Sutro Biopharma, a US-based cancer drug developer backed by pharmaceutical firms Amgen, Celgene, Eli Lilly and Merck & Co, raised $85m in its initial public offering on Thursday.
The company listed on the Nasdaq Global Market, issuing almost 5.7 million shares priced at $15.00 each. Its shares opened at $15.40 before closing at $15 on Friday.
Founded in 2003 as Fundamental Applied Biology, Sutro Biopharma is working on immuno-oncology therapies, antibody drug conjugates and bispecific antibodies targeting cancer and autoimmune diseases.
Sutro’s drug discovery platform, XpressCF, is exploiting research undertaken by founder James Swartz, the James H. Clark professor at Stanford University’s School of Engineering.
The company has two lead assets: STRO-001, a therapy for non-Hodgkin lymphoma and multiple myeloma, and STRO-002, aimed at ovarian and endometrial cancers.
Sutro will use $35m to $40m of the proceeds to fund further development of STRO-001 through 2021, and $30m to $35m to advance the development of STRO-002 through 2021. Additional capital will go to technology development and other product candidates.
The IPO follows an $84.5m series E round in July this year backed by Amgen Ventures and Lilly Ventures, respective corporate venturing vehicles for Amgen and Celgene, as well as Merck & Co and Eli Lilly.
Samsara BioCapital and Surveyor Capital co-led the series E round, which included Skyline Ventures, SV Health Investors, Eventide, Nexthera Capital, Vida Ventures and funds managed by Tekla Capital Management. Merck’s investment included a commitment to future funding.
Amgen Ventures, Lilly Ventures and Celgene took part in a $26m series D round for Sutro in 2013 together with Alta Partners, Skyline Ventures and SV Life Sciences. The same consortium, minus Celgene, had already put its weight behind a $36.5m series C round in 2010.
Merck & Co owned a 12.5% stake ahead of the offering and purchased $10m worth of additional shares through a concurrent private placement to retain an 11.9% stake. Celgene’s shareholding was diluted from 10.5% to 7.6%, while Lilly Ventures’ stake dropped from 9.4% to 6.8%.
Other notable investors in Sutro include Skyline (8.6% post-IPO), Alta Partners (8.5%), SV Health (7.9%), Citadel (4.6%). Vida Ventures and Samsara Biocapital (5.6% each).
Cowen and Piper Jaffray are joint book-running managers for the offering while JMP Securities and Wedbush PacGrow are co-managers. They have been granted a 30-day option to purchase about 850,000 more shares, worth approximately $12.8m.
