Short-term volatility is the hallmark of clinical-stage biopharma investing, and Sutro Biopharma (NASDAQ:STRO) is a fine example of that, recently taking investors on a wild ride. The stock climbed over 22% in the first two months of the year, slid -37% the next month, jumped 72% in a week, and has since pulled back another -26%.
Despite this, the company is well positioned for future growth with a robust pipeline of candidates and strategic collaborations. It is a speculative play but one that long-term biopharma investors may find interesting.
Sutro’s Pipeline & Partners
Sutro Biopharma is a clinical-stage biotech company specializing in developing and manufacturing pharmaceutical products to meet pressing needs in oncology. Its primary focus is developing effective cancer therapeutics using their patent technology, XpressCF, and XpressCF+, a cell-free protein synthesis platform.
The company’s product pipeline also includes antibody-drug conjugates (ADCs) like luveltamab- tazevibulin and STRO-002, which are currently in Phase II/III clinical trials for patients with ovarian and endometrial cancers. Several other drug candidates are also in Phase I clinical trials as part of the company’s robust research and development agenda.
Sutro Biopharma’s advanced drug discovery efforts have led to promising partnerships with notable entities like Merck Sharp & Dohme Corporation, Vaxcyte (NASDAQ:PCVX), Tasly Biopharmaceuticals, EMD Serono, and Astellas Pharma Inc. (OTC:ALPMF).
Sutro’s Recent Financial Results
During the first quarter ending March 31, 2024, Sutro reported increased revenue of $13.0 million, exceeding estimates of $12 million and up from $12.7 million for the same period in 2023. Crucial collaborations with Astellas, Tasly, and Vaxcyte were the main driving force behind those earnings. Net loss of -$58 million translated to an EPS of -$0.95, which lagged consensus expectations of -$0.92.
As of quarter end, the company reported cash and investments amounting to $267.6 million and holding shares of Vaxcyte common stock valued at $45.6 million. In addition, Sutro strengthened its financial standing in April with an additional $75 million in upfront payments after securing exclusive global licensing rights to STRO-003 to Ipsen and raising another $75 million in an underwritten offering of common stock.
Is STRO Stock a Buy?
Analysts following the company have mainly been bullish on the stock. For instance, Deutsche Bank analyst James Shin recently lowered the price target from $12.00 to $10.00 while maintaining a Buy rating. He cited positive expectations for clinical trial data, though cautioning that cash burn and competition are a concern.
The stock is rated a Strong Buy based on the recommendations and price targets assigned by 10 Wall Street analysts over the past three months. The average price target for STRO stock is $11.38, representing an upside of 174.88% from current levels.
After a rocky ride, the stock has been trending up the past month, climbing over 19%. It sits in the middle of its 52-week price range of $2.00-$6.13 and shows growing price momentum (though not yet entirely positive), trading roughly at the 20-day (4.15) and 50-day (4.15) moving averages.
Summary on Sutro
Sutro Biopharma has surfaced as a fascinating player in the biotechnology field. With a solid pipeline of ADC candidates and strategic partnerships with Vaxcyte, Astellas, Merck, and Tasly, it’s geared up for forthcoming expansion. In addition, Sutro’s robust financial health and encouraging therapeutic pipeline mark it as a compelling investment opportunity for long-term biotech investors willing to endure its high volatility in the short future.
