IPOs

Closely allied with (both) Mercks and Celgene, Sutro CEO Bill Newell is laying out all his cards in a new IPO

Sutro CEO Bill Newell didn’t hide his interest in an IPO last year, after he retooled a pact with Celgene that eliminated their buyout option and left the company free to pursue its own destiny. And with tens of millions of Merck dollars backing him after their new cancer drug partnership last month, he’s going for it.

Bill Newell

South San Francisco-based Sutro filed for a $75 million IPO last night, spelling out in considerable detail how he’s been able to raise cash to grow the company from his platform partnerships. Investors added an $85 million round a few days ago to top up the numbers, bringing Sutro’s VC total to $175 million.

There’s lots of cash and billions in milestones to consider here.

We know now that in addition to Merck’s $60 million upfront in July, the pharma giant also bought $30 million in stock while committing to $1.6 billion in milestones. That offers a key Big Pharma endorsement for a platform that concentrates heavily on a new generation of cancer-targeting antibody-drug conjugates and bispecifics. 

In the first three years of the 2014 Celgene deal, Sutro earned $167 million, then bagged another $12.5 million in cash a year ago to focus on four key programs, an antibody-drug conjugate for BCMA that leads the group. Celgene is using their alliance to surround multiple myeloma from several sides with different partners. There are several bispecifics in the deal, which are still not completely in view, with another $12.5 million due on the first IND clearance.

“We are excited about that target for myeloma,” Newell told me last summer. “Three different modalities gives them different patients for whom different therapies might be appropriate. CAR-T is exciting, but not all patients will be eligible for CAR-T. They want to focus on different modalities.”

Milestones range from $295 million to $393.7 million, depending on the drug.

Another set of IND-enabling studies is planned next year for their third strategic partner, Merck KGaA, which has rights to six different cancer targets. That pact has delivered $27 million in payments and research support.

While the partnerships have helped the company grow, Sutro has been spotlighting the early clinical development of a lead therapy dubbed STRO-001, an antibody-drug conjugate targeting CD74, which is expressed on B cell malignancies. And the company intends to continue to build up its own pipeline.

Altogether Sutro has nine different investors who own more than 5% of the stock, with Merck on top with 12.5%. The rest of the group includes Alta Partners, Celgene, Lilly and Skyline Ventures as well as Vida Ventures.

A spinout of theirs, SutroVax, is pursuing a clinical quest aimed at conquering the pneumococcal conjugate vaccine business.

 


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