STRO · Sutro Biopharma
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $13.61
Note written ·
Price against the kill line
27.8% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $13.61, on record since 11 November 2026. The shares are down 55.9% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $13.61, which sits over the 50-day average of closes and would show the shares leading the S&P 500 again. A signed ADC platform partnership adding cash, or STRO-004 expansion data with confirmed responses, would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 12 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 9.1
- Revenue, change on a year (%)
- −6.1
- Operating margin (%)
- −241.3
- Net cash, cash less debt ($M)
- 142
- Enterprise value to sales (×)
- 0.5
All filed numbers
What Sutro Biopharma reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 9.1 | −6.1 | −241.3 |
| first filed | 9.8 | −84.6 | −303.8 |
| first filed | 14.5 | −16.5 | −204.2 |
| first filed | 11.6 | −21.4 | −326.7 |
| first filed | 9.7 | +13.8 | −499.9 |
| first filed | 63.7 | +148.0 | −5.2 |
| Pre-tax income ($M) | −31.5 |
| Net income ($M) four quarters: −155 | −31.5 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +94.2 |
| Operating cash flow ($M) | −129 |
| Capital spending ($M) | Not reported |
| Free cash flow ($M) | Not available |
| Cash and short-term investments ($M) | 142 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 142 |
| Deferred revenue ($M) −21.1% on a year | 10.1 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 12.8 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | −133 |
| Market value ($M) | 163 |
| Enterprise value, market value plus net debt ($M) no debt reported | 20.8 |
| Enterprise value to sales (×) no debt reported | 0.5 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | Not meaningful |
| Free-cash-flow yield (%) | Not available |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 11.8% of shares outstanding sold short, 6.3 days of average trading to cover, +6.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $0 |
The thesis
Sutro Biopharma's shares are more likely to lag the S&P 500 over the next three months. Cash is shrinking, a partnered program has ended, and the clinical data that could change the picture is guided to 2027. The first-half 2027 update on STRO-004 settles the case.
Sutro reported third-quarter 2026 results on 12 November 2026. Cash, cash equivalents and marketable securities were $142.2 million at 30 September 2026, against $164.3 million at 30 June 2026. The net loss was $31.5 million, or $1.90 per share, against $56.9 million, or $6.66 per share, a year earlier (company 8-K, 12 November 2026).
The company now says its cash runway supports operations "into the first half of 2028". The second-quarter release on 12 August 2026 said funding "into at least the second quarter of 2028". Merck discontinued MK-1484, an IL-2 agonist (an immune-signalling protein) partnered with Sutro since 2018, on 7 November 2026, per Fierce Biotech.
The shares closed at $9.59 on 12 November 2026, down from $10.26 on 11 November 2026. That is 78.1% below the 52-week intraday high of $43.85 on 15 May 2026. The three-month change is −53.2%. The market has already priced in the loss of the Merck program and a long wait for data.
Bullish and bearish views on Sutro Biopharma, Inc.
The bull case on Sutro Biopharma, Inc. (STRO), in brief: spending is falling. The bear case: a partnered program has ended.
Bull case
- Spending is falling. Research, development and general expenses were $31.0 million in the third quarter of 2026, against $48.6 million a year earlier (company results, 12 November 2026). The net loss per share was $1.90 against $1.91 expected by analysts, per a news headline of 12 November 2026.
- Astellas paid a milestone. Astellas dosed the first patient in a second dual-payload program (B7-H3 target), and Sutro received a $10 million milestone payment in October 2026 (company results, 12 November 2026).
- Two programs are moving into the clinic. First patient was dosed in the Phase 1 trial of STRO-006, an antibody-drug conjugate (ADC) aimed at ITGB6, in October 2026, with initial data guided to the second half of 2027. STRO-227 is advancing toward a Phase 1 start in early 2027.
- STRO-004 has a dated follow-up. The 12 August 2026 update described confirmed and unconfirmed partial responses to the tissue-factor-targeting ADC across 49 patients (data cutoff 24 July 2026). Sutro plans the next update and expansion cohorts in select indications in the first half of 2027.
- A partnering push is staffed. Sutro named Lucas Donigian Senior Vice President, Business Development, effective 29 September 2026, and said it is seeking ADC platform collaborations. A signed deal would add cash without selling shares.
Bear case
- A partnered program has ended. Fierce Biotech reported on 7 November 2026 that Merck dropped MK-1484 as part of routine pipeline prioritization. The company's third-quarter release does not quantify any effect on milestone income.
- Revenue missed and is lumpy. Third-quarter revenue was $9.1 million, mainly from Astellas, against $9.7 million a year earlier and a $10.342 million analyst estimate cited in a 12 November 2026 news headline. Second-quarter 2026 revenue was $9.8 million against $63.7 million in the second quarter of 2025.
- Runway wording is less firm. The 12 November 2026 release says "into the first half of 2028", where the 12 August 2026 release said "into at least the second quarter of 2028". Cash fell from $164.3 million to $142.2 million between 30 June 2026 and 30 September 2026.
- Share supply has roughly doubled. Shares outstanding were 16,581,171 on 7 August 2026 (Form 10-Q), against 8,584,309 on 31 December 2025, after a first-half 2026 offering of 7,868,383 shares. Weighted-average shares for the third quarter were 16,583,806. An up-to-$100 million at-the-market equity program registered in June 2026 remains available.
- Efficacy evidence is thin. The 12 August 2026 disclosure covered 49 patients across eight tumour types, and part of the responses were unconfirmed. The sample is too small to support a broad efficacy conclusion.
Price setup
The shares closed at $9.59 on 12 November 2026. The 50-day average of closes is $13.39 and the 200-day average is $22.78. The last close sits below both.
The 52-week closing low is $7.30 on 2 December 2025, after the 1-for-10 reverse split of December 2025. The 52-week intraday high is $43.85 on 15 May 2026. Closes in the past week ran from $9.20 on 5 November 2026 to $10.61 on 9 November 2026.
The only recent Form 4 is dated 22 September 2026: Chief Scientific Officer Hans-Peter Gerber exercised 3,750 options on 18 September 2026, and 1,345 shares were withheld for tax at $15.34. It records a tax withholding.
Catalysts ahead
- ~31 March 2027 (est.): STRO-227 Phase 1 trial start, guided to early 2027. A first-patient announcement would show the wholly owned dual-payload program is on schedule.
- ~30 June 2027 (est.): End of the guided first-half 2027 window for the next STRO-004 update and expansion cohorts. Response counts and longer follow-up would test whether the early responses hold; this is the event that settles the call.
- ~31 December 2027 (est.): End of the guided second-half 2027 window for initial STRO-006 Phase 1 data. The first clinical read on the ITGB6-targeting ADC; a slip into 2028 would lengthen the wait.
What would change the view
A daily close above $13.61, which sits over the 50-day average of closes and would show the shares leading the S&P 500 again. A signed ADC platform partnership adding cash, or STRO-004 expansion data with confirmed responses, would also show the shares leading.
What it trades with
The shares trade on company-specific clinical and financing news. The 53.2% three-month decline came with no index-level driver. Small-cap oncology biotechs with ADC programs and recent equity raises react to the same funding-market conditions.
Merck's exit concerns a partnered program. It carries no direct read-across to Sutro's wholly owned STRO-004, STRO-006 and STRO-227.
The evidence, claim by claim (8)
- Cash, cash equivalents and marketable securities were $142.2 million at 30 September 2026, against $164.3 million at 30 June 2026; runway guided into the first half of 2028. Sutro 8-K and third-quarter 2026 results release · as of
- Third-quarter 2026 revenue was $9.1 million against $9.7 million a year earlier; net loss was $31.5 million, or $1.90 per share, against $56.9 million, or $6.66 per share. Sutro 8-K and third-quarter 2026 results release · as of
- Astellas dosed the first patient in a second dual-payload program, and Sutro received a $10 million milestone payment in October 2026. Sutro third-quarter 2026 results release · as of
- Merck discontinued development of MK-1484, the IL-2 agonist partnered with Sutro since 2018, calling it routine pipeline prioritization. Fierce Biotech · as of
- Shares outstanding were 16,581,171 at 7 August 2026, against 8,584,309 at 31 December 2025; 7,868,383 shares were issued in a first-half 2026 offering. Sutro Form 10-Q for the quarter ended 30 June 2026 · as of
- Weighted-average basic and diluted shares for the third quarter of 2026 were 16,583,806. Sutro third-quarter 2026 results release · as of
- Research, development and general expenses were $31.0 million in the third quarter of 2026, against $48.6 million a year earlier. Sutro third-quarter 2026 results release · as of
- Share close of $9.59 on 12 November 2026, 78.1% below the 52-week intraday high of $43.85 set on 15 May 2026. Split-adjusted daily closes · as of
Sources
- SUTRO BIOPHARMA, INC. - Form 8-K - FY2026 · sec.gov
- Merck abandons Sutro-partnered IL-2 drug in 'routine pipeline prioritization' · fiercebiotech.com
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