Team principal Franz Tost set the ambitious target of finishing sixth in the constructors' championship when the STR8 was launched in February.
But Toro Rosso has banked only one point so far thanks to Jean-Eric Vergne's 10th place in the Malaysian Grand Prix, leaving it eighth in the standings.
Force India has been the outstanding midfield team of 2013 to date, but asked if he was worried about the advantage it and Sauber had, Key told AUTOSPORT: "No, there's a path [to catch up in terms of development].
"Force India have done a great job and are looking strong, probably stronger than everyone expected because in winter testing but we're on a par with Williams and Sauber as far as I can see."
Toro Rosso has upgrades in development, with a package expected for next month's Spanish Grand Prix.
Key, who joined the team last September, made substantial changes to the mechanical package, meaning the launch-specification car was relatively conservative and expected to offer significant development potential.
But Key added that the potential of the car has been shrouded by some set-up difficulties in the first two weekends and that the race pace has been good.
"During the first four races in four very different kinds of track conditions, everyone builds up a massive database with what the tyres are doing and you hit Spain much better prepared," he said.
"We know where some of our weakness are and we'll see where we are in Spain.
"Because we are starting from a point where we have a lot of catching up to do, I don't think we should look at where we are now because it's the start of the long process with a lot of races to go.
"The [development] directions are beginning to define themselves, the team is beginning to understand how it needs to work."
One of the aims for the 2013 Toro Rosso was to make it more responsive to set-up changes.
Last season, the team was limited by having to set its car up in a very narrow window.
But while Key is happy that there has been a step forward in this regard, the set-up range is still limited.
"We have widened the set-up window but it's still quite narrow," he said.
"But we can do a lot of stuff and some of that [limitation] is probably the tyres and some in finding the right compromise.
"[Last year's car] was extremely limited.
"There are certain things which we introduced late at the last winter test and they simply aren't where they need to be at this stage but the car is reacting."