Sutro Biopharma, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Redeemable Convertible Preferred Stock (Tables)

Redeemable Convertible Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of Redeemable Convertible Preferred Stock

Redeemable convertible preferred stock, $0.001 par value, as of September 30, 2018 consisted of:

	Shares Authorized		Shares Issued and Outstanding		Original Issue Price Per Share		Carrying Value		Liquidation Preference
	(in thousands, except for share and per share amounts)
Series A		3,503,692		3,503,692	$	0.5900	$	1,992	$	2,067
Series B		24,515,966		24,345,936		0.8822		19,865		21,478
Series C		78,582,049		76,661,901		0.4797		38,036		36,775
Series C-2		8,338,892		8,338,892		0.5996		4,845		5,000
Series D		43,362,233		43,362,233		0.5996		25,900		26,000
Series D-2		18,779,561		18,097,331		0.6596		11,868		11,937
Series E		320,988,598		319,305,718		0.2674		84,739		85,382
Balance at September 30, 2018		498,070,991		493,615,703			$	187,245	$	188,639

Redeemable convertible preferred stock, $0.001 par value, as of December 31, 2017 consisted of:

	Shares Authorized		Shares Issued and Outstanding		Original Issue Price Per Share		Carrying Value		Liquidation Preference
	(in thousands, except for share and per share amounts)
Series A		3,503,692		3,503,692	$	0.5900	$	1,992	$	2,067
Series B		24,515,966		24,345,936		0.8822		19,865		21,478
Series C		78,582,049		76,102,337		0.4797		38,035		36,506
Series C-2		8,338,892		8,338,892		0.5996		4,845		5,000
Series D		43,362,233		43,362,233		0.5996		25,900		26,000
Series D-2		18,779,561		18,097,331		0.6596		11,868		11,937
Balance at December 31, 2017		177,082,393		173,750,421			$	102,505	$	102,988

Schedule of Warrants Outstanding And Exercisable

As of September 30, 2018 and December 31, 2017, the warrants outstanding and exercisable were as follows:

				Shares as of				Estimated Fair Value as of,
Stock	Expiration Date	Exercise Price Per Share		September 30, 2018		December 31, 2017		September 30, 2018		December, 31 2017
	(in thousands except for share and per share amounts)
Series B redeemable convertible preferred	June 2018	$	0.8822		–		170,030	$	–	$	116
Series C redeemable convertible preferred⁽¹⁾	July 2020 – November 2021	$	0.4797		1,920,148		2,479,712		336		1,263
Series D-2 redeemable convertible preferred	August 2027	$	0.6596		–		682,230		–		329
Series E redeemable convertible preferred⁽¹⁾	August 2027	$	0.2674		1,682,871		–		531		–
Total					3,603,019		3,331,972	$	867	$	1,708

(1)

On October 1, 2018, 1,232,220 shares of the Series C redeemable convertible preferred warrants will be canceled, and the remaining 687,928 shares will be converted to warrants to purchase common stock on a 1-for-0.0370 basis. All Series E redeemable convertible preferred warrants will be converted to warrants to purchase common stock at a on a 1-for-0.0275 basis.

Schedule of Common Stock Reserved for Future Issuance

As of September 30, 2018, the Company had reserved common stock, on an if-converted basis, for issuance as follows:

Redeemable convertible preferred stock			16,028,462
Common stock options issued and outstanding			3,383,756
Remaining shares reserved for issuance under 2018 Equity Incentive Plan			2,577,223
Warrants to purchase redeemable convertible preferred stock			117,400
Warrants to purchase common stock			942
Total			22,107,783

Warrants

Schedule of Warrants Valued Using Option Pricing Method

The warrants were valued using the Option Pricing Method and were estimated using the following assumptions:

	Nine Months Ended September 30,
	2018		2017
Average expected life	3.1-8.8 years		2.5 years
Expected volatility	62.42%-71.21%		64.00%
Risk-free interest rate	2.88%-3.40%		1.55%
Expected dividend		–		–

- Definition

Tabular disclosure of warrants or rights issued. Warrants and rights outstanding are derivative securities that give the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame. Warrants are often included in a new debt issue to entice investors by a higher return potential. The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. Disclose the title of issue of securities called for by warrants and rights outstanding, the aggregate amount of securities called for by warrants and rights outstanding, the date from which the warrants or rights are exercisable, and the price at which the warrant or right is exercisable.

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