Shattuck Labs, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. The unaudited financial statements are prepared under U.S. GAAP. Shattuck is a clinical-stage biotechnology company developing ARC and GADLEN dual-sided fusion proteins; it has no approved products and has generated no product-sales revenue.
Financial results and liquidity
Amounts below are in millions, except per-share data. Revenue was entirely related-party collaboration revenue from Takeda.
| Metric | Three months ended Sept. 30 | Nine months ended Sept. 30 |
|---|---|---|
| Collaboration revenue | 2020: $2.4; 2019: $1.8 | 2020: $8.6; 2019: $7.1 |
| Research and development expense | 2020: $11.8; 2019: $7.9 | 2020: $27.7; 2019: $20.4 |
| General and administrative expense | 2020: $2.5; 2019: $1.4 | 2020: $5.8; 2019: $4.1 |
| Net loss | 2020: $(11.8); 2019: $(7.3) | 2020: $(24.6); 2019: $(16.6) |
| Basic and diluted loss per share | 2020: $(1.54); 2019: $(0.96) | 2020: $(3.21); 2019: $(2.20) |
| Net cash used in operating activities | Not presented quarterly | 2020: $(19.6); 2019: $(13.4) |
At September 30, cash and cash equivalents were $128.6 million and short-term investments were $6.3 million, totaling $134.9 million. Current assets were $142.3 million and current liabilities were $16.5 million. Total liabilities were $37.1 million; the filing reports no outstanding borrowings or other interest-bearing debt. Accumulated deficit was $60.1 million. No gross margin is presented; the company had no product sales.
Operating cash use increased year over year. Investing activities provided $25.2 million, principally from short-term investment maturities and sales, while financing activities provided $116.0 million, principally from Series B and B-1 preferred stock proceeds. Cash and cash equivalents increased $121.6 million over the nine-month period.
Changes versus the prior comparable periods
- For Q3, revenue rose 36.5%, while R&D expense rose 48.6% and G&A expense rose 80.8%; net loss increased 62.5% from Q3 2019.
- For the first nine months, revenue increased 21.6%, but R&D and G&A expenses increased 35.5% and 43.2%, respectively. Net loss increased 48.0% year over year.
- Management attributed higher R&D spending mainly to manufacturing and clinical costs for SL-279252 and SL-172154, plus expanded personnel and capabilities; lower nonclinical spending partly offset the increases. Higher G&A reflected increased personnel costs.
- Takeda-related deferred revenue totaled $28.3 million at September 30, including $8.6 million current. Collaboration revenue remains concentrated in one partner.
Outlook, developments and risks
- Management estimated that September 30 cash and investments, together with approximately $213.5 million of net IPO proceeds received after quarter-end, would fund projected operations through at least the end of 2024. This is an estimate based on assumptions; the company expects continuing losses and cash use and may require additional funding.
- On October 14, 2020, Shattuck completed its IPO of 13,664,704 shares at $17.00 per share, receiving approximately $213.5 million net. Preferred stock converted into 20,300,253 common shares upon the IPO. These post-quarter transactions are not included in September 30 balances.
- Management expected initial dose-escalation data for SL-172154 in ovarian cancer and SL-279252 in the second half of 2021, and for a planned SL-172154 trial in cutaneous squamous cell or head and neck squamous cell cancer in the second half of 2022. The filing describes these as expectations, not assured outcomes.
- COVID-19 had delayed both lead programs and third-party work. Enrollment in the SL-279252 trial was paused from March through May 2020 and resumed in June; management expected further timeline risk from enrollment, site access, laboratory, vendor and manufacturing disruptions.
- Takeda may exercise options to license SL-279252 and SL-115154. The filing describes potential license fees, milestones and royalties, but these are contingent and not assured. Takeda did not exercise options for four preclinical molecules, and its option period for those molecules lapsed.
- Other material risks include early-stage clinical uncertainty, potential safety issues, reliance on third-party manufacturers and CROs (including a single-source bulk drug-substance supplier), intellectual-property challenges, and the need for future capital. The Heat license carries up to $20.6 million of contingent milestone payments and low-single-digit royalties; no milestone liability was recorded because achievement was not considered probable.
- The company reported effective disclosure controls as of September 30, no material changes in internal control during the quarter, and no material pending or threatened litigation known to management. A 6.85-for-1 stock split became effective October 1; share and per-share information was retroactively adjusted in the filing.
Most important facts for investors to verify
- Progress, enrollment, safety and timing of the SL-172154 and SL-279252 trials, including any continuing COVID-related disruption.
- Whether the estimated runway through 2024 remains reasonable as clinical, manufacturing and public-company costs evolve.
- Takeda’s option decisions, remaining collaboration obligations, and the timing and recognition of deferred collaboration revenue.
- Availability and continuity of clinical drug supply, particularly from the single-source bulk drug-substance supplier and other contract manufacturers.
- Actual terms and impact of the post-quarter IPO, preferred-stock conversion and resulting share count; the filing reported 41,744,237 common shares outstanding as of November 1, 2020.