Shares of Sutro Biopharma (STRO) gained almost 50% during the extended trading session on June 27 after it inked a worldwide strategic collaboration and licensing agreement with Astellas Pharma Inc.
The collaboration is aimed at focusing on the discovery and development of novel immunostimulatory antibody-drug conjugates (iADCs).
Headquartered in California, Sutro Biopharma, Inc. is a biotechnology company focused on clinical-stage drug discovery, development, and manufacturing. Its product technologies include XpressCF, anti-body drug conjugates, bispecific and engineered antibodies, and a cGMP facility.
Synergies from the Deal
iADCs are a next-generation modality for treating cancer and are designed to boost anti-cancer activity. It offers the potential for effective and efficient approaches for the treatment of cold tumors, bringing new drug therapies to patients who do not respond to existing cancer immunotherapies.
The combination of Astellas’ global oncology R&D expertise with Sutro’s ability to engineer complex conjugated antibodies will leverage the unique cancer-fighting potential of iADCs as a novel modality.
Per the terms of the collaboration, Sutro will receive an upfront cash payment of $90 million to develop iADCs for three biological targets. Furthermore, it will be eligible to receive an incremental $422.5 million for achieving certain development, regulatory, and commercial milestones for each product candidate, over and above royalties.
CEO’s Comments
Sutro’s CEO, William J. Newell, commented, “iADCs hold promise well beyond the existing success of ADCs. Sutro’s unique conjugation technology enables dual conjugations that site-specifically incorporate a potent cytotoxin that can directly kill tumor cells together with an immunostimulatory component that has the potential to locally prime an immune response to the patient’s particular tumor cells.”
He further added, “We look forward to collaboratively exploring the potential of this approach to treat cold tumors and bring new drug therapies to patients who do not respond to existing immunotherapies.”
Analyst Recommendation
Consensus among analysts is a Strong Buy based on 5 unanimous Buys. The average Sutro Biopharma price target of $23.50 implies a whopping 335.19% upside potential from the current levels.
Conclusion
Sutro Biopharma is a leader in the area of iADCs and has its own original iADC technologies. The strategic partnership is a win-win for both companies broadening the scope of cancer immunotherapies.
