believes that the


expectations reflected in such forward-looking statements are reasonable, the company cannot guarantee future events, results, actions, levels of activity, performance or achievements, and the timing and results of biotechnology development and potential regulatory approval is inherently uncertain. Forward-looking statements are subject to risks and uncertainties that may cause the company’s actual activities or results to differ significantly from those expressed in any forward-looking statement, including risks and uncertainties related to the company’s ability to advance its product candidates, obtain regulatory approval of and ultimately commercialize its product candidates, the timing and results of preclinical and clinical trials, the company’s ability to fund development activities and achieve development goals, the company’s ability to protect intellectual property and other risks and uncertainties described under the heading “Risk Factors” in documents the company files from time to time with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this press release, and the company undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date hereof.

# # #

Investor Contacts

John Graziano

Solebury Trout

+1 646-378-2942

jgraziano@soleburytrout.com

Xuan Yang

Solebury Trout

+1 646-378-2975

xyang@soleburytrout.com

Media Contacts

David Schull

Russo Partners

(212) 845-4271

david.schull@russopartnersllc.com

Scott Stachowiak

Russo Partners

(646) 942-5630

(646) 300-3590 mobile

scott.stachowiak@russopartnersllc.com


Sutro Biopharma, Inc.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(In thousands, except share and per share amounts)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2018     2017     2018     2017  

Revenue:

        

Collaboration revenue

   $ 6,924     $ 17,499     $ 13,955     $ 47,701  

Other revenue—related parties

     912       —         5,378       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     7,836       17,499       19,333       47,701  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Research and development

     12,642       13,669       39,475       39,499  

General and administrative

     5,351       4,895       13,806       12,306  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     17,993       18,564       53,281       51,805  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (10,157     (1,065     (33,948     (4,104

Interest income

     403       62       483       192  

Interest expense

     (415     (235     (1,199     (235

Other income (expense), net

     (68     (180     840       (197
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (10,237   $ (1,418   $ (33,824   $ (4,344
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, basic and diluted

   $ (21.26   $ (3.14   $ (71.06   $ (9.77
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares used in computing net
loss per share

     481,613       451,550       476,023       444,594  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive income:

        

Unrealized gain (loss) on available-for-sale
securities

     (27     5       (27     16  
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (10,264   $ (1,413   $ (33,851   $ (4,328
  

 

 

   

 

 

   

 

 

   

 

 

 


Sutro Biopharma, Inc.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

 

     September 30,
2018
    December 31,
2017
 
     (Unaudited)     (1)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 41,353     $ 22,020  

Marketable securities

     81,597       —    

Accounts receivable, net

     2,443       1,624  

Prepaid expenses and other current assets

     1,979       1,985  
  

 

 

   

 

 

 

Total current assets

     127,372       25,629  

Property and equipment, net

     11,673       13,997  

Other long-term assets

     5,966       1,128  

Restricted cash

     15       15  
  

 

 

   

 

 

 

Total assets

   $ 145,026     $ 40,769  
  

 

 

   

 

 

 

Liabilities, Redeemable Convertible Preferred Stock, and Stockholders’ Deficit

    

Current liabilities:

    

Accounts payable

   $ 4,594     $ 2,902  

Accrued compensation

     4,085       3,639  

Deferred revenue—current

     24,229       10,709  

Debt—current

     3,182       14,634  

Other current liabilities

     815       72  
  

 

 

   

 

 

 

Total current liabilities

     36,905       31,956  

Deferred revenue, non-current

     48,805       13,159  

Deferred rent

     473       428  

Redeemable convertible preferred stock warrant liability

     867       1,708  

Debt—non-current

     11,500       —    

Other noncurrent liabilities

     664       14  
  

 

 

   

 

 

 

Total liabilities

     99,214       47,265  

Commitments and Contingencies

    

Redeemable convertible preferred stock

     187,246       102,505  

Stockholders’ deficit:

    

Common stock

     —         —    

Note receivable from stockholder

     —         (208

Additional paid-in-capital

     7,428       6,218  

Accumulated other comprehensive loss

     (27     —    

Accumulated deficit

     (148,835     (115,011
  

 

 

   

 

 

 

Total stockholders’ deficit

     (141,434     (109,001
  

 

 

   

 

 

 

Total liabilities, redeemable convertible preferred stock, and stockholders’ deficit

   $ 145,026     $ 40,769  
  

 

 

   

 

 

 

 

(1) 

The condensed balance sheet as of December 31, 2017 was derived from the audited financial statements included in the Company’s registration statements on Form S-1 filed with the Securities and Exchange Commission on September 26, 2018.