Stifel starts Sutro Biopharma at buy; PT $25


Stifel initiated coverage of Sutro Biopharma (NASDAQ:STRO) with a “buy” rating and $25 price target. The stock closed at $16.35 on Dec. 2.

Sutro is developing XpressCF, a cell-free protein-synthesis platform that enables rapid screening and optimization of protein-based therapeutics. The company is using the platform primarily to generate antibody-drug conjugates (ADC) and its most advanced clinical-stage assets are a folate receptor alpha-targeting ADC and a CD74-targeting ADC. The company also plans to produce bispecifics and cytokine derivatives.

“Sutro’s XpressCF technology is one of the most potentially disruptive platforms in the protein therapeutics space,” writes analyst Konstantinos Aprilakis, M.D. “We believe that Sutro’s ability to rapidly optimize and screen biologics serve particularly well to the development of ADCs and cytokine-derivatives.”

Dr. Aprilakis said that Sutro’s lead asset, STRO-002, could provide definitive proof-of-concept for the company’s platform while targeting the unmet need of ovarian cancer. “The core of our valuation lies in STRO-002,” the company’s folate receptor alpha ADC, he added.

STRO’s cytokine-derivative program is partnered with Merck and the partnership was extended by one year in March 2020, as a “promising immune-modulating cytokine derivative” is advancing toward IND-enabling studies,” Dr. Aprilakis said.

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