Mail Stop 4628
June 29, 2018
William J. Newell
Chief Executive Officer
Sutro Biopharma, Inc.
310 Utah Avenue, Suite 150
South San Francisco, CA 94080
Re: Sutro Biopharma, Inc.
Draft Registration Statement on Form S-1
Submitted June 1, 2018
CIK No. 0001382101
Dear Mr. Newell:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Prospectus Summary, page 1
1. We note your disclosure here and in the Business section that your
preclinical models for
STRO-001 have demonstrated "potent anti-tumor activity" and its
properties "suggest a
low likelihood of off-target toxicity" and potential for improved
therapeutic index, and
for STRO-002 that your preclinical models have demonstrated "superior
inhibition of
tumor growth" and greater linker stability relative to the benchmark
molecule you
created. Please revise your disclosure to eliminate any suggestion that
your candidates
have been or will ultimately be determined to be safe or effective or to
have demonstrated
efficacy for purposes of granting marketing approval by the FDA or
comparable agency,
including comparisons to the current standard of care.
2. We note your statements in this section and throughout your filing that
your product
candidates will be first-in-class and best-in-class, and that your
platform allows you to
William J. Newell
Sutro Biopharma, Inc.
June 29, 2018
Page 2
accelerate the discovery of first-in-class and best-in-class molecules.
Since these
statements imply an expectation of regulatory approval, they are
inappropriate given your
early stage of development and lack of clinical trial data. Please
remove these statements
and similar statements from the descriptions of your platform and
product candidates.
Our Pipeline, page 2
3. We note your product pipeline tables here and in your Business section
include programs
that are in the discovery phase. Because you have not identified a
product candidate for
these programs, it appears premature to include them in a product
pipeline table. Please
revise or advise. Please also include in the table columns for Phases 2
and 3 and the
indications intended to be pursued for each product candidate.
Corporate Information, page 5
4. Please explain the difference between XpressCF and XpressCF+ at an
appropriate place
in your filing.
Use of Proceeds, page 68
5. We note your disclosure that the expected net proceeds of the offering
will not be
sufficient to fund any of your product candidates through regulatory
approval, and you
will need to raise substantial additional capital to complete the
development and
commercialization of your product candidates. Please clarify the
expected stage of
development you expect to achieve with your current assets and the
proceeds from this
offering.
Management's Discussion and Analysis of Financial Condition and Results of
Operations, page
79
Critical Accounting Polices and Estimates, page 88
Stock-Based Compensation, page 90
6. Revise the disclosure regarding your estimates of the fair value of
stock options granted
to your employees to specify the methods used to determine the fair
value of the shares
underlying these awards and to provide additional detail regarding the
nature of the
material assumptions involved in making those estimates. Separately,
provide us with an
analysis explaining the reasons for material differences between recent
valuations of your
common stock and your estimated offering price, once it is available.
William J. Newell
Sutro Biopharma, Inc.
June 29, 2018
Page 3
Business, page 94
Our Product Candidates, page 104
7. We note that the studies discussed in this section provide data without
providing proper
context for such data. For each of the studies discussed in this
section, please disclose the
date(s) of the studies, the sponsor and the location; scope and size;
dosage and duration;
and actual results observed, including any negative findings. Please
also state whether
you have published the data for any of your studies.
8. You disclose on pages 107 and 111 that the toxicology studies you
conducted to
investigate the safety of STRO-001 and STRO-002, respectively, did not
result in any
"unexpected toxicity findings." Please revise your disclosure to explain
what you mean
by this statement.
Collaboration and License Agreements, page 112
Celgene Collaboration, page 112
9. We note that you are eligible to earn tiered royalties ranging from
single-digit to low
double-digit percentages on worldwide sales of any commercial product
that may result
from the 2017 Calgene Agreement. This disclosure is too broad and could
imply that
your royalty rate is up to 49%. Please revise your disclosure here and
throughout the
prospectus to give investors a reasonable idea of the amount of the
royalty rate that does
not exceed 10 percentage points.
Merck KGaA, Darmstadt, Germany Collaboration, page 113
10. We note your disclosure that the MDA Agreement term expires on a
product-by-product
and country-by-country basis, and that upon expiration, Merck KGaA,
Darmstadt,
Germany will have a fully paid-up, royalty free, perpetual, and
irrevocable non-exclusive
license, with the right to grant sublicenses, under certain of your
intellectual property
rights. Please disclose the years, or range of years if more
appropriate, in which this
agreement will expire.
Intellectual Property, page 116
11. Please revise your disclosure to clearly identify your material patents
or patent
applications, including the patents or patent applications relating to
your Xpress CF
Platform, and your product candidates, STRO-001 and STRO-002. For each
such
material patent or patent application, please disclose (1) whether the
patents relate to
XpressCF Plaform or the specific product(s) to which such patents or
patent applications
relate; (2) whether the patents are owned or licensed from Stanford or
other third parties
(3) the type of patent protection; (4) patent expiration dates and
expected expiration dates
William J. Newell
Sutro Biopharma, Inc.
June 29, 2018
Page 4
for patent applications; and (5) the jurisdictions where such patents
were issued and such
patent applications are pending.
Management, page 131
12. We note that your website indicates that you have a scientific advisory
board and a
clinical advisory board. Please revise your disclosure to describe the
role or function of
each of your scientific advisory board and clinical advisory board, and
whether there are
any rules of procedures governing these boards. Please also disclose how
members of
such boards are compensated.
Certain Relationships and Related Party Transactions, page 150
Letter Agreement with Four Oaks, page 151
13. Please revise your disclosure to describe the compensation terms under
you letter
agreement with Four Oaks. In this regard, please clarify whether your
future payments to
Four Oaks of amounts equal to 2% of any future payments received under
your 2017
Celgene Agreement are your only payment obligations under the letter
agreement. Please
also file a copy of this agreement as an exhibit or explain why it is
not required to be
filed. Refer to 601(b)(10)(ii)(B) of Regulation S-K.
Principal Stockholders, page 153
14. Consistent with Item 403 of Regulation S-K and Exchange Act Rule 13d-3,
please
identify the person or persons who directly or indirectly exercise sole
or shared voting
and/or dispositive power with respect to the shares held by Mutual Fund
Series Trust, on
behalf of Eventide Healthcare & Life Sciences Fund.
General
15. Please supplementally provide us with copies of all written
communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your
behalf, present to potential investors in reliance on Section 5(d) of
the Securities Act,
whether or not they retain copies of the communications.
16. Please provide us proofs of all graphics, visual, or photographic
information you will
provide in the printed prospectus prior to its use, for example in a
preliminary prospectus.
Please note that we may have comments regarding this material.
William J. Newell
Sutro Biopharma, Inc.
June 29, 2018
Page 5
You may contact Wei Lu, Staff Accountant, at (202) 551-3725 or Ethan
Horowitz,
Accounting Branch Chief, at 202-551-3311 if you have questions regarding
comments on the
financial statements and related matters. Please contact Irene
Barberena-Meissner, Staff
Attorney, at (202) 551-6548 or Kevin Dougherty, Staff Attorney, at (202)
551-3271 with any
other questions.
Sincerely,
/s/ John Reynolds
John Reynolds
Assistant Director
Office of Natural
Resources
cc: Rob Freedman, Esq.
Fenwick & West LLP