Piper Sandler has confirmed its Overweight rating on Sutro Biopharma (NASDAQ: NASDAQ:STRO) with a consistent price target of $11.00. The firm noted Sutro's strong financial position, highlighting its $376 million in cash reserves at the end of the second quarter of 2024, in addition to approximately $51.6 million in shares of PCVX.
The biopharmaceutical company has made significant progress in its clinical trials, having enrolled 50 women with FolRα+ platinum-resistant ovarian cancer in the Phase II segment of the REFRaME-O1 trial for its drug candidate luvelta.
The trial has now expanded to enroll around 516 patients who will be administered one of the two luvelta regimens or chemotherapy. An interim analysis of the trial's objective response rate (ORR) and duration of response (DoR) is anticipated, which could potentially lead to accelerated approval, with final progression-free survival (PFS) and overall survival (OS) data sought for full approval.
Additionally, Sutro is set to present Phase Ib data on the combination of luvelta and Avastin for ovarian cancer at the European Society for Medical Oncology (ESMO) conference in September. The company is also preparing for an expansion cohort in the first half of 2025. Plans are in place to initiate the REFRaME-P1 registrational trial in pediatric acute myeloid leukemia (AML) with CBF/GLIS alterations in the second half of 2024.
Sutro is further extending its research into non-small cell lung cancer (NSCLC), with a Phase II study scheduled to begin in the latter half of 2024. Initial findings from this study are expected in the first half of 2025. The company has also entered into a partnership regarding its STRO-003 (ROR1 ADC) with Ipsen, marking another strategic collaboration in its pipeline development.
Sutro reported first-quarter 2024 earnings, with Wedbush maintaining an 'outperform' rating and $8.00 price target for the company. The company has completed enrollment for part one of the REFRaME-01 study, focusing on its lead asset, luvelta, for the treatment of platinum-resistant ovarian cancer. Concurrently, Sutro Biopharma has appointed Sukhi Jagpal as a new board director and Audit Committee member, granting him stock options contingent on his ongoing service.
Deutsche Bank, however, revised its price target for Sutro Biopharma to $10 from the previous $12, citing concerns about cash burn and competitive pressures, but maintains a 'buy' rating. The company is also advancing a phase 2 study combining luvelta with bevacizumab, and a phase 2 study of luvelta for non-small cell lung cancer is anticipated to start in the second half of 2024.
In addition, Sutro Biopharma plans to submit an Investigational New Drug application for STRO-004, a tissue factor targeted ADC for solid tumors, in 2024. The company reported having $267.6 million in cash, cash equivalents, and marketable securities at the end of the quarter, with an operating runway projected to extend into the first quarter of 2026.
InvestingPro Insights
Piper Sandler's upbeat assessment of Sutro Biopharma (NASDAQ:STRO) is further complemented by certain financial metrics and InvestingPro Tips that may interest investors. Notably, Sutro's cash reserves exceed its debt, indicating financial resilience. This aligns with Piper Sandler's emphasis on Sutro's strong financial position. Moreover, the company's high shareholder yield is a positive sign for investors looking for returns. However, it's worth noting that analysts are concerned about the company's cash burn rate and anticipate a sales decline in the current year, which could be a factor for investors to consider.
InvestingPro Data highlights that Sutro Biopharma currently has a market cap of approximately $263.38 million. While the company's P/E ratio is not applicable due to negative earnings, the adjusted P/E ratio for the last twelve months as of Q1 2024 stands at -1.99. Additionally, the recent revenue growth has been impressive at 106.66% for the last twelve months as of Q1 2024, though gross profit margins remain weak at -28.45%.
For those seeking a more in-depth analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/STRO, which delve into aspects such as the company's profitability outlook and stock performance over the last month. These insights can provide a comprehensive view of Sutro Biopharma's financial health and future prospects.
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