Oppenheimer starts Sutro Biopharma at Outperform, sees 200% possible upside

Oppenheimer initiated coverage of Sutro Biopharma (STRO) with an Outperform rating and $10 price target, which represents about 200% potential upside. The firm views Sutro as “a unique clinical-stage company pioneering the development of next-generation antibody-drug conjugates,” or ADCs, with lead asset luveltamab tazivibulin targeting platinum-resistant ovarian cancer, or PROC. The drug, which will be competing against ImmunoGen’s (IMGN) Elahere, has Phase 1 results supporting a potentially superior profile and the firm view Sutro as “underappreciated” compared to ImmunoGen, noting that it forecasts about $1.4B peak risk-adjusted revenue in 2036, primarily from luvelta.