10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 13, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from ________ to ________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable:
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
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(Nasdaq Global Market) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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☐ |
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☒ |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 7, 2024, the registrant had
Table of Contents
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Page |
PART I. |
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Item 1. |
2 |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. |
37 |
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Item 4. |
38 |
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PART II. |
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Item 1. |
39 |
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Item 1A. |
39 |
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Item 2. |
Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities |
91 |
Item 3. |
91 |
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Item 4. |
91 |
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Item 5. |
91 |
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Item 6. |
92 |
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93 |
1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
Sutro Biopharma, Inc.
Condensed Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
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September 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Investment in equity securities |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other non-current assets |
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Restricted cash |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Deferred revenue - current |
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Operating lease liability - current |
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Debt - current |
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- |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Deferred revenue - non-current |
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Operating lease liability - non-current |
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Deferred royalty obligation related to the sale of future royalties |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in-capital |
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Accumulated other comprehensive (loss) income |
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Accumulated deficit |
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( |
) |
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( |
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Total stockholders’ equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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See accompanying notes to unaudited interim condensed financial statements.
2
Sutro Biopharma, Inc.
Condensed Statements of Operations
(Unaudited)
(In thousands, except share and per share amounts)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Operating expenses |
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Research and development |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest income |
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Unrealized gain on equity securities |
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Non-cash interest expense related to the |
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( |
) |
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( |
) |
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( |
) |
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( |
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Interest and other income (expense), net |
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( |
) |
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( |
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Loss before provision for income taxes |
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( |
) |
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( |
) |
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( |
) |
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( |
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Provision for income taxes |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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$ |
( |
) |
Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
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Weighted-average shares used in computing |
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See accompanying notes to unaudited interim condensed financial statements.
3
Sutro Biopharma, Inc.
Condensed Statements of Comprehensive Loss
(Unaudited)
(In thousands)
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Other comprehensive income (loss) : |
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Net unrealized income (loss) on available-for-sale |
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( |
) |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
See accompanying notes to unaudited interim condensed financial statements.
4
Sutro Biopharma, Inc.
Condensed Statements of Stockholders’ Equity
(Unaudited)
(In thousands, except share amounts)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In- |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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Balances at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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Exercise of common stock options |
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— |
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— |
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— |
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Issuance of common stock under |
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— |
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— |
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— |
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Vesting of restricted stock units |
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( |
) |
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— |
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— |
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— |
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Stock transaction associated with taxes |
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( |
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— |
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( |
) |
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— |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Net unrealized loss on available-for-sale securities |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at March 31, 2024 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock transaction associated with taxes |
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( |
) |
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— |
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( |
) |
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— |
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— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Issuance of common stock in connection with the |
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— |
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— |
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Issuance of common stock to Ipsen Biopharmaceuticals, Inc. |
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||||||
Net unrealized loss on available-for-sale securities |
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— |
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— |
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— |
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( |
) |
|
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— |
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( |
) |
Net loss |
|
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— |
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— |
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— |
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— |
|
|
|
( |
) |
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( |
) |
Balances at June 30, 2024 |
|
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
Exercise of common stock options |
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— |
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— |
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— |
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|||
Issuance of common stock under |
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— |
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— |
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— |
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|||
Vesting of restricted stock units |
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— |
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— |
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— |
|
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— |
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|
— |
|
|
Stock transaction associated with taxes |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
|
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|
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— |
|
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— |
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||
Net unrealized income on available-for-sale securities |
|
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— |
|
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— |
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|
— |
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|
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— |
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||
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balances at September 30, 2024 |
|
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In- |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Equity |
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||||||
Balances at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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||||
Exercise of common stock options |
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— |
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— |
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— |
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|||
Issuance of common stock under |
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— |
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— |
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— |
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|||
Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock transaction associated with taxes |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
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( |
) |
Stock-based compensation expense |
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— |
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— |
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— |
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— |
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||
Issuance of common stock in connection with |
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— |
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— |
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||||
Net unrealized income on available-for-sale securities |
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— |
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|
— |
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|
— |
|
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|
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— |
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||
Net loss |
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— |
|
|
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— |
|
|
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— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Vesting of restricted stock units |
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— |
|
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|
— |
|
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— |
|
|
|
— |
|
|
|
— |
|
|
Stock transaction associated with taxes |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Stock-based compensation expense |
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— |
|
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|
— |
|
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|
|
|
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— |
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— |
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||
Issuance of common stock in connection with |
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— |
|
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— |
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— |
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|||
Net unrealized income on available-for-sale securities |
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— |
|
|
|
— |
|
|
|
— |
|
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|
|
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— |
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||
Net loss |
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— |
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— |
|
|
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— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock under |
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— |
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— |
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— |
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|||
Vesting of restricted stock units |
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— |
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— |
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— |
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|||
Stock transaction associated with taxes |
|
|
( |
) |
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— |
|
|
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( |
) |
|
|
— |
|
|
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— |
|
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( |
) |
Stock-based compensation expense |
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— |
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— |
|
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|
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— |
|
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— |
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||
Net unrealized loss on available-for-sale securities |
|
|
— |
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— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
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|
( |
) |
Net loss |
|
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— |
|
|
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— |
|
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|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balances at September 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
See accompanying notes to unaudited interim condensed financial statements.
5
Sutro Biopharma, Inc.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
|
|
Nine Months Ended |
|
|||||
|
|
September 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Operating activities |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Accretion of discount on marketable securities |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
||
Non-cash lease expenses |
|
|
|
|
|
|
||
Realized gain on sale of equity securities |
|
|
( |
) |
|
|
|
|
Unrealized gain on equity securities |
|
|
|
|
|
( |
) |
|
Non-cash interest expense on deferred royalty obligation |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Prepaid expenses and other assets |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued compensation |
|
|
( |
) |
|
|
( |
) |
Accrued expenses and other liabilities |
|
|
( |
) |
|
|
|
|
Deferred revenue |
|
|
|
|
|
( |
) |
|
Change in operating lease liability |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities |
|
|
|
|
|
|
||
Purchases of marketable securities |
|
|
( |
) |
|
|
( |
) |
Maturities of marketable securities |
|
|
|
|
|
|
||
Sales of marketable securities |
|
|
|
|
|
|
||
Proceed from sale of equity securities |
|
|
|
|
|
|
||
Purchases of equipment and leasehold improvements |
|
|
( |
) |
|
|
( |
) |
Net cash provided by investing activities |
|
|
|
|
|
|
||
Financing activities |
|
|
|
|
|
|
||
Proceeds from sales of common stock, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from sales of common stock to Ipsen Biopharmaceuticals, Inc. (USA) |
|
|
|
|
|
|
||
Payment of debt |
|
|
( |
) |
|
|
( |
) |
Proceeds from the sale of future royalties, net of issuance costs |
|
|
|
|
|
|
||
Proceeds from exercise of common stock options |
|
|
|
|
|
|
||
Taxes paid related to net shares settlement of restricted stock units |
|
|
( |
) |
|
|
( |
) |
Proceeds from employee stock purchase plan |
|
|
|
|
|
|
||
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Income tax paid |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of non-cash investing and financing information: |
|
|
|
|
|
|
||
Purchases of equipment included in accounts payable and accrued expense |
|
$ |
|
|
$ |
|
||
Financing component associated with program fees |
|
$ |
|
|
$ |
|
||
Premium on common stock issued to Ipsen Biopharma, Inc. (USA) |
|
$ |
|
|
$ |
|
See accompanying notes to unaudited interim condensed financial statements.
6
Sutro Biopharma, Inc.
Notes to Unaudited Interim Condensed Financial Statements
1. Organization and Principal Activities
Description of Business
Sutro Biopharma, Inc. (the “Company”), is a clinical-stage oncology company developing site-specific and novel-format antibody drug conjugates, or ADCs. The Company was incorporated on
The Company operates and manages its business as one operating segment. The Company’s Chief Executive Officer reviews financial information on an aggregate basis for the purposes of allocating resources and evaluating financial performance.
All the Company’s long-lived assets are maintained in the United States.
Liquidity
The Company has incurred significant losses and has negative cash flows from operations. As of September 30, 2024, there was an accumulated deficit of $
As of September 30, 2024, the Company had unrestricted cash, cash equivalents, and marketable securities of $
The Company believes that its unrestricted cash, cash equivalents, and marketable securities as of September 30, 2024 will enable the Company to maintain its operations for a period of at least