Wednesday, BofA Securities initiated coverage on Sutro Biopharma (NASDAQ: NASDAQ:STRO), a company focused on the development of cancer therapeutics, with a Buy rating and a price target set at $12.00. The firm highlighted the potential of Sutro's lead drug candidate, luvelta, which is an antibody-drug conjugate (ADC) currently in a phase 3 trial for patients with platinum-resistant ovarian cancer (PROC).
According to BofA Securities, luvelta has the potential to address a broader patient population in the PROC segment than currently approved treatments. The drug could potentially be applicable to up to 80% of PROC patients, which would be a significant expansion from the approximately 30% who are eligible for AbbVie (NYSE:ABBV)'s Elahere, another FolRα ADC approved for the same condition.
The firm's positive outlook is based on the commercial opportunity luvelta presents in the PROC market. While not all eligible patients are expected to receive the drug, its potential to meet high unmet needs in oncology makes it an attractive prospect. Moreover, there is a possibility for the drug to be expanded into other oncology indications with similar unmet needs.
Sutro Biopharma's luvelta is one of several drugs in the company's pipeline within the established class of ADCs. These drugs are designed to target and kill cancer cells while sparing healthy cells, which could offer a more effective and less toxic treatment option for patients.
The initiation of coverage by BofA Securities with a Buy rating and a $12 price target reflects confidence in Sutro Biopharma's strategic direction and the clinical development of its leading drug candidate. The market will continue to monitor the progress of luvelta's phase 3 trial and any further developments in the company's pipeline.
InvestingPro Insights
With BofA Securities initiating coverage on Sutro Biopharma (NASDAQ: STRO) and the focus on its lead drug candidate, luvelta, investors may find it useful to consider some key financial metrics and insights. Sutro Biopharma holds a market capitalization of roughly $372 million and has experienced a remarkable revenue growth of nearly 127% over the last twelve months as of Q1 2023. Despite this growth, the company faces challenges, as reflected by its negative gross profit margin of -17.36% and a significant operating loss.
InvestingPro Tips reveal that while Sutro Biopharma has more cash than debt on its balance sheet, it is rapidly burning through cash. Additionally, analysts have revised their earnings downwards for the upcoming period, and they do not anticipate the company will be profitable this year. On a positive note, the company has seen a significant return over the last week and holds liquid assets that exceed short-term obligations.
For investors who are considering Sutro Biopharma as part of their portfolio, it may be beneficial to explore the full range of InvestingPro Tips available at InvestingPro. With an additional 11 tips listed on InvestingPro, subscribers can gain a comprehensive understanding of the company's financial health and market position. To enhance your investment research experience, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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