On Tuesday, Sutro Biopharma (NASDAQ:STRO) maintained its Outperform rating and $8.00 price target from Wedbush, as the company reported first-quarter 2024 earnings. The biopharmaceutical firm has completed enrollment for part one of the REFRaME-01 study, which focuses on its lead asset luvelta, a FolRα-targeted ADC, for the treatment of platinum-resistant ovarian cancer.
The randomized phase of the trial is currently enrolling, with expectations to have approximately 140 sites open by the end of 2024.
Luvelta has the potential to serve a larger population than AbbVie (NYSE:ABBV)'s Elahere, which received approval in March for treating adult patients with high FolRa expressing platinum-resistant ovarian cancer (PROC).
Luvelta could also benefit low to medium FolRα expressing patients who are ineligible for Elahere. Additionally, Sutro Biopharma plans to initiate the REFRaME-P1 pediatric study in the second half of 2024 for CBF/GLIS acute myeloid leukemia (AML), with promising data already presented at the American Society of Hematology (ASH) conference in 2023.
The company is also advancing a phase 2 study combining luvelta with bevacizumab, with enrollment expected to complete in the first half of 2024. However, the continuation of this combination in ovarian and endometrial cancers depends on the availability of resources.
For non-small cell lung cancer (NSCLC), a phase 2 study of luvelta is anticipated to start in the second half of 2024, with initial data expected in the first half of 2025.
Looking ahead, Sutro Biopharma has plans to submit an Investigational New Drug (IND) 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 additional $75 million from an upfront payment and equity investment by Ipsen, and $75 million raised in April from a secondary offering, the firm's operating runway is projected to extend into the first quarter of 2026.
The analyst anticipates potential interim data from studies on luvelta in PROC and CBF/GLIS AML within the next 12 months. The current valuation of Sutro Biopharma is seen as significantly undervalued given the broad potential of luvelta in these markets.
InvestingPro Insights
As Sutro Biopharma (NASDAQ:STRO) continues to make strides in its clinical developments, the financial health and market performance of the company provide additional insight for investors. With a market capitalization of $345.86 million, Sutro Biopharma is trading at a low revenue valuation multiple, which aligns with the analyst's view of the stock being undervalued. This is further supported by recent data showing a significant price uptick over the last six months, at 78.48%, indicating growing investor confidence.
Despite the company's promising clinical progress, InvestingPro Tips highlight that Sutro Biopharma is quickly burning through cash and analysts have revised their earnings downwards for the upcoming period. These factors, coupled with the anticipation of a sales decline in the current year and expectations of net income dropping, suggest that investors should monitor the company's financial management closely. On a positive note, the company holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations, which could provide some financial stability as it pursues its clinical trials.
For those interested in a deeper analysis, there are 11 additional InvestingPro Tips available for Sutro Biopharma, which can offer more nuanced guidance on the stock's potential. To explore these insights, visit https://www.investing.com/pro/STRO and remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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