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SUTRO BIOPHARMA, INC. (STRO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $9.7M grew 14% YoY and modestly beat S&P Global consensus ($9.13M*), while Primary EPS of -$0.56* missed consensus (-$0.40*) amid restructuring and higher non‑cash royalty-related interest expense; GAAP EPS was -$0.67. Revenue was principally from the Astellas collaboration .
  • FDA cleared the IND for STRO‑004 (Tissue Factor ADC) and first patient dosing was guided for before year‑end; on Nov 12 the company disclosed the Phase 1 study is underway. Cash was $167.6M with runway into at least mid‑2027, supported by restructuring and expected milestones .
  • Operating discipline is evident: R&D+G&A fell to $48.6M from $76.4M YoY; however, Q3 included $9.6M in restructuring costs and a $9.7M non‑cash interest expense on future royalties, contributing to a $56.9M net loss .
  • 2026–2027 pipeline catalysts: initial STRO‑004 data targeted mid‑2026; STRO‑006 IND in 2026; first dual‑payload (PTK7) IND pulled forward to 2026/2027; first Astellas iADC program expected to enter the clinic in early 2026—key stock catalysts over the next 12–18 months .

Note: We did not find a Q3 2025 “earnings-call-transcript” in the document system; we used the Nov 12 R&D Day transcript (other-transcript) for call themes and Q&A -.

What Went Well and What Went Wrong

What Went Well

  • IND cleared for STRO‑004; program entered Phase 1 with plan to deliver initial data mid‑2026. CEO: “STRO‑004 … has now entered clinical development.” .
  • Revenue outperformed consensus and rose YoY, driven principally by the Astellas collaboration; operating cost base reduced materially vs prior year through restructuring .
  • Cash runway extended into at least mid‑2027; management highlighted sharpened strategic focus and externalized manufacturing to improve efficiency .

What Went Wrong

  • EPS missed S&P consensus, pressured by $9.6M restructuring charges and higher non‑cash interest expense on sale of future royalties ($9.7M), widening the net loss to $56.9M (vs $48.8M YoY) .
  • Deferred revenue stepped down to $12.7M (from $82.3M at year‑end 2024), reflecting revenue recognition dynamics that can create quarterly lumpiness absent new milestones .
  • Ipsen chose not to advance STRO‑003 in Q2, removing a potential near‑term partnered driver (company noted no change to runway outlook at that time) .

Financial Results

Quarter-over-quarter and YoY comparison

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$8.520 $17.399 $63.745 $9.693
GAAP Net Loss ($USD Millions)$(48.787) $(75.968) $(11.499) $(56.857)
GAAP EPS (basic/diluted)$(0.59) $(0.91) $(0.14) $(0.67)
R&D Expense ($USD Millions)$62.108 $51.597 $38.325 $39.853
G&A Expense ($USD Millions)$14.331 $13.273 $10.343 $8.741
Restructuring & Related Costs ($USD Millions)— $21.043 $18.422 $9.558
Cash, Cash Equivalents & Marketable Securities (end of period, $USD Millions)—$248.972 $205.131 $167.594

Results vs S&P Global consensus (Q3 2025)

MetricConsensusActualOutcome
Revenue ($USD)$9,129,180*$9,693,000*Beat*
Primary EPS ($)-$0.40*-$0.56*Miss*

Values marked with * retrieved from S&P Global.

KPIs and selected balance sheet/cash flow items

KPIQ1 2025Q2 2025Q3 2025
Total Operating Expenses ($USD Millions)$85.913 $67.090 $58.152
Deferred Revenue ($USD Millions)$77.544 $18.870 $12.735
Deferred Royalty Obligation ($USD Millions)$190.301 $200.084 $209.878
Non‑cash Interest Expense on Royalty Sale ($USD Millions)$9.344 $9.647 $9.670
Weighted‑avg Shares (basic/diluted)83,106,013 84,580,125 84,869,864

Segment breakdown: Not applicable; revenue is principally collaboration/licensing (Astellas) and can fluctuate with milestone timing .

Guidance Changes

Metric/ItemPeriodPrevious GuidanceCurrent GuidanceChange
Cash runwayMulti‑year“Into early 2027” (Q2 2025) “Into at least mid‑2027” (Q3 2025) Raised/extended
STRO‑004 (TF ADC)2H 2025–2026“On track to initiate FIH in 2H 2025” (Q2 2025) IND cleared; first patient before year‑end (Nov 6); Phase 1 initiated (Nov 12); initial data mid‑2026 Accelerated/initiated
STRO‑006 (ITGB6 ADC)2026“Expected to enter clinical development in 2026” (Q1/Q2 2025) “IND submission targeted for 2026” (Nov 12) Maintained
Dual‑payload (STRO‑227, PTK7)2026–2027“IND 2027” (Q1/Q2 2025) “IND targeted for 2026/2027” (Nov 12) Pulled forward
Astellas iADC programEarly 2026IND‑enabling tox started in Q1 2025; $7.5M milestone (Q2 2025) “First iADC to enter the clinic in early 2026” (Nov 12) New clinical timing
Restructuring cash costsQ4 2025—~$4.1–$4.3M (majority paid in Q4 2025) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
R&D execution/pipeline focusPivot to next‑gen ADCs; prioritize STRO‑004; three INDs over 3 years IND cleared and Phase 1 initiated for STRO‑004; initial data mid‑2026 Positive execution momentum
Dual‑payload strategyAdvancing dual‑payload platform; IND 2027; Astellas iADC milestone PTK7 selected (STRO‑227); IND 2026/2027; iADC to clinic early 2026 Accelerating timelines
Cost discipline/cash runwayRunway into early 2027; restructuring underway Additional restructuring extends runway to at least mid‑2027 Runway extended
Manufacturing/supply chainDecommission in‑house; externalized manufacturing by YE25 “Fully externalized CDMO network” and modularized mfg for resiliency and lower burn Strategic shift complete/in progress
CollaborationsAstellas iADC programs progressing; Ipsen exited STRO‑003 Astellas iADC clinic entry ~early 2026; collaboration remains a validation pillar External validation continues
RegulatorySTRO‑004 IND planned for 2H25 IND cleared; Phase 1 active Milestone achieved

Management Commentary

  • CEO Jane Chung (Q3 PR): “STRO‑004… has received IND clearance ahead of our projections and remains on track to enter the clinic this year… we’re strengthening our leadership in dual‑payload ADCs… [and] extend our cash runway into at least mid‑2027.”
  • CEO (R&D Day): “With STRO‑004 entering the clinic and our dual‑payload programs accelerating, we are positioned to deliver ADCs… to enable deeper and more durable responses.”
  • Clinical lead Dr. Jonathan Fawcett (R&D Day): STRO‑004 entered dose escalation at 1 mg/kg with “HNSTD of 50 mg/kg” in NHP, aiming for a wide therapeutic window and a rapid path to meaningful exposure and initial data in 2026 .
  • CSO Dr. Hans‑Peter Gerber (R&D Day): Emphasized platform engineering (Fc‑silent antibodies, beta‑glucuronidase linker, tunable non‑natural amino acid conjugation) to increase exposure and safety, foundational for dual‑payload ADCs .

Q&A Highlights

  • STRO‑004 efficacy/safety thresholds: Management expects differentiation on both efficacy and safety, citing GLP‑tox HNSTD of 50 mg/kg and activity signals at doses as low as 1 mg/kg; Phase 1 is designed to reach therapeutic exposures quickly .
  • Dual‑payload toxicity and tunability: Team highlighted the need to tune payload ratios (not 1:1) and showed non‑clinical tolerance at doses up to 25 mg/kg for dual‑payload constructs, enabled by precise, dual‑site conjugation chemistry .
  • Lead indications for STRO‑004: Intend to expand TF‑ADC benefit beyond cervical cancer into lung, head & neck, and pancreatic cancers; cervical included to show differentiation vs TV .
  • PTK7 inclusion approach: PTK7 selected for first dual‑payload program; expression is broad across tumors; company evaluating IHC‑guided enrichment and expects pragmatic eligibility reflecting prior therapies .
  • Rationale for MMAE+Topo‑1: Combines credentialed payloads with complementary MOAs to overcome resistance and potentially sensitize to IO combinations; design de‑risks clinical PoC while differentiating from single‑payload competitors .

Estimates Context

  • S&P Global consensus for Q3 2025: Revenue $9.13M*, Primary EPS -$0.40* (10 estimates each). Actuals: Revenue $9.69M*; Primary EPS -$0.56* → Revenue beat, EPS miss*. GAAP EPS was -$0.67 (press release) .
  • Likely estimate revisions: Collaboration-driven revenue recognized this quarter and expected near‑term milestones support runway, but EPS may drift near term given restructuring charges and continued non‑cash interest expense on royalty sale .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term pipeline execution is the stock’s primary catalyst: STRO‑004 Phase 1 underway with initial data mid‑2026; STRO‑006 IND in 2026; dual‑payload IND accelerated to 2026/2027; Astellas iADC clinic entry early 2026 .
  • Q3 showed good cost control (R&D+G&A down materially YoY) but EPS was weighed by restructuring and royalty‑related non‑cash expense; revenue beat was collaboration‑driven and may be lumpy without milestones .
  • The platform’s tunability and stability (Fc‑silent, beta‑glucuronidase linker, dual non‑natural amino acid conjugation) underpin the dual‑payload thesis to overcome resistance and widen the therapeutic window—central to the medium‑term story .
  • Cash runway into at least mid‑2027 provides time to reach multiple value‑inflection readouts without near‑term financing signaled in company communications .
  • Watch for early clinical tolerability/PK data from STRO‑004 as read‑through to dual‑payload programs; positive safety/exposure could de‑risk STRO‑227 and iADC efforts .
  • Competitive context: Ipsen’s exit on STRO‑003 removes a partner path there, but Astellas collaboration momentum and acceleration of dual‑payload timelines provide external validation .
  • Trading setup: Expect data‑driven volatility around 2026 readouts; interim updates on enrollment progress, dose escalation, and any milestone receipts could serve as interim catalysts .

Appendix: Additional Q3 Items

  • Restructuring cash costs estimated at ~$4.1–$4.3M, majority paid in Q4 2025 .
  • Balance sheet movements: Deferred revenue fell to $12.7M; deferred royalty obligation rose to $209.9M; total liabilities exceeded assets, reflecting the royalty financing liability structure .
  • Revenue mix: Principally Astellas collaboration; future collaboration/license revenue expected to fluctuate with timing of milestones and revenue recognition .