Sutro Biopharma (STRO) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01We are an early stage biopharmaceutical company. Biotechnology product development is a highly speculative undertaking and involves a substantial degree of risk
2. 02general economic, industry and market conditions, including market volatility, high levels of inflation, changes in interest rates, changes in tariffs and trade restrictions, uncertainty with respect to the federal debt ceiling and budget and potential government shutdowns related thereto
3. 03We or our collaborators’ inability to complete development of or commercialize our product candidates or significant delays in doing so due to one or more of these factors, could have a material and adverse effect on our business, financial condition, results of operations and prospects
4. 04achieving commercially relevant success in the market post approval
5. 05We could encounter delays if prescribing physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles
6. 06If we do not achieve our projected development goals in the time frames we anticipate and project, the commercialization of our products may be delayed and our stock price may decline
7. 07Our approach to the discovery and development of our therapeutic treatments is based on novel technologies, including unprecedented Immunostimulatory Antibody Drug Conjugate, or iADC, and dual Antibody Drug Conjugates, or ADC2 technology, that are unproven and may not result in marketable products
8. 08Results of preclinical studies and early clinical trials may not be predictive of results of future clinical trials
9. 09Interim, top-line, or preliminary data from our clinical trials that we announce may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data
10. 10The market may not be receptive to our product candidates based on a novel therapeutic modality, and we may not generate any future revenue from the sale or licensing of product candidates
11. 11the availability of alternative effective treatments for the disease indications our product candidates are intended to treat and the relative risks, benefits and costs of those treatments
12. 12iADC and ADC2 are novel technologies, which makes it difficult to predict the time, risks and cost of development and of subsequently obtaining regulatory approval of these potential product candidates
13. 13commercialize therapeutics using our novel and unprecedented iADC or ADC2 technology. We may never receive approval to market and commercialize any potential iADC or ADC2 product candidate
14. 14collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates
15. 15We may not successfully engage in strategic transactions, including any additional collaborations we seek, which could adversely affect our ability to develop and commercialize product candidates, impact our cash position, increase our expenses and present significant distractions to our management
16. 16To date, no product developed on a cell-free manufacturing platform has received approval from the FDA, so the requirements for the manufacturing of products using our XpressCF® and XpressCF+® platforms are uncertain
17. 17responsibilities and requirements. Any adverse development or delay in our preclinical studies or clinical trials as a result of our reliance on third parties could have a material and adverse effect on our business, financial condition, results of operations and prospects
18. 18in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our products
19. 19manufacturer an agreement for commercial supply and it is not certain we will be able to come to agreement on terms acceptable to us
20. 20We may not be successful in our efforts to use our XpressCF® and XpressCF+® platforms to expand our pipeline of product candidates and develop marketable products
21. 21We may expend our limited resources to pursue a particular product candidate and fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success
22. 22Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics for our product candidates could harm our drug development strategy and operational results
23. 23we may not realize the full commercial potential of any product candidates that receive marketing approval if, among other reasons, we are unable to appropriately identify patients with the specific genetic alterations targeted by our product candidates
24. 24Our success will depend partially on our ability to develop and protect therapeutics that are safer and more effective than competing products. Our commercial opportunity and success will be reduced or eliminated if competing products are safer, more effective, or less expensive than the therapeutics we develop
25. 25Any inability to attract and retain qualified key management and technical personnel would impair our ability to implement our business plan
26. 26In addition, job candidates and existing employees often consider the value of the stock awards they receive
27. 27below the market price of our common stock, particularly after the expiration of the lock-up agreements described herein
28. 28We will need to grow our organization, and we may experience difficulties in managing our growth and expanding our operations
29. 29Our future growth may depend, in part, on our ability to operate in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties
30. 30Price controls imposed in either the U.S. or foreign markets may adversely affect our future profitability
31. 31Our business entails a significant risk of product liability and our ability to obtain sufficient insurance coverage could have a material and adverse effect on our business, financial condition, results of operations and prospects
32. 32Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
33. 33Our information technology systems could face serious disruptions that could adversely affect our business
34. 34If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be affected adversely
35. 35Any violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences
36. 36Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flows, financial condition or results of operations
37. 37Our ability to use net operating loss carryforwards to offset taxable income could be limited
38. 38generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal net operating losses, is limited to 80% of taxable income (without regard to certain deductions)
39. 39Our cash and investments could be adversely affected if the financial institutions in which we hold our cash and investments fail
40. 40Our financial results may be adversely affected by changes in accounting principles generally accepted in the United States

Risks Related to Intellectual Property

1. 41If we are not able to obtain, maintain and enforce sufficient patent and other intellectual property protection for our technologies or product candidates, development and commercialization of our product candidates may be adversely affected
2. 42intellectual property rights such as patents, as appropriate, the process of obtaining patents is time consuming, expensive and sometimes unpredictable
3. 43If we or our licensors or collaborators fail to maintain the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which could have a material and adverse effect on our business, financial condition, results of operations and prospects
4. 44If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed
5. 45Other companies or organizations may challenge our or our licensors’ patent rights or may assert patent rights that prevent us from developing and commercializing our products
6. 46We may not be able to protect our intellectual property rights throughout the world
7. 47claims against us or our licensors or collaborators. We or our licensors or collaborators may not prevail in any lawsuits that we or our licensors or collaborators initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful
8. 48We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our therapeutics
9. 49Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities
10. 50If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose intellectual property rights that are necessary for developing and protecting our product candidates or we could lose certain rights to grant sublicenses
11. 51the priority of invention of patented technology
12. 52Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time
13. 53Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
14. 54If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected

Risks Related to Government Regulation

1. 55We and/or our collaborators may be unable to obtain, or may be delayed in obtaining, U.S. or foreign regulatory approval and, as a result, unable to commercialize our product candidates
2. 56Delays in obtaining regulatory approval of our manufacturing process may delay or disrupt our commercialization efforts. To date, no product using a cell-free manufacturing process in the United States has received approval from the FDA
3. 57injunctions or the imposition of civil or criminal penalties
4. 58We may face difficulties from healthcare legislative reform measures
5. 59While there have been legislative and judicial efforts to modify, repeal or otherwise invalidate all or certain aspects of the ACA or its implementing regulations, the ACA remains in effect in its current form. It is unclear how any such efforts in the future will impact the ACA or our business
6. 60exclusion from eligibility for the award of government contracts for our products
7. 61Our failure to comply with privacy and data security laws, regulations and standards may cause our business to be materially adversely affected
8. 62If in the future we are unable to establish U.S. or global sales and marketing capabilities or enter into agreements with third parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if they are approved and we may not be able to generate any revenue
9. 63Our product candidates for which we intend to seek approval as biologic products may face competition sooner than anticipated
10. 64If any of our product candidates receives marketing approval and we or others later identify undesirable side effects caused by the product candidates, our ability to market and derive revenue from the product candidates could be compromised
11. 65Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate
12. 66If we decide to seek Fast Track Designation by the FDA for any product candidate, even if successful, it may not lead to a faster development or regulatory review or approval process
13. 67If we decide to seek Orphan Drug Designation for some of our product candidates, we may be unsuccessful or may be unable to maintain the benefits associated with Orphan Drug Designation, including the potential for orphan drug exclusivity
14. 68If we decide to pursue accelerated approval for any of our product candidates, it may not lead to a faster development or regulatory review or approval process and does not increase the likelihood that our product candidates will receive marketing approval
15. 69we disseminate false or misleading promotional materials relating to the relevant product candidate

Risks Related to Our Common Stock

1. 70Our quarterly and annual operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline
2. 71Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management
3. 72establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings
4. 73In addition, Section 203 of the DGCL may discourage, delay or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations and other transactions between us and holders of 15% or more of our common stock
5. 74Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain
6. 75The market price of our stock may be volatile, and you could lose all or part of your investment
7. 76general economic, industry and market conditions
8. 77The future sale and issuance of equity or of debt securities that are convertible into equity will dilute our share capital
9. 78A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline
10. 79Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations
11. 80If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline
12. 81We may be subject to securities litigation, which is expensive and could divert management attention