0000950170-22-023279.txt : 20221108 0000950170-22-023279.hdr.sgml : 20221108 20221108163343 ACCESSION NUMBER: 0000950170-22-023279 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 70 CONFORMED PERIOD OF REPORT: 20220930 FILED AS OF DATE: 20221108 DATE AS OF CHANGE: 20221108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUTRO BIOPHARMA, INC. CENTRAL INDEX KEY: 0001382101 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 452441988 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38662 FILM NUMBER: 221369442 BUSINESS ADDRESS: STREET 1: 111 OYSTER POINT BLVD. CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 650-392-8412 MAIL ADDRESS: STREET 1: 111 OYSTER POINT BLVD. CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 FORMER COMPANY: FORMER CONFORMED NAME: SUTRO BIOPHARMA INC DATE OF NAME CHANGE: 20061127 10-Q 1 stro-20220930.htm 10-Q 10-Q
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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, 2022

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) 881-6500

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 3, 2022, the registrant had 57,475,466 shares of common stock, $0.001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

2

 

Condensed Balance Sheets

2

 

Condensed Statements of Operations

3

 

Condensed Statements of Comprehensive Loss

4

 

Condensed Statements of Stockholders’ Equity

5

 

Condensed Statements of Cash Flows

6

 

Notes to Unaudited Interim Condensed Financial Statements

7

Item 2.

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

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

Item 4.

Controls and Procedures

38

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

39

Item 1A.

Risk Factors

39

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

93

Item 3.

Defaults Upon Senior Securities

93

Item 4.

Mine Safety Disclosures

94

Item 5.

Other Information

94

Item 6.

Exhibits

95

Signatures

 

96

 

 

 

 

 

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,

 

 

 

2022

 

 

2021

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

96,779

 

 

$

30,414

 

Marketable securities

 

 

190,560

 

 

 

130,343

 

Investment in equity securities

 

 

36,909

 

 

 

37,181

 

Accounts receivable

 

 

11,241

 

 

 

12,454

 

Prepaid expenses and other current assets

 

 

11,064

 

 

 

8,123

 

Total current assets

 

 

346,553

 

 

 

218,515

 

Property and equipment, net

 

 

24,281

 

 

 

22,550

 

Operating lease right-of-use assets

 

 

27,073

 

 

 

29,041

 

Marketable securities, non-current

 

 

-

 

 

 

68,775

 

Other non-current assets

 

 

1,921

 

 

 

1,655

 

Restricted cash

 

 

872

 

 

 

872

 

Total assets

 

$

400,700

 

 

$

341,408

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,443

 

 

$

11,327

 

Accrued compensation

 

 

10,380

 

 

 

11,417

 

Deferred revenue - current

 

 

15,920

 

 

 

5,496

 

Operating lease liability - current

 

 

2,631

 

 

 

1,037

 

Debt - current

 

 

12,500

 

 

 

9,375

 

Other current liabilities

 

 

4,414

 

 

 

3,084

 

Total current liabilities

 

 

58,288

 

 

 

41,736

 

Deferred revenue - non-current

 

 

74,732

 

 

 

-

 

Operating lease liability - non-current

 

 

31,038

 

 

 

31,224

 

Debt - non-current

 

 

6,783

 

 

 

15,738

 

Other non-current liabilities

 

 

133

 

 

 

146

 

Total liabilities

 

 

170,974

 

 

 

88,844

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value — 10,000,000 shares authorized
   as of September 30, 2022 and December 31, 2021;
0 shares issued and
   outstanding as of September 30, 2022 and December 31, 2021

 

 

-

 

 

 

-

 

Common stock, $0.001 par value — 300,000,000 shares authorized
   as of September 30, 2022 and December 31, 2021;
54,631,360 and
   
46,327,131 shares issued and outstanding as of September 30, 2022
   and December 31, 2021, respectively

 

 

55

 

 

 

46

 

Additional paid-in-capital

 

 

649,028

 

 

 

586,243

 

Accumulated other comprehensive loss

 

 

(1,336

)

 

 

(314

)

Accumulated deficit

 

 

(418,021

)

 

 

(333,411

)

Total stockholders’ equity

 

 

229,726

 

 

 

252,564

 

Total Liabilities and Stockholders’ Equity

 

$

400,700

 

 

$

341,408

 

 

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)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenues

 

$

25,147

 

 

$

8,517

 

 

$

59,140

 

 

$

51,226

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

31,714

 

 

 

26,602

 

 

 

94,036

 

 

 

74,473

 

General and administrative

 

 

14,643

 

 

 

16,589

 

 

 

44,825

 

 

 

40,241

 

Total operating expenses

 

 

46,357

 

 

 

43,191

 

 

 

138,861

 

 

 

114,714

 

Loss from operations

 

 

(21,210

)

 

 

(34,674

)

 

 

(79,721

)

 

 

(63,488

)

Interest income

 

 

1,014

 

 

 

109

 

 

 

1,327

 

 

 

481

 

Unrealized gain (loss) on equity securities

 

 

3,496

 

 

 

4,483

 

 

 

323

 

 

 

(1,881

)

Interest and other expense, net

 

 

(2,788

)

 

 

(820

)

 

 

(4,039

)

 

 

(2,525

)

Loss before provision for income taxes

 

 

(19,488

)

 

 

(30,902

)

 

 

(82,110

)

 

 

(67,413

)

Provision for income taxes

 

 

-

 

 

 

-

 

 

 

2,500

 

 

 

-

 

Net loss

 

$

(19,488

)

 

$

(30,902

)

 

$

(84,610

)

 

$

(67,413

)

Net loss per share, basic and diluted

 

$

(0.37

)

 

$

(0.67

)

 

$

(1.74

)

 

$

(1.46

)

Weighted-average shares used in computing
   basic and diluted loss per share

 

 

52,345,732

 

 

 

46,162,544

 

 

 

48,622,258

 

 

 

46,060,010

 

 

See accompanying notes to unaudited interim condensed financial statements.

3


 

Sutro Biopharma, Inc.

Condensed Statements of Comprehensive Loss

(Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(19,488

)

 

$

(30,902

)

 

$

(84,610

)

 

$

(67,413

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

20

 

 

 

15

 

 

 

(1,022

)

 

 

(159

)

Comprehensive loss

 

$

(19,468

)

 

$

(30,887

)

 

$

(85,632

)

 

$

(67,572

)

 

See accompanying notes to unaudited interim condensed financial statements.

4


 

Sutro Biopharma, Inc.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(In thousands, except share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In-

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

(Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2021

 

 

46,327,131

 

 

$

46

 

 

$

586,243

 

 

$

(314

)

 

$

(333,411

)

 

$

252,564

 

Exercise of common stock options

 

 

32,497

 

 

 

 

 

 

180

 

 

 

 

 

 

 

 

 

180

 

Issuance of common stock under
   Employee Stock Purchase Plan

 

 

146,165

 

 

 

 

 

 

1,006

 

 

 

 

 

 

 

 

 

1,006

 

Vesting of restricted stock units

 

 

465,731

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Stock transaction associated with taxes
   withheld on restricted stock units

 

 

(44,665

)

 

 

 

 

 

(404

)

 

 

 

 

 

 

 

 

(404

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,974

 

 

 

 

 

 

 

 

 

6,974

 

Net unrealized loss on available-for-
   sale securities

 

 

 

 

 

 

 

 

 

 

 

(838

)

 

 

 

 

 

(838

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39,110

)

 

 

(39,110

)

Balances at March 31, 2022

 

 

46,926,859

 

 

$

47

 

 

$

593,998

 

 

$

(1,152

)

 

$

(372,521

)

 

$

220,372

 

Exercise of common stock options

 

 

298

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Vesting of restricted stock units

 

 

31,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock transaction associated with taxes
   withheld on restricted stock units

 

 

(1,296

)

 

 

 

 

 

(9

)

 

 

 

 

 

 

 

 

(9

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,696

 

 

 

 

 

 

 

 

 

6,696

 

Issuance of common stock in connection with
   At-The-Market sale, net of issuance costs of $
690

 

 

1,716,996

 

 

 

2

 

 

 

8,211

 

 

 

 

 

 

 

 

 

8,213

 

Net unrealized loss on available-for-
   sale securities

 

 

 

 

 

 

 

 

 

 

 

(204

)

 

 

 

 

 

(204

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,012

)

 

 

(26,012

)

Balances at June 30, 2022

 

 

48,674,232

 

 

$

49

 

 

$

608,898

 

 

$

(1,356

)

 

$

(398,533

)

 

$

209,058

 

Exercise of common stock options

 

 

16,659

 

 

 

 

 

 

85

 

 

 

 

 

 

 

 

 

85

 

Issuance of common stock under
   Employee Stock Purchase Plan

 

 

124,351

 

 

 

 

 

 

607

 

 

 

 

 

 

 

 

 

607

 

Vesting of restricted stock units

 

 

76,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock transaction associated with taxes
   withheld on restricted stock units

 

 

(7,606

)

 

 

 

 

 

(50

)

 

 

 

 

 

 

 

 

(50

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

6,782

 

 

 

 

 

 

 

 

 

6,782

 

Issuance of common stock in connection with
   At-The-Market sale, net of issuance costs of $
902

 

 

5,746,849

 

 

 

6

 

 

 

32,706

 

 

 

 

 

 

 

 

 

32,712

 

Net unrealized gain on available-for-
   sale securities

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,488

)

 

 

(19,488

)

Balances at September 30, 2022

 

 

54,631,360

 

 

$

55

 

 

$

649,028

 

 

$

(1,336

)

 

$

(418,021

)

 

$

229,726

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Paid-In-

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2020

 

 

45,752,116

 

 

$

46

 

 

$

559,746

 

 

$

129

 

 

$