Piper Sandler cuts Sutro Biopharma shares target, stays positive on Ipsen deal
Investing.com | Editor Emilio Ghigini
Published Apr 03, 2024 12:30
On Wednesday, Sutro Biopharma (NASDAQ:STRO)'s share price target was lowered to $11 from $12 by Piper Sandler, while the firm maintained an Overweight rating on the company. The adjustment comes as Sutro Biopharma, a clinical-stage drug discovery, development, and manufacturing company, progresses with its pipeline of therapies.
Sutro has recently entered a partnership with Ipsen concerning its preclinical ROR1 ADC STRO-003, securing a $50 million upfront payment and a $25 million equity investment. The deal also includes potential milestones exceeding $800 million and royalties anticipated to be in the low-double digit to mid-teens range. This collaboration is part of Sutro's strategic efforts to advance its oncology portfolio.
The company is actively enrolling participants for the Phase II segment of the pivotal REFRaME-O1 trial, which tests the efficacy of luveltamab tazevibulin in treating platinum-resistant ovarian cancer. Additionally, Sutro is preparing to initiate the REFRaME-P1 trial for pediatric AML in the second half of 2024, a study that may enable accelerated approval and the acquisition of a Priority Review Voucher.
Sutro also plans to submit an Investigational New Drug (IND) application for luveltamab in non-small cell lung cancer (NSCLC) within the first half of 2024. The company concluded the year 2023 with $376 million in cash reserves and has since raised an additional $75 million. Taking into account the recent financial transactions with Ipsen, Sutro's pro forma cash is estimated to be approximately $526 million.
The revised price target reflects Piper Sandler's assessment of the financing's dilutive impact. Despite the reduced target, the firm reiterates its positive Overweight rating on Sutro Biopharma shares, signaling confidence in the company's growth prospects and pipeline development.
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