Sutro Biopharma Closes Second Tranche of $36M C-round Financing

May 08, 2012

Sutro Biopharma Inc. is ready for war.

The South San Francisco biotech company closed the second tranche of a $36 million Series C venture round, it said Tuesday, and is readying the infrastructure it needs to produce highly targeted, cancer-fighting antibody-drug conjugates.

Sutro closed the first tranche of $20 million in November 2010. But before delivering the remaining $16.5 million, investors Skyline Ventures, Lilly Ventures, Amgen Ventures, SV Life Sciences    SV Life Sciences Latest from The Business Journals Sutro Biopharma lines up funding, targets cancer7 Boston VCs make Forbes' Midas ListJazz to acquire EUSA Pharma for 0M in cash Follow this company and Alta Partners    Alta Partners Latest from The Business Journals Sutro Biopharma lines up funding, targets cancerDrug discovery firm Scynexis raises .5MChemoCentryx refiles IPO plans, looks to raise M Follow this company wanted the 9-year-old company to go beyond the theoretical with its technology, said CEO William Newell.

What’s more, they wanted Sutro to move closer to manufacturing and to prove that the company’s antibody-drug conjugates would be attractive to potential biopharma partners.

Manipulating antibodies -- Y-shaped proteins that identify and destroy bacteria, viruses and other foreign bodies -- to target cancer is nothing new. But the one-two punch of combining antibodies and drugs is producing plenty of excitement in research and corporate circles. South San Francisco-based Genentech    Genentech Latest from The Business Journals Sutro Biopharma lines up funding, targets cancerFor BofA, Golden Gate anniversary bash is a financial bridge too farBioMed, Genentech swap Peninsula properties Follow this company Inc., for example, expects to submit its "armed antibody," T-DM1, to the Food and Drug Administration later this year. That therapy combines the active ingredient in the groundbreaking breast cancer drug Herceptin with a chemotherapy agent.

Analysts expect T-DM1, which uses some technology licensed from ImmunoGen (NASDAQ: IMGN) of Waltham, Mass., to be a blockbuster. Genentech, which has some 30 conjugates in its pipeline, also is working with Seattle Genetics Inc.    Seattle Genetics Inc. Latest from The Business Journals Seattle Genetics pares Q1 loss, stock slipsMillennium starts Phase 3 cancer trial with Seattle GeneticsSeattle Genetics, Millennium to collaborate with Ventana on diagnostic for Adcetris Follow this company (NASDAQ: SGEN) and Spirogen Ltd. on other types of antibody-drug conjugates.

The double whammy of antibody-drug conjugates allows therapy to get deeper into cancer cells. What also is attractive to drug makers is the ability of the combo drug to deliver the therapy consistently to a specific spot, reducing toxic side effects.

Sutro is taking conjugates one step further, Newell said. While T-DM1 manipulates an antibody using a natural amino acid, for example, Sutro’s technology centers on a non-natural amino acid warhead that allows the therapy to land at the best “anchor point” on a cell, Newell said. That allows Sutro to use a variety of warheads, Newell said, and could make Sutro’s technology attractive to biopharma companies.

Sutro is no stranger to dealing with Big Pharma. It closed a peptide drug deal early last year with Pfizer Inc. (NYSE: PFE).

“We are confident that we will have one, maybe two, meaningful collaborations in the antibody-drug conjugate space in the next 12 to 18 months,” Newell said. “There is a lot of enthusiasm about this space, and when you have a novel platform, it will get a lot of interest.”

To get there, Sutro has hired about 20 people over the past year or so, Newell said, including Trevor Hallam as chief scientific officer.

Sutro now has about 50 employees, Newell said.

About a year ago, Sutro also leased 10,000 square feet in San Carlos for preclinical and Phase I clinical manufacturing. It recently finished moving its equipment into the Industrial Avenue building, the former home of defunct Point Biomedical Corp.

“I can see additional people -- particularly as we strike collaborations with companies,” Newell said.