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On Friday, Wedbush analyst downgraded Sutro Biopharma (NASDAQ:STRO)’s stock rating from Outperform to Neutral and significantly reduced the price target from $8.00 to $2.00. The adjustment followed Sutro Biopharma’s recent announcement during their fourth-quarter and full-year 2024 earnings report. The company revealed a strategic reprioritization of its portfolio, including the deprioritization of its luvelta treatment. The stock has declined over 16% in the past week, with the current market capitalization at approximately $103 million. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value model, despite analyst targets ranging from $4 to $20.
Sutro Biopharma stated that their decision to shift focus was driven by financial considerations and not by any doubts about luvelta’s therapeutic potential. While InvestingPro data shows the company maintains a healthy current ratio of 3.09 and holds more cash than debt, it’s currently experiencing rapid cash burn. The company will now concentrate its efforts on developing STRO-004, a new lead candidate that is a tissue-factor targeted antibody-drug conjugate (ADC) with a novel exatecan payload. The firm plans to submit an Investigational New Drug (IND) application for STRO-004 in the second half of 2025, targeting solid tumors.
The company has laid out a timeline for STRO-004, expecting Phase 1a/b dose escalation data in 2026 and dose expansion data in 2027. Initial response data for STRO-004 is anticipated in the first half of 2027. Additionally, Sutro Biopharma is preparing to initiate a clinical study for STRO-006, an integrin-beta 6 targeted ADC for solid tumors, in 2026. Dose escalation data from this study is expected in 2027. In the same year, the company aims to submit an IND for its dual payload program.
Despite the reduction in focus on luvelta, Sutro Biopharma is actively engaging in discussions with multiple potential partners to continue its development. As part of the portfolio restructuring, the company also announced a workforce reduction of approximately 50%. This move is expected to streamline operations and better align Sutro Biopharma’s resources with its strategic objectives. With the stock down nearly 69% over the past year and analysts revising earnings estimates downward, investors can access comprehensive analysis and 15 additional key insights through InvestingPro’s detailed research report.
In other recent news, Sutro Biopharma announced a significant restructuring in its drug development strategy, which includes the discontinuation of its lead program, luvelta, and a nearly 50% reduction in its workforce. This strategic pivot led JMP analysts to downgrade Sutro Biopharma’s stock rating from Market Outperform to Market Perform. The company is redirecting its focus toward three preclinical candidates, with plans to initiate clinical trials for STRO-004 in the second half of 2026 and file a new drug application for STRO-006 in mid-2026. Sutro Biopharma’s financial position remains strong, with cash and equivalents totaling $316.9 million, expected to support operations until at least the fourth quarter of 2026. Additionally, the company has appointed Jane Chung as the new Chief Executive Officer, succeeding Bill Newell, who will remain in an advisory role. The company’s collaborations with Ipsen (EPA:IPN) and Astellas continue to be a priority, with potential milestone payments and royalties up to $2 billion. Sutro Biopharma is also seeking a partner for the luvelta program, despite promising clinical data, to focus on its early pipeline. These developments were shared during a conference call and webcast.
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