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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File Number: 001-38662

 

SUTRO BIOPHARMA, INC.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

47-0926186

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

111 Oyster Point Blvd,  

South San Francisco, California

94080

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (650) 392-8412

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

 

Trading Symbol

 

Name of each exchange on which registered

Common stock, $0.001 par value

 

STRO

 

The Nasdaq Stock Market LLC

(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.     Yes      No  

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).     Yes      No  

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

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

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. 

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 4, 2021, the registrant had 46,270,347 shares of common stock, $0.001 par value per share, outstanding.

 

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Comprehensive (Loss) Income

3

 

Condensed Statements of Stockholders’ Equity

4

 

Condensed Statements of Cash Flows

6

 

Notes to Unaudited Condensed Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

27

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4.

Controls and Procedures

39

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

40

Item 1A.

Risk Factors

40

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

89

Item 3.

Defaults Upon Senior Securities

89

Item 4.

Mine Safety Disclosures

89

Item 5.

Other Information

89

Item 6.

Exhibits

90

Signatures

 

91

 

 

 

 

 

i

 


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Sutro Biopharma, Inc.

Condensed Balance Sheets

(In thousands, except share and per share amounts)

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

30,707

 

 

$

206,152

 

Marketable securities

 

 

159,231

 

 

 

120,341

 

Investment in equity securities

 

 

39,763

 

 

 

41,644

 

Accounts receivable

 

 

12,330

 

 

 

5,559

 

Prepaid expenses and other current assets

 

 

8,698

 

 

 

4,486

 

Total current assets

 

 

250,729

 

 

 

378,182

 

Property and equipment, net

 

 

23,319

 

 

 

12,935

 

Operating lease right-of-use assets

 

 

30,129

 

 

 

 

Marketable securities, non-current

 

 

64,279

 

 

 

 

Other non-current assets

 

 

2,144

 

 

 

2,122

 

Restricted cash

 

 

872

 

 

 

872

 

Total assets

 

$

371,472

 

 

$

394,111

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

11,173

 

 

$

5,544

 

Accrued compensation

 

 

8,487

 

 

 

8,823

 

Deferred revenue—current

 

 

7,804

 

 

 

14,603

 

Operating lease liability - current

 

 

1,445

 

 

 

 

Debt—current

 

 

6,250

 

 

 

 

Other current liabilities

 

 

296

 

 

 

627

 

Total current liabilities

 

 

35,455

 

 

 

29,597

 

Deferred revenue, non-current

 

 

145

 

 

 

6,100

 

Operating lease liability - non-current

 

 

32,073

 

 

 

 

Deferred rent

 

 

 

 

 

1,340

 

Debt—non-current

 

 

18,714

 

 

 

24,545

 

Other noncurrent liabilities

 

 

1,505

 

 

 

481

 

Total liabilities

 

 

87,892

 

 

 

62,063

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value — 10,000,000 shares authorized

   as of September 30, 2021 and December 31, 2020; 0 shares issued and

   outstanding as of September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.001 par value — 300,000,000 shares authorized

   as of September 30, 2021 and December 31, 2020; 46,261,060 and

   45,752,116 shares issued and outstanding as of September 30, 2021

   and December 31, 2020, respectively

 

 

46

 

 

 

46

 

Additional paid-in-capital

 

 

578,850

 

 

 

559,746

 

Accumulated other comprehensive (loss) income

 

 

(30

)

 

 

129

 

Accumulated deficit

 

 

(295,286

)

 

 

(227,873

)

Total stockholders’ equity

 

 

283,580

 

 

 

332,048

 

Total Liabilities and Stockholders’ Equity

 

$

371,472

 

 

$

394,111

 

 

See accompanying notes to unaudited interim condensed financial statements.

1

 


Sutro Biopharma, Inc.

Condensed Statements of Operations

(Unaudited)

(In thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues (including amounts from related parties

   of $0 during both the three and nine months ended

   September 30, 2021, and $0 and $2,813 during the

   three and nine months ended September 30, 2020,

   respectively)

 

 

8,517

 

 

$

17,823

 

 

$

51,226

 

 

$

34,444

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

26,602

 

 

 

19,361

 

 

 

74,473

 

 

 

54,223

 

General and administrative

 

 

16,589

 

 

 

9,079

 

 

 

40,241

 

 

 

26,435

 

Total operating expenses

 

 

43,191

 

 

 

28,440

 

 

 

114,714

 

 

 

80,658

 

Loss from operations

 

 

(34,674

)

 

 

(10,617

)

 

 

(63,488

)

 

 

(46,214

)

Interest income

 

 

109

 

 

 

295

 

 

 

481

 

 

 

1,320

 

Unrealized gain (loss) on equity securities

 

 

4,483

 

 

 

29,778

 

 

 

(1,881

)

 

 

78,638

 

Interest and other expense, net

 

 

(820

)

 

 

(2,317

)

 

 

(2,525

)

 

 

(6,328

)

Net (loss) income

 

$

(30,902

)

 

$

17,139

 

 

$

(67,413

)

 

$

27,416

 

Net (loss) income per share, basic

 

$

(0.67

)

 

$

0.46

 

 

$

(1.46

)

 

$

0.91

 

Net (loss) income per share, diluted

 

$

(0.67

)

 

$

0.45

 

 

$

(1.46

)

 

$

0.90

 

Weighted-average shares used in computing

   basic net (loss) income per share

 

 

46,162,544

 

 

 

36,887,266

 

 

 

46,060,010

 

 

 

29,994,917

 

Weighted-average shares used in computing

   diluted net (loss) income per share

 

 

46,162,544

 

 

 

37,877,552

 

 

 

46,060,010

 

 

 

30,349,856

 

 

See accompanying notes to unaudited interim condensed financial statements.

2


Sutro Biopharma, Inc.

Condensed Statements of Comprehensive (Loss) Income

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net (loss) income

 

$

(30,902

)

 

$

17,139

 

 

$

(67,413

)

 

$

27,416

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

15

 

 

 

(161

)

 

 

(159

)

 

 

72

 

Comprehensive (loss) income

 

$

(30,887

)

 

$

16,978

 

 

$

(67,572

)

 

$

27,488

 

 

See accompanying notes to unaudited interim condensed financial statements.

3


Sutro Biopharma, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-In-

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

 

 

$

 

 

 

45,752,116

 

 

$

46

 

 

$

559,746

 

 

$

129

 

 

$

(227,873

)

 

$

332,048

 

Exercise of common stock options

 

 

 

 

 

 

 

 

129,161

 

 

 

 

 

 

1,360

 

 

 

 

 

 

 

 

 

1,360

 

Issuance of common stock under Employee Stock

   Purchase Plan

 

 

 

 

 

 

 

 

93,346

 

 

 

 

 

 

873

 

 

 

 

 

 

 

 

 

873

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

147,349

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock transaction associated with taxes withheld

   on restricted stock units

 

 

 

 

 

 

 

 

(18,366

)

 

 

 

 

 

(407

)

 

 

 

 

 

 

 

 

(407

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,952

 

 

 

 

 

 

 

 

 

3,952

 

Net unrealized loss on available-for- sale

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(129

)

 

 

 

 

 

(129

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,359

)

 

 

(30,359

)

Balances at March 31, 2021

 

 

 

 

$

 

 

 

46,103,606

 

 

$

46

 

 

$

565,524

 

 

$

 

 

$

(258,232

)

 

$

307,338

 

Exercise of common stock options

 

 

 

 

 

 

 

 

40,902

 

 

 

 

 

 

452

 

 

 

 

 

 

 

 

 

452

 

Return and retirement of common stocks

 

 

 

 

 

 

 

 

(6,804

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

3,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,907

 

 

 

 

 

 

 

 

 

5,907

 

Net unrealized loss on available-for- sale

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45

)

 

 

 

 

 

(45

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,152

)

 

 

(6,152

)

Balances at June 30, 2021

 

 

 

 

$

 

 

 

46,141,454

 

 

$

46

 

 

$

571,883

 

 

$

(45

)

 

$

(264,384

)

 

$

307,500

 

Exercise of common stock options

 

 

 

 

 

 

 

 

15,911

 

 

 

 

 

 

160

 

 

 

 

 

 

 

 

 

160

 

Issuance of common stock under Employee Stock

   Purchase Plan

 

 

 

 

 

 

 

 

52,463

 

 

 

 

 

 

892

 

 

 

 

 

 

 

 

 

892

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

81,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock transaction associated with taxes withheld

   on restricted stock units

 

 

 

 

 

 

 

 

(30,143

)

 

 

 

 

 

(580

)

 

 

 

 

 

 

 

 

(580

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,495

 

 

 

 

 

 

 

 

 

6,495

 

Net unrealized gain on available-for- sale

   securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,902

)

 

 

(30,902

)

Balances at September 30, 2021

 

 

 

 

$

 

 

 

46,261,060

 

 

$

46

 

 

$

578,850

 

 

$

(30

)

 

$

(295,286

)

 

$

283,580

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Paid-In-

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2019

 

 

 

 

$

 

 

 

23,098,969

 

 

$

23

 

 

$

293,346

 

 

$

165