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On Friday, Jefferies analyst Roger Song adjusted the price target for Sutro Biopharma (NASDAQ:STRO) shares, bringing it down to $8.00 from the previous $20.00 while keeping a Buy rating on the stock. The revision follows a comprehensive strategic portfolio assessment by the company. The stock, currently trading at $0.81, has seen significant pressure, falling over 70% in the past six months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value metrics.
Sutro Biopharma recently decided to focus on the development of three wholly owned next-generation antibody-drug conjugates (ADCs) that are still in the preclinical stage. As part of this strategic shift, the company will reduce further investment in its luvelta (FRα ADC) across all indications. Additionally, Sutro Biopharma plans to reduce its workforce by approximately 50%.
The company’s new lead candidate ’004, which targets tissue factor, has shown promising preclinical data that is expected to be presented in 2025. The Investigational New Drug (IND) application for this candidate is slated for submission in the second half of 2025. Another candidate, ’006 which targets integrin beta 6, is anticipated to enter clinical trials in 2026.
Sutro Biopharma reported having $316.9 million in cash reserves, which they believe will fund operations until at least the fourth quarter of 2026. This financial position provides the company with a solid runway to advance its prioritized preclinical ADCs and reach significant development milestones in the coming years. InvestingPro data shows the company maintains strong liquidity with a current ratio of 2.6, though it’s currently burning through cash rapidly. For deeper insights into Sutro’s financial health and 12+ additional ProTips, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Sutro Biopharma reported its Q4 2024 earnings, meeting its earnings per share (EPS) forecast of -0.83 and surpassing revenue expectations with $14.8 million against an anticipated $12.15 million. Despite this revenue beat, the company announced significant restructuring efforts, including workforce reductions and operational changes, to manage expenditures and focus on advancing its three preclinical ADC programs. Sutro Biopharma plans to submit three Investigational New Drug (IND) applications over the next three years. The company’s restructuring aims to extend its cash runway into Q4 2026, with anticipated restructuring charges of $40 to $45 million in 2025. Additionally, Sutro Biopharma is exploring partnership opportunities for its Livalca program, which has been deprioritized. Analysts have noted the company’s efforts to secure partnerships and out-licensing opportunities as crucial for its future growth. Despite these developments, the company’s stock experienced a significant decline, reflecting investor concerns over the restructuring and future guidance.
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