SUTRO BIOPHARMA, INC. Fair Value Disclosure
3. Fair Value Measurements
The following table sets forth the fair value of the Company’s financial assets and liabilities measured on a recurring basis by level within the fair value hierarchy:
|
|
December 31, 2025 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
51,333 |
|
|
$ |
51,333 |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial paper |
|
|
29,139 |
|
|
|
— |
|
|
|
29,139 |
|
|
|
— |
|
Corporate debt securities |
|
|
16,952 |
|
|
|
— |
|
|
|
16,952 |
|
|
|
— |
|
Asset-backed securities |
|
|
7,280 |
|
|
|
— |
|
|
|
7,280 |
|
|
|
— |
|
U.S. government securities |
|
|
29,927 |
|
|
|
29,927 |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
134,631 |
|
|
$ |
81,260 |
|
|
$ |
53,371 |
|
|
$ |
— |
|
|
|
December 31, 2024 |
|
|||||||||||||
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
$ |
68,474 |
|
|
$ |
68,474 |
|
|
$ |
— |
|
|
$ |
— |
|
Commercial paper |
|
|
50,932 |
|
|
|
— |
|
|
|
50,932 |
|
|
|
— |
|
Corporate debt securities |
|
|
94,257 |
|
|
|
— |
|
|
|
94,257 |
|
|
|
— |
|
Asset-backed securities |
|
|
40,522 |
|
|
|
— |
|
|
|
40,522 |
|
|
|
— |
|
U.S. government securities |
|
|
49,644 |
|
|
|
49,644 |
|
|
|
— |
|
|
|
— |
|
U.S. agency securities |
|
|
9,582 |
|
|
|
— |
|
|
|
9,582 |
|
|
|
— |
|
Total |
|
$ |
313,411 |
|
|
$ |
118,118 |
|
|
$ |
195,293 |
|
|
$ |
— |
|
Where applicable, the Company uses quoted market prices in active markets for identical assets to determine fair value. This pricing methodology applies to Level 1 investments, which are comprised of money market funds and U.S. government securities.
If quoted prices in active markets for identical assets are not available, then the Company uses quoted prices for similar assets or inputs other than quoted prices that are observable, either directly or indirectly. These investments are included in Level 2 and consist of commercial paper, corporate debt securities, asset-backed securities, and U.S. agency securities. These assets are valued using market prices when available, adjusting for accretion of the purchase price to face value at maturity.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability.
In certain cases where there is limited activity or less transparency around inputs to valuation, securities are classified as Level 3 within the valuation hierarchy. As of December 31, 2025 and 2024, the deferred royalty obligation related to the sale of future Vaxcyte royalties was classified as Level 3 within the valuation hierarchy. Refer to Note 9 below for information relating to the Purchase Agreement between the Company and Blackstone, pursuant to which the Company sold to Blackstone its 4% royalty, or revenue interest, in potential future net sales of Vaxcyte’s pneumococcal conjugate vaccine, or PCV, products, including VAX-24 and VAX-31.
Investments in Equity Securities
During the year ended December 31, 2024, the Company sold 667,780 shares of Vaxcyte common stock at their fair market value of approximately $74.0 million, net of transaction cost and recognized a of $32.1 million which is recorded under interest and other income (expense), net, in the Statements of Operations. As of December 31, 2025 and 2024, the Company did not hold any shares of Vaxcyte common stock.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 23, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 25, 2024 | |
| 2022 | Mar 30, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 18, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Apr 1, 2019 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.