Shattuck Labs, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Shattuck is a clinical-stage biotechnology company developing dual-sided fusion proteins for oncology and inflammatory diseases. It has no approved products and no product sales; collaboration revenue is from its Takeda agreement.
Financial results and position
Amounts below are in millions of dollars except per-share data. Operating margins are not especially informative for this pre-commercial company.
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Collaboration revenue | (4.2) | 3.2 | (2.0) | 6.2 |
| Research and development expense | 14.9 | 7.8 | 25.2 | 15.9 |
| General and administrative expense | 5.4 | 1.7 | 9.8 | 3.3 |
| Net loss | (23.6) | (6.2) | (35.4) | (12.8) |
| Net loss per share, diluted | (0.56) | (0.81) | (0.85) | (1.67) |
| Operating cash used | — | 25.4 | 8.3 |
At June 30, cash and cash equivalents were $86.5 million and short-term investments were $218.3 million, totaling $304.8 million. Current assets were $315.9 million, current liabilities $15.1 million, and total liabilities $46.7 million. The balance sheet reports no debt. Management said available cash and investments were expected to fund operations through at least the end of 2024. Accumulated deficit was $107.5 million.
Changes and notable items
- Revenue declined sharply and was negative in both the second quarter and first half of 2021. A change in estimated total development costs for SL-279252 produced a one-time cumulative catch-up adjustment of approximately $4.2 million, increasing 2021 net loss and basic and diluted loss per share by $0.10. The filing says total consideration received and total revenue expected under the agreement were unchanged.
- First-half R&D expense rose 58.7%, primarily due to clinical-material manufacturing and process development, higher compensation, preclinical and facility costs, and clinical trials. G&A rose 191.5%, reflecting headcount and public-company costs.
- First-half operating cash use increased to $25.4 million. Investing activities used $47.3 million, mainly reflecting purchases of short-term investments net of maturities and $5.0 million of property and equipment. Financing provided $1.3 million, principally from stock-option exercises; the comparable 2020 period included $117.0 million of preferred-stock proceeds.
- Q2 and first-half net losses increased year over year, although loss per share was lower; weighted-average shares increased substantially following the 2020 IPO, limiting direct per-share comparability.
Outlook, risks, and contingencies
- Management expects increasing operating expenses and losses as it advances SL-172154 and SL-279252, develops additional candidates, and expands clinical, manufacturing, and operating capabilities. No product-revenue forecast or profitability guidance is provided.
- Planned milestones included initial SL-172154 ovarian-cancer Phase 1 dose-escalation data in Q4 2021, initial data from its CSCC/HNSCC trial in the first half of 2022, SL-279252 Phase 1 dose-escalation data in Q4 2021, an IND filing for hematologic malignancies in Q4 2021, and nomination of another ARC candidate in the second half of 2021 with a regulatory filing anticipated in 2022.
- COVID-19 had disrupted manufacturing and raw-material supply, clinical-trial enrollment and treatment, laboratory work, and third-party services; further delays and added costs were possible. The company also depends heavily on one contract manufacturer and two CROs.
- The company has received approximately $81.5 million under the Takeda collaboration and may qualify for further option, milestone, and royalty payments. Future payments depend on development and licensing events; the filing notes Takeda’s options and rights of first negotiation. The company relies on external funding if needed, which may be unavailable or dilutive.
- Heat Biologics milestone payments of up to $20.6 million, sublicense-related payments, and low-single-digit royalties are contingent; no liability was recorded because milestone achievement was not considered probable. No material litigation was reported, and the filing said there were no material changes to previously disclosed risk factors.
Key facts for investors to verify
- Progress, enrollment, safety, and timing of the disclosed clinical trials and regulatory filings, including whether COVID-related delays persist.
- Assumptions underlying the SL-279252 cost-based revenue estimate and the effect of further development-plan changes on reported collaboration revenue.
- Cash burn, investment balances, and the assumptions supporting management’s runway estimate through at least year-end 2024.
- Takeda option and licensing decisions, and the timing and conditions for potential collaboration payments.
- Reliance on the contract manufacturer, CROs, and other third parties, as well as the potential costs and dilution of any future financing.