Sutro Biopharma 2025 Q1 Earnings Misses Targets with Net Loss Widening 30.5%

Sutro Biopharma (STRO) reported its fiscal 2025 Q1 earnings on May 08th, 2025. The company missed expectations with its earnings results, as evidenced by a wider net loss compared to the previous year. Despite the financial challenges, Sutro Biopharma remains focused on advancing its next-generation antibody-drug conjugate (ADC) portfolio. The company plans to submit three new Investigational New Drug (IND) applications over the next three years, beginning with STRO-004. Guidance remains in line with previous projections, and the company is confident in its strategic direction moving forward.

Revenue
Sutro Biopharma's total revenue for Q1 2025 increased by 33.8% compared to Q1 2024, reaching $17.40 million. The revenue was primarily driven by its collaboration with Astellas Pharma Inc., which contributed $16.88 million. Tasly Biopharmaceuticals Co., Ltd. generated $9,000, while Vaxcyte, Inc. added $223,000, and Ipsen Pharma SAS contributed $288,000 to the total revenue.

Earnings/Net Income
Sutro Biopharma's earnings per share improved slightly, narrowing losses to $0.91 per share in 2025 Q1 from $0.95 per share in 2024 Q1, marking a 4.2% improvement. However, the net loss widened significantly, increasing by 30.5% to $75.97 million, indicating continued financial challenges.

Price Action
The stock price of Sutro Biopharma experienced volatility following the earnings report. It dropped by 4.17% during the latest trading day, fell by 10.44% over the past week, but surged 33.56% month-to-date. Investors remain cautious due to the stock's fluctuating nature and inherent risks in the biotech sector.

Post-Earnings Price Action Review
The strategy of purchasing Sutro Biopharma shares after a revenue drop and holding for 30 days proved unsuccessful over the past five years, with the stock suffering significant losses. A sharp decline of 77.64% over the past year and 82.17% over three years reflects a persistent downward trend. The stock's volatility, indicated by a beta of 1.78, underscores its high-risk nature, while the lack of recovery following a quarterly revenue decline remains a concern. Despite a recent 50.89% monthly increase, the stock struggled to stabilize after initial setbacks. The market perception of the stock's growth potential remains low, further impacting its performance. Overall, the strategy of holding STRO shares post-revenue drop has not been fruitful, and investors should consider the stock's volatility and lack of recovery potential before investing.

CEO Commentary
"In the first quarter, we announced a strategic decision to shift Sutro’s product candidate focus from luvelta to our pipeline of wholly-owned novel exatecan and dual-payload ADCs," said Jane Chung, Chief Executive Officer of Sutro Biopharma. She emphasized that STRO-004 has been prioritized as the lead clinical candidate, supported by strong preclinical data indicating its best-in-class potential. Chung highlighted the promising anti-tumor activity and safety profile of STRO-004 and expressed enthusiasm for the unique capabilities of their XpressCF+® cell-free platform in developing novel ADCs, stating the team is inspired by the immense potential of their pipeline.

Guidance
Sutro Biopharma anticipates delivering three new INDs over the next three years, starting with STRO-004 expected to enter clinical studies in the second half of 2025. The company is preparing for the IND submission and a first-in-human study for STRO-004. Additionally, an IND for STRO-006 is anticipated in 2026, with the first dual-payload ADC IND expected to be filed in 2027. The company maintains a strong financial position, with cash runway expected to extend into early 2027, excluding anticipated milestones from existing collaborations.

Additional News
In recent weeks, Sutro Biopharma announced significant organizational changes, including appointing Jane Chung as the new Chief Executive Officer. As part of a strategic restructuring, the company plans to reduce its workforce by nearly 50% and will decommission its manufacturing facility by the end of 2025. These moves are aimed at optimizing resources and focusing on advancing Sutro's next-generation ADC pipeline. The company remains committed to its collaborations and partnerships, which continue to play a crucial role in its strategic priorities. Additionally, Sutro has reported promising preclinical data from its ADC programs at recent industry conferences, highlighting its potential for treating complex cancer types.