SUTRO BIOPHARMA, INC.

Previous wording

You should read the following discussion of our financial condition and results of operations in conjunction with our condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements related to our expectations regarding our future results of operations and financial position, the use and adequacy of our existing cash to achieve our business goals, business strategy, market size for our product candidates, potential future milestone and royalty payments, potential growth opportunities, nonclinical and clinical development activities, efficacy and safety profile of our product candidates, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of nonclinical studies and clinical trials, collaboration with third parties, the impact of health pandemics, tariffs, regional geopolitical conflicts, changes in interest rates, inflation, potential uncertainty with respect to the debt ceiling and potential government shutdown related thereto, on our operations, and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “predict,” “target,” “intend,” “could,” “would,” “should,” “project,” “plan,” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Current wording

You should read the following discussion of our financial condition and results of operations in conjunction with our condensed financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to historical financial information, this discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations, intentions and belief. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “Risk Factors” under Part II, Item 1A below. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements related to our expectations regarding our future results of operations and financial position, the use and adequacy of our existing cash to achieve our business goals, business strategy, market size for our product candidates, potential future milestone and royalty payments, potential growth opportunities, nonclinical and clinical development activities, efficacy and safety profile of our product candidates, our ability to maintain and recognize the benefits of certain designations received by product candidates, the timing and results of nonclinical studies and clinical trials, collaboration with third parties, the impact of health pandemics, tariffs, regional geopolitical conflicts, changes in interest rates, inflation, potential uncertainty with respect to the debt ceiling and government shutdowns, on our operations, and the receipt and timing of potential regulatory designations, approvals and commercialization of product candidates, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “predict,” “target,” “intend,” “could,” “would,” “should,” “project,” “plan,” “expect,” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

Previous wording

Our most advanced preclinical stage programs are STRO-004 and STRO-006, with STRO-004 being our current highest priority wholly-owned product candidate. STRO-004 is a single homogeneous ADC directed against tissue factor, or TF, which we intend to develop for the treatment of solid tumors. We anticipate filing an IND for STRO-004 in the second half of 2025.

Current wording

Our most advanced preclinical stage programs are STRO-004 and STRO-006, with STRO-004 being our current highest priority wholly-owned product candidate. STRO-004 is a single homogeneous ADC directed against tissue factor, or TF, which we intend to develop for the treatment of solid tumors. We believe STRO-004 has the potential to be a best-in-class ADC targeting TF. In preclinical studies, STRO-004 has demonstrated potent antitumor activity and the potential for a differentiated safety profile. We filed an IND and received IND clearance for STRO-004 in the fourth quarter of 2025, and plan to initiate clinical development by the end of 2025.

Previous wording

We believe STRO-004 has the potential to be a best-in-class ADC targeting TF. Preclinical data suggest that STRO-004 has potent antitumor activity and the potential for a differentiated safety profile. Our other preclinical assets include STRO-006, an ADC targeting Integrinβ6, and dual-payload ADCs, including iADCs. We plan to file three INDs by the end of 2027, including for STRO-004 and for STRO-006.

Current wording

Our other preclinical assets include STRO-006, an ADC targeting Integrinβ6, or Iβ6, and multiple dual-payload ADCs, including iADCs. We believe STRO-006 has the potential to be a best-in-class ADC targeting Iβ6 based on preclinical studies that have demonstrated potent antitumor activity and the potential for a differentiated safety profile. IND enabling activities are underway for STRO-006 that could potentially support an IND filing in connection with this program in the second half of 2026.

Previous wording

Enabled through our proprietary XpressCF® and XpressCF+® platforms, we have entered into multitarget, product-focused collaborations with leading pharmaceutical and biotechnology companies in the field of oncology. We have an ongoing multitarget iADC collaboration with Astellas. Recently, Ipsen made a strategic decision not to advance the STRO-003 program under its partnership with us, following the review of new data and developments in the ROR1 landscape. STRO-003 continues to be recognized as a well-engineered ADC candidate.

Current wording

Enabled through our proprietary XpressCF® and XpressCF+® platforms, we have entered into multitarget, product-focused collaborations with leading pharmaceutical and biotechnology companies in the field of oncology and we may enter into additional such collaborations in the future. We have an ongoing multitarget iADC collaboration with Astellas. In addition, we may partner or out-license our wholly owned preclinical or clinical development programs depending on resource and capital availability.

Previous wording

In March 2025, the Board of Directors approved a strategic portfolio review, or the Restructuring Plan, with an associated planned reduction in our workforce, as a result of a review of current strategic priorities, resource allocation, and cost reduction intended to reduce operating costs, streamline operations and extend our cash runway. In connection with this Restructuring Plan, we deprioritized further investment in luvelta and refocused our activities on our preclinical pipeline, including STRO-004 and STRO-006. In addition, we intend to decommission or otherwise exit our San Carlos manufacturing facility by the end of 2025 and rely on an external manufacturing strategy, in which all elements of our product candidates and platform reagents are manufactured by qualified third-party CMOs.

Current wording

In March 2025, the Board of Directors approved a strategic portfolio review, or the March 2025 Restructuring Plan, with an associated planned reduction in our workforce, as a result of a review of current strategic priorities, resource allocation, and cost reduction intended to reduce operating costs, streamline operations and extend our cash runway. In connection with this March 2025 Restructuring Plan, we deprioritized further investment in our late stage clinical development product candidate, luveltamab tazevibulin, and refocused our activities on our preclinical pipeline, including STRO-004 and STRO-006. In addition, we intend to decommission our San Carlos manufacturing facility by the end of 2025 and rely on an external manufacturing strategy, in which all elements of our product candidates and platform reagents are manufactured by qualified third-party CMOs. In September 2025, we announced a further reduction in our workforce of approximately one third of our remaining employees, or the September 2025 Restructuring Plan, and, together with the March 2025 Restructuring Plan, the Restructuring Plans, which was intended to further reduce operating costs, streamline operations, and extend our cash runway.

Previous wording

We do not have any products approved for commercial sale and have not generated any revenue from commercial product sales. We had a loss from operations of $71.9 million and a net loss of $87.5 million for the six months ended June 30, 2025. We had a loss from operations of $105.3 million and a net loss of $106.2 million for the six months ended June 30, 2024. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We cannot assure you that we will have net income or that we will generate positive cash flow from operating activities in the future. As of June 30, 2025, we had an accumulated deficit of $874.3 million. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, access, marketing, manufacturing and distribution. We expect a reduction in operating expenses as we strategically reprioritize our resources. However, we anticipate our operating expenses would increase if we advance our product candidates through clinical development, seek regulatory approvals for our product candidates, engage in other research and development activities, expand our pipeline of product candidates, maintain and expand our intellectual property portfolio, seek regulatory and marketing approval for any product candidates that we may develop, acquire or in-license other assets or technologies, ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval, and operate as a public company. In light of our current resources and the cost of development, we are continuing our process of evaluating our programs and spending. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other research and development and general and administrative activities, and the timing of achievement and receipt of upfront, milestones and other collaboration agreement payments.

Current wording

We do not have any products approved for commercial sale and have not generated any revenue from commercial product sales. We had a loss from operations of $120.3 million and a net loss of $144.3 million for the nine months ended September 30, 2025. We had a loss from operations of $173.2 million and a net loss of $155.0 million for the nine months ended September 30, 2024. Substantially all of our losses have resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations. We cannot assure you that we will have net income or that we will generate positive cash flow from operating activities in the future. As of September 30, 2025, we had an accumulated deficit of $931.2 million. We do not expect to generate any revenue from commercial product sales unless and until we successfully complete development and obtain regulatory approval for one or more of our product candidates, which we expect will take a number of years. If we obtain regulatory approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, access, marketing, manufacturing and distribution. We expect a reduction in operating expenses as we strategically reprioritize our resources. However, we anticipate our operating expenses would increase if we advance our product candidates through clinical development, seek regulatory approvals for our product candidates, engage in other research and development activities, expand our pipeline of product candidates, maintain and expand our intellectual property portfolio, seek regulatory and marketing approval for any product candidates that we may develop, acquire or in-license other assets or technologies, ultimately establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval, and operate as a public company. In light of our current resources and the cost of development, we are continuing our process of evaluating our programs and spending. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials, our expenditures on other research and development and general and administrative activities, and the timing of achievement and receipt of upfront, milestones and other collaboration agreement payments.

Previous wording

In March 2025, we announced the Restructuring Plan resulting in the prioritization of our three wholly-owned preclinical programs in our next-generation ADC pipeline. We also announced that we are deprioritizing additional investment into development of luvelta across all indications and are reducing headcount by nearly 50 percent. In connection with these events, we reported the following restructuring costs in "Restructuring and Related Costs" in our interim condensed Statements of Operations for the three and six months ended June 30, 2025:

Current wording

In March 2025, we announced the March 2025 Restructuring Plan resulting in the prioritization of our three wholly-owned preclinical programs in our next-generation ADC pipeline. We also announced that we are deprioritizing additional investment into development of luvelta across all indications and are reducing headcount by nearly 50 percent. In September 2025, we announced a further reduction in our workforce of approximately one third of our remaining employees. In connection with these events, we reported the following restructuring costs in "Restructuring and Related Costs" in our interim condensed Statements of Operations for the three and nine months ended September 30, 2025:

Previous wording

Total revenue increased by $38.0 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This was primarily due to a $56.0 million increase from Ipsen, which included the derecognition of $53.2 million in deferred revenue as a result of Ipsen's strategic decision not to advance the STRO-003 program under its partnership with us, and a $2.7 million increase in manufacturing activities supporting clinical trial supply. These increases were partially offset by a $17.3 million decrease from Astellas, of which $16.2 million related to ongoing performance on partially unsatisfied performance obligations, including a $5.7 million cumulative catch-up adjustment due to a change in transaction price reflecting a $7.5 million contingent payment earned in the first quarter of 2025 for the initiation by Astellas of the first IND-enabling toxicology study under the Astellas Agreement. An additional $0.9 million was from the financing component under the Astellas Agreement, and $0.2 million was from research and development services. Additionally, there was a $0.7 million decrease in Vaxcyte revenue from research and development services.

Current wording

Total revenue increased by $1.2 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. This was primarily due to a $1.9 million increase from Astellas, of which $0.9 million related to ongoing performance on partially unsatisfied performance obligations under the Astellas Agreement, and a $1.6 million increase in research and development services and materials supply, partially offset by a $0.6 million decrease from the financing component under the Astellas Agreement. Additionally, there was a $0.5 million decrease in Vaxcyte revenue from research and development services.

Previous wording

Research and development expense decreased by $23.7 million, or 38%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The overall decrease was due primarily to decreases of $12.1 million in preclinical research and clinical development expenses, $6.3 million in outside services, $4.1 million in personnel-related expenses, $0.8 million in facilities expenses, $0.2 million in laboratory supplies, and $0.1 million in travel-related expenses. Following the implementation of the Restructuring Plan, we began reporting restructuring costs and other costs associated with the deprioritized luvelta program under "Restructuring and related costs" in our interim condensed financial statements.

Current wording

Research and development expense decreased by $22.3 million, or 36%, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The overall decrease was due primarily to decreases of $7.2 million in preclinical research and clinical development expenses, $6.5 million in personnel-related expenses, $4.8 million in outside services, $2.8 million in laboratory supplies, and $1.1 million in allocated facilities and IT-related expenses. Following the implementation of the March 2025 Restructuring Plan, we began reporting restructuring costs and other costs associated with the deprioritized luvelta program under "Restructuring and related costs" in our interim condensed financial statements.

Previous wording

General and administrative expense decreased by $2.0 million, or 16%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The overall decrease was due primarily to decreases of $1.9 million in personnel-related expenses, $0.1 million in equipment and office-related expenses, and $0.1 million in insurance and other services expenses, partially offset by a $0.1 million increase in allocated facilities-related expenses. Some general and administrative expenses previously recorded under this category are now reported under "Restructuring and related costs" in our interim condensed financial statements following the implementation of our Restructuring Plan.

Current wording

General and administrative expense decreased by $5.6 million, or 39%, during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. The overall decrease was due primarily to decreases of $4.0 million in personnel-related expenses, $1.8 million in outside services, $0.1 million in travel-related expenses, and $0.1 million in equipment and office-related expenses, partially offset by a $0.5 million increase in allocated facilities and IT-related expenses. Some general and administrative expenses previously recorded under this category are now reported under "Restructuring and related costs" in our interim condensed financial statements following the implementation of our Restructuring Plans.

Previous wording

The following table presents the components of restructuring and related costs, as further described and disclosed in Note 10 to our condensed financial statements:

Current wording

The following table presents the components of restructuring and related costs from the March 2025 Restructuring Plan, as further described and disclosed in Note 10 to our condensed financial statements:

Previous wording

Interest income decreased by $2.4 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, due primarily to lower average investment balances and lower average rates of return in 2025.

Current wording

Interest income decreased by $2.9 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, due primarily to lower average investment balances and lower average rates of return in 2025.

Previous wording

Non-cash interest expense increased by $2.4 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. Non-cash interest expense was recognized on our deferred royalty obligation related to the June 2023 sale of future Vaxcyte royalties pursuant to the Purchase Agreement, using the effective interest method based on the imputed interest rate derived from estimated amounts and timing of potential future royalty payments to be earned and received by Blackstone from Vaxcyte under the 2015 License Agreement.

Current wording

Non-cash interest expense increased by $1.8 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024. Non-cash interest expense was recognized on our deferred royalty obligation related to the June 2023 sale of future Vaxcyte royalties pursuant to the Purchase Agreement, using the effective interest method based on the imputed interest rate derived from estimated amounts and timing of potential future royalty payments to be earned and received by Blackstone from Vaxcyte under the 2015 License Agreement.

Previous wording

Interest and other income (expense), net, decreased by $0.7 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a decrease of $0.9 million from the financing component related to the Astellas Agreement, partially offset by a $0.2 million increase from foreign exchange fluctuations.

Current wording

Interest and other income (expense), net, decreased by $22.9 million during the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to a $23.7 million gain on the sale of Vaxcyte common stock recognized during the three months ended September 30, 2024, partially offset by a $0.6 million decrease from the financing component related to the Astellas Agreement and a $0.1 million decrease from foreign exchange fluctuations.

Previous wording

Total revenue increased by $42.4 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This was primarily due to a $56.0 million increase from Ipsen, which included the derecognition of $53.2 million in deferred revenue resulting from Ipsen's strategic decision not to advance the STRO-003 program under its partnership with us, and a $2.7 million increase in manufacturing activities supporting clinical trial supply. These increases were partially offset by an $11.8 million decrease from Astellas, of which $10.4 million related to ongoing performance on partially unsatisfied performance obligations, including a $5.7 million cumulative catch-up adjustment due to a change in transaction price reflecting a $7.5 million contingent payment earned in the first quarter of 2025 for the initiation by Astellas of the first IND-enabling toxicology study under the Astellas Agreement. An additional $1.9 million decrease was from the financing component under the Astellas Agreement, partially offset by a $0.5 million increase in research and development services and materials supply. Revenue also decreased by $1.1 million from Vaxcyte, and $0.9 million from Tasly, both related to research and development services and materials supply.

Current wording

Total revenue increased by $43.6 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. This was primarily due to a $56.1 million increase from Ipsen, which included the derecognition of $53.2 million in deferred revenue resulting from Ipsen's strategic decision not to advance the STRO-003 program under its partnership with us, and a $2.9 million increase in manufacturing activities supporting clinical trial supply. These increases were partially offset by an $9.9 million decrease from Astellas, of which $9.6 million related to ongoing performance on partially unsatisfied performance obligations, including a $5.7 million cumulative catch-up adjustment due to a change in transaction price reflecting a $7.5 million contingent payment earned in the first quarter of 2025 for the initiation by Astellas of the first IND-enabling toxicology study under the Astellas Agreement. An additional $2.5 million decrease was from the financing component under the Astellas Agreement, partially offset by a $2.2 million increase in research and development services and materials supply. Revenue also decreased by $1.6 million from Vaxcyte, and $0.9 million from Tasly, both related to research and development services and materials supply.

Previous wording

Research and development expense decreased by $29.0 million, or 24%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The overall decrease was due primarily to decreases of $12.5 million in preclinical research and clinical development expenses, $9.4 million in outside services, $5.8 million in personnel-related expenses, $1.0 million in allocated facilities-related expenses, $0.2 million in equipment and office-related expenses, and $0.1 million in travel-related expenses. Following the implementation of the Restructuring Plan, we began reporting restructuring costs and other costs associated with the deprioritized luvelta program under "Restructuring and related costs" in our interim condensed financial statements.

Current wording

Research and development expense decreased by $51.2 million, or 28%, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The overall decrease was due primarily to decreases of $19.7 million in preclinical research and clinical development expenses, $14.2 million in outside services, $12.3 million in personnel-related expenses, $2.6 million in laboratory supplies, $2.2 million in allocated facilities and IT-related expenses, and $0.2 million in travel-related expenses. Following the implementation of the Restructuring Plans, we began reporting restructuring costs and other costs associated with the deprioritized luvelta program under "Restructuring and related costs" in our interim condensed financial statements.

Previous wording

General and administrative expense decreased by $1.5 million, or 6%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The overall decrease was due primarily to decreases of $1.7 million in personnel-related expenses, $0.2 million in equipment and office-related expenses, and $0.1 million in travel-related expenses, partially offset by increases of $0.3 million in allocated facilities-related expenses and $0.2 million in outside services. Some general and administrative expenses previously recorded under this category are now reported under "Restructuring and related costs" in our interim condensed financial statements following the implementation of our Restructuring Plan.

Current wording

General and administrative expense decreased by $7.1 million, or 18%, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. The overall decrease was due primarily to decreases of $5.7 million in personnel-related expenses, $1.7 million in outside services, $0.3 million in equipment and office-related expenses, and $0.3 million in travel-related expenses, partially offset by an increase of $0.8 million in allocated facilities and IT-related expenses. Some general and administrative expenses previously recorded under this category are now reported under "Restructuring and related costs" in our interim condensed financial statements following the implementation of our Restructuring Plans.

Previous wording

The following table presents the components of restructuring and related costs, as further described and disclosed in Note 10 to our condensed financial statements:

Current wording

The following table presents the components of restructuring and related costs from the March 2025 Restructuring Plan, as further described and disclosed in Note 10 to our condensed financial statements:

Previous wording

Interest income decreased by $3.3 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due primarily to lower average investment balances and lower average rates of return in 2025.

Current wording

Interest income decreased by $6.2 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, due primarily to lower average investment balances and lower average rates of return in 2025.

Previous wording

Non-cash interest expense increased by $4.5 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. Non-cash interest expense was recognized on our deferred royalty obligation related to the June 2023 sale of future Vaxcyte royalties pursuant to the Purchase Agreement, using the effective interest method based on the imputed interest rate derived from estimated amounts and timing of potential future royalty payments to be earned and received by Blackstone from Vaxcyte under the 2015 License Agreement.

Current wording

Non-cash interest expense increased by $6.3 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024. Non-cash interest expense was recognized on our deferred royalty obligation related to the June 2023 sale of future Vaxcyte royalties pursuant to the Purchase Agreement, using the effective interest method based on the imputed interest rate derived from estimated amounts and timing of potential future royalty payments to be earned and received by Blackstone from Vaxcyte under the 2015 License Agreement.

Previous wording

Interest and other income (expense), net, decreased by $1.6 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a decrease of $1.9 million from the financing component related to the Astellas Agreement, partially offset by a $0.3 million increase from foreign exchange fluctuations.

Current wording

Interest and other income (expense), net, decreased by $29.8 million during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to a $32.1 million gain on the sale of Vaxcyte common stock recognized during the nine months ended September 30, 2024 and a $0.2 million increase from foreign exchange fluctuations, partially offset by a $2.6 million decrease from the financing component related to the Astellas Agreement,.

Previous wording

To date, we have incurred significant net losses, and negative cash flows from operations. Our operations have been funded primarily by payments received from our collaborators, and net proceeds from equity sales, debt, sale of shares of Vaxcyte common stock, and a royalty monetization. As of June 30, 2025, we had cash, cash equivalents and marketable securities of $205.1 million, and an accumulated deficit of $874.3 million.

Current wording

To date, we have incurred significant net losses, and negative cash flows from operations. Our operations have been funded primarily by payments received from our collaborators, and net proceeds from equity sales, debt, sale of shares of Vaxcyte common stock, and a royalty monetization. As of September 30, 2025, we had cash, cash equivalents and marketable securities of $167.6 million, and an accumulated deficit of $931.2 million.

Previous wording

In September 2020, we entered into a sublease agreement, (the "Sublease with Five Prime Therapeutics, Inc."), or (the "Sublessor"), for approximately 115,466 square feet, in a building located in South San Francisco, California, or (the "Premises"). We use the Premises as our corporate headquarters and to conduct (or expand) research and development activities. We commenced making monthly payments for the first 85,755 square feet of the Premises, or Initial Premises, in July 2021, with occupancy of such space commencing in August 2021. We were provided early access to the Initial Premises in the fourth quarter of 2020 to conduct certain planning and tenant improvement work. The Sublease is subordinate to the lease agreement, effective December 12, 2016, between the Sublessor and HCP Oyster Point III LLC (the "Landlord"). We commenced using the remaining 29,711 square feet of the Premises, (the "Expansion Premises") on July 1, 2023 under the sublease agreement. The Sublease for both the Initial Premises and Expansion Premises will expire on December 31, 2027. With a commencement date on the Initial Premises of July 1, 2021, and Expansion Premises of July 1, 2023, the aggregate estimated base rent payments due over the term of the Sublease are approximately $39.1 million, including the approximately $5.2 million in potential financial benefit to us of base rent abatement to be provided by the Sublessor, subject to certain terms contained in the Sublease. The Sublease contains customary provisions requiring us to pay our pro rata share of utilities and a portion of the operating expenses and certain taxes, assessments and fees of the Premises and provisions allowing the Sublessor to terminate the Sublease upon the termination of the lease with the Landlord or if we fail to remedy a breach of certain of our obligations within specified time periods. Additionally, we posted a security deposit of $0.9 million, which is reflected as restricted cash in non-current assets on our Balance Sheets as of June 30, 2025 and December 31, 2024.

Current wording

In September 2020, we entered into a sublease agreement, (the "Sublease with Five Prime Therapeutics, Inc."), or (the "Sublessor"), for approximately 115,466 square feet, in a building located in South San Francisco, California, or (the "Premises"). We use the Premises as our corporate headquarters and to conduct (or expand) research and development activities. We commenced making monthly payments for the first 85,755 square feet of the Premises, or Initial Premises, in July 2021, with occupancy of such space commencing in August 2021. We were provided early access to the Initial Premises in the fourth quarter of 2020 to conduct certain planning and tenant improvement work. The Sublease is subordinate to the lease agreement, effective December 12, 2016, between the Sublessor and HCP Oyster Point III LLC (the "Landlord"). We commenced using the remaining 29,711 square feet of the Premises, (the "Expansion Premises") on July 1, 2023 under the sublease agreement. The Sublease for both the Initial Premises and Expansion Premises will expire on December 31, 2027. With a commencement date on the Initial Premises of July 1, 2021, and Expansion Premises of July 1, 2023, the aggregate estimated base rent payments due over the term of the Sublease are approximately $40.4 million, including the approximately $5.2 million in potential financial benefit to us of base rent abatement to be provided by the Sublessor, subject to certain terms contained in the Sublease. The Sublease contains customary provisions requiring us to pay our pro rata share of utilities and a portion of the operating expenses and certain taxes, assessments and fees of the Premises and provisions allowing the Sublessor to terminate the Sublease upon the termination of the lease with the Landlord or if we fail to remedy a breach of certain of our obligations within specified time periods. Additionally, we posted a security deposit of $0.9 million, which is reflected as restricted cash in non-current assets on our Balance Sheets as of September 30, 2025 and December 31, 2024.

Previous wording

Cash used in operating activities for the six months ended June 30, 2025 was $112.6 million. Our net loss of $87.5 million included non-cash amounts of $19.0 million for non-cash interest expense on our deferred royalty obligation, $10.8 million for stock-based compensation, $3.8 million for depreciation and amortization, $2.8 million for non-cash lease expense, and $2.1 million for the accretion of discount on marketable securities. Cash used in operating activities also reflected a net change in operating assets and liabilities of $59.7 million, due to a decrease of $63.4 million in deferred revenue resulting from Ipsen's strategic decision not to advance the STRO-003 program under its partnership with us, a decrease of $5.7 million in accounts payable due to timing of payments, a decrease of $3.6 million in operating lease liabilities, and a decrease in $1.1 million in accrued compensation primarily due to severance payments made under the Restructuring Plan, partially offset by an increase of $7.1 million in accrued expenses and other liabilities due primarily to increases in CMO restructuring costs as a result of the deprioritization of luvelta, and a decrease of $6.4 million in prepaid expenses and other assets due to a decrease in clinical trials and CMO-related activities as a result of the deprioritization of STRO-002.

Current wording

Cash used in operating activities for the nine months ended September 30, 2025 was $150.8 million. Our net loss of $144.3 million included non-cash amounts of $28.7 million for non-cash interest expense on our deferred royalty obligation, $12.4 million for stock-based compensation, $5.7 million for depreciation and amortization, $4.3 million for non-cash lease expense, and $2.9 million for the accretion of discount on marketable securities. Cash used in operating activities also reflected a net change in operating assets and liabilities of $55.1 million, due to a decrease of $69.6 million in deferred revenue resulting from Ipsen's strategic decision not to advance the STRO-003 program under its partnership with us and revenue recognized under the Astellas Agreement, a decrease of $5.5 million in operating lease liabilities, and a decrease of $3.0 million in accounts payable due to timing of payments, partially offset by a decrease of $14.4 million in prepaid expenses and other assets due to a decrease in clinical trials and CMO-related activities as a result of the deprioritization of STRO-002, a decrease of $4.7 million in accounts receivable due primarily to decreases in billing as a result of Ipsen's strategic decision not to advance the STRO-003 program and the completion of technology transfer, and an increase of $3.6 million in accrued expenses and other liabilities due primarily to increases in CMO restructuring costs as a result of the deprioritization of luvelta.

Previous wording

Cash used in operating activities for the six months ended June 30, 2024 was $55.3 million. Our net loss of $106.2 million included non-cash charges of $14.5 million for non-cash interest expense on our deferred royalty obligation, $12.2 million for stock-based compensation, $8.5 million for the unrealized gain on equity securities as a result of the remeasurement of the estimated fair value of our investment in Vaxcyte common stock, $5.5 million for the accretion of discount on marketable securities, $3.5 million for depreciation and amortization, and $2.5 million for non-cash lease expense. Cash used in operating activities also reflected a net change in operating assets and liabilities of $31.7 million, due to a decrease of $29.1 million in accounts receivable primarily from receiving $25.0 million from Vaxcyte as the second of two installment payments for the Option exercise price under the Vaxcyte Agreement, and an increase of $21.2 million in deferred revenue primarily due to the upfront payment from Ipsen, partially offset by revenue recognized under the Astellas Agreement, which were partially offset by a decrease of $8.7 million in accounts payable, accrued expenses and other liabilities due to timing of payments, a decrease of $4.7 million in accrued compensation expense primarily due to bonuses paid in 2024 in connection with certain company 2023 goal achievements, a decrease of $3.0 million in our operating lease liability, and an increase of $2.1 million in prepaid expenses and other assets.

Current wording

Cash used in operating activities for the nine months ended September 30, 2024 was $119.8 million. Our net loss of $155.0 million included non-cash amounts of $32.1 million for the realized gain on the sale of Vaxcyte common stock, $22.4 million for non-cash interest expense on our deferred royalty obligation, $18.8 million for stock-based compensation, $8.2 million for the accretion of discount on marketable securities, $5.4 million for depreciation and amortization, and $3.8 million for non-cash lease expense. Cash used in operating activities also reflected a net change in operating assets and liabilities of $24.6 million, due to a decrease of $29.4 million in accounts receivable primarily from receiving $25.0 million from Vaxcyte as the second of two installment payments for the Option exercise price under the Vaxcyte Agreement, and an increase of $16.1 million in deferred revenue primarily due to the upfront payment from Ipsen, partially offset by revenue recognized under the Astellas Agreement, which were partially offset by a decrease of $10.0 million in accounts payable, accrued expenses and other liabilities due to timing of payments, a decrease of $4.7 million in our operating lease liability, an increase of $4.6 million in prepaid expenses and other assets, and a decrease of $1.5 million in accrued compensation expense primarily due to bonuses paid in 2024 in connection with certain company 2023 goal achievements.

Previous wording

Cash used in investing activities of $13.7 million for the six months ended June 30, 2025 was primarily related to purchases of marketable securities of $171.0 million, and purchases of property and equipment of $1.3 million, principally for laboratory equipment, partially offset by maturities and sales of marketable securities of $135.7 million, and sales of marketable securities of $22.8 million.

Current wording

Cash provided by investing activities of $26.3 million for the nine months ended September 30, 2025 was primarily related to purchases of marketable securities of $260.9 million, and purchases of property and equipment of $1.5 million, principally for laboratory equipment, partially offset by maturities and sales of marketable securities of $251.3 million, and sales of marketable securities of $37.5 million.

Previous wording

Cash used in investing activities of $16.3 million for the six months ended June 30, 2024 was primarily related to purchases of marketable securities of $292.3 million, and purchases of property and equipment of $1.2 million, principally for laboratory equipment, partially offset by maturities and sales of marketable securities of $277.2 million,.

Current wording

Cash provided by investing activities of $131.0 million for the nine months ended September 30, 2024 was primarily related to maturities and sales of marketable securities of $394.5 million, and net proceeds from the sale of Vaxcyte common stock of $74.0 million, partially offset by purchases of marketable securities of $335.5 million, and purchases of property and equipment of $2.0 million, principally for laboratory equipment.

Previous wording

Cash provided by financing activities for the six months ended June 30, 2025 was immaterial, primarily related to $0.2 million of net proceeds received from participants in our employee equity plans, partially offset by a $0.2 million tax payment related to the net shares settlement of vested restricted stock units.

Current wording

Cash provided by financing activities of $0.1 million for the nine months ended September 30, 2025 was primarily related to $0.4 million of net proceeds received from participants in our employee equity plans, partially offset by a $0.3 million tax payment related to the net shares settlement of vested restricted stock units.

Previous wording

Cash provided by financing activities of $93.1 million for the six months ended June 30, 2024 was primarily related to $71.5 million of net proceeds from the underwritten offering, $25.0 million of proceeds from Ipsen USA upon the purchase of our common stock under the Ipsen Investment Agreement, $0.9 million of net proceeds received from participants in our employee equity plans, and $0.1 million of proceeds received from the exercise of common stock options, partially offset by debt repayment of $4.1 million and a $0.4 million tax payment related to the net shares settlement of vested restricted stock units.

Current wording

Cash provided by financing activities of $94.1 million for the nine months ended September 30, 2024 was primarily related to $71.5 million of net proceeds from the underwritten offering, $25.0 million of proceeds from Ipsen USA upon the purchase of our common stock under the Ipsen Investment Agreement, $1.8 million of net proceeds received from participants in our employee equity plans, and $0.3 million of proceeds received from the exercise of common stock options, partially offset by debt repayment of $4.1 million and a $0.5 million tax payment related to the net shares settlement of vested restricted stock units.