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Piper Sandler upgraded Sutro Biopharma (NASDAQ:STRO) from Neutral to Overweight on Monday, setting a price target of $2.00 for the biopharmaceutical company focused on antibody-drug conjugates (ADCs). According to InvestingPro data, the stock has seen significant volatility, falling over 76% in the past year, with shares currently trading at $0.80.
The upgrade comes as Sutro plans to file three Investigational New Drug (IND) applications for next-generation ADCs over the next three years. These include STRO-004 targeting tissue factor in the second half of 2025, STRO-006 targeting integrin αvβ6 in mid-2026, and its first dual-payload ADC in 2027. Despite its robust pipeline, InvestingPro analysis indicates the company is quickly burning through cash, though it maintains more cash than debt on its balance sheet.
Sutro has established strategic partnerships to advance its pipeline, including a collaboration with Ipsen (EPA:IPN) for its ROR1 ADC STRO-003 and development of two immunostimulatory ADCs with Astellas. These partnerships could yield more than $1.6 billion in milestone payments plus low double-digit to mid-teens royalties.
The company is seeking a partner for its FolRα ADC luveltamab tazevibulin, which is being evaluated in multiple clinical trials including a Phase III trial in ovarian cancer, a registrational trial in CBF/GLIS AML, and a Phase II trial in FolRα-positive NSCLC.
Sutro ended the first quarter of 2025 with $249 million in cash, sufficient to fund operations into 2027, and currently trades at a negative $181 million enterprise value, according to Piper Sandler. With a current ratio of 2.16, InvestingPro data shows the company’s liquid assets exceed short-term obligations, though analysts don’t expect profitability this year. Get access to 8 more exclusive ProTips and comprehensive financial analysis with an InvestingPro subscription.
In other recent news, Sutro Biopharma has announced the appointment of Greg Chow as its new Chief Financial Officer. Chow, who has extensive experience in finance and operations within the biotech sector, is expected to enhance Sutro’s financial strategy. In addition, the company disclosed the upcoming departure of Dr. John Freund from its Board of Directors, effective after the Annual Meeting of Shareholders in June 2025. Dr. Freund’s decision to leave is not due to any disagreements with the company, and he will continue to advise the management in a consulting role.
Furthermore, H.C. Wainwright analysts have downgraded Sutro Biopharma’s stock rating from "Buy" to "Neutral," significantly reducing the price target from $12.00 to $2.00. This downgrade follows Sutro’s strategic realignment, which now focuses on advancing its next-generation antibody-drug conjugate pipeline. The analysts have removed luvelta from their valuation model, basing their new valuation solely on collaboration revenue. They have cited several risks, including regulatory challenges and commercialization hurdles, that could impact Sutro’s ability to meet the new price target. These developments reflect the firm’s expectations for Sutro’s future financial performance and the inherent risks involved.
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