Sutro Biopharma: A Promising Oncology Play

Investors undaunted by the risk/reward equation and in search for strong returns will often turn to the biotech sector. This is a unique corner of the stock market where success is easily defined: present successful solutions for diseases and the market will pay its reward. The problem of course is that the space is fraught with risk and dependent on the treatments making the grade – no mean task when put under the regulators’ intense scrutiny.

For H.C. Wainwright’s Andrew Fein, Sutro Biopharma (STRO) is a name that offers much promise, based on the company’s XpressCF platform which is producing “formidable ADC candidates for oncology.”

“We believe Sutro Biopharma can continue to be a standout performer in the antibody-drug conjugate (ADC) space, primarily driven by their novel cell-free (CF) XpressCF platform, which has generated multiple clinical candidates to date,” the 5-star analyst opined.

Sutro’s pipeline is all based on the platform and includes several collaborations with some well-known pharma names (Merck, Bristol Myers Squibb) which should help the XpressCF platform “sustain longer term growth.” Fein, however, thinks Sutro’s value lies mostly with its two “wholly owned assets.”

These are STRO-002 (folate receptor alpha (FolRa-α) ADC), indicated for the treatment of ovarian cancer (OC), and STRO-001 (CD74 ADC), intended as a therapy for Non-Hodgkin’s lymphoma (NHL) and multiple myeloma (MM).

The former has impressed in a Phase 1 study, with updated results presented during ASCO 2021 showing “signals of efficacy and tolerability” which compared favorably to competitors’ offerings at the same stage of development.

Fein believes the candidate has the potential to be the “best-in-class FolRa-α targeting ADC for patients with platinum-resistant ovarian cancer.” In 2H21, the company will meet with the FDA to discuss the development pathway ahead for the drug.

As for STRO-001, during ASH 2020, Sutro presented preliminary results from the Phase 1 trial which showed 1 CR (complete response) with 2 PRs (partial response) in heavily pretreated patients with DLBCL (diffuse large B-cell lymphoma) – the most common type of NHL – 1 SD (stable disease) in marginal zone lymphoma (MZL) and 2 SDs in follicular lymphoma (FL).

Add into the mix a tolerability profile which reported no ocular toxicity, and Fein says the data is “encouraging.”

“Overall,” the analyst further added, “We view the recent update during ASH 2020 to bode well for future positive readouts and believe that STRO-001 has a high probability of being active across more tumor types.”

To this end, Fein rates STRO shares a Buy along with a $35 price target. This figure suggests ~77% upside from current levels. (To watch Fein’s track record, click here)

Although STRO has only a few analysts currently throwing the hat in the ring, all are bullish on the stock. STRO’s analyst consensus rating is a Strong Buy, with all 3 analysts giving it the thumbs up. The 12-month average price target stands at $30.67, which implies ~55$ upside for the year ahead. (See STRO stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.