Stoke Therapeutics, Inc. — 2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019. The filing also presents unaudited quarterly results, including the quarter ended December 31, 2019. The company is an early-stage biotechnology business and had no approved products or product revenue.
Business context and development status
Stoke is developing antisense oligonucleotide medicines using its TANGO platform, intended to increase functional protein production by modifying RNA splicing. Its lead candidate, STK-001, targets SCN1A-related Dravet syndrome; reported efficacy and safety findings were preclinical, not human clinical results. The company submitted an IND in late 2019 and received FDA communication in the first quarter of 2020 allowing planned Part A clinical dosing. The filing expected enrollment and dosing to begin in the second half of 2020, with preliminary data in 2021.
Financial highlights
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $23.8 million | $8.4 million |
| General and administrative expense | $11.9 million | $4.4 million |
| Total operating expenses | $35.7 million | $12.8 million |
| Loss from operations | $(35.7) million | $(12.8) million |
| Interest income | $3.4 million | $0.3 million |
| Net loss | $(32.3) million | $(12.5) million |
| Net loss per share, basic and diluted | $(1.80) | $(17.65) |
| Cash used in operating activities | $(31.1) million | $(11.0) million |
For the fourth quarter of 2019, revenue was $0; operating expenses were $11.1 million and net loss was $10.2 million. The filing does not provide a meaningful revenue or gross margin because the company had no product sales.
At December 31, 2019, cash and cash equivalents were $222.5 million, restricted cash was $0.2 million, total current assets were $226.0 million, and total current liabilities were $4.1 million. Total liabilities were $4.3 million and stockholders’ equity was $224.4 million. No borrowings or credit facility were reported; the company stated it had no committed capital sources. Contractual operating lease obligations totaled $2.3 million.
Material changes versus the prior year
- Net loss increased to $32.3 million from $12.5 million as operating expenses rose, reflecting greater STK-001 development activity, increased headcount, and higher facilities and administrative costs.
- Research and development expense increased by $15.4 million; STK-001 program expense rose to $10.7 million from $2.0 million.
- Cash and cash equivalents plus restricted cash increased to $222.7 million from $105.6 million, principally following the June 2019 IPO, which generated approximately $149.4 million in net proceeds.
- Operating cash use increased to $31.1 million from $11.0 million. The 2019 financing cash inflow was $149.8 million.
Outlook, risks and unusual items
- Management estimated that year-end cash, cash equivalents and restricted cash would fund operating expenses and capital expenditures into 2023, based on its current operating plan. It expects continued losses and rising research, development and corporate costs; additional financing may be needed.
- The FDA placed a partial clinical hold on the higher-dose Part B cohorts of STK-001, seeking additional nonclinical safety information for doses above those planned in Part A. The filing said the hold was not due to an identified manufacturing or safety issue. Additional single-dose toxicology studies were underway; progression to Part B depended on FDA clearance.
- Key risks include clinical failure or delay, uncertainty translating animal findings to people, small patient populations and enrollment challenges, reliance on third-party manufacturers and research providers, competition, intellectual-property challenges, and future financing and reimbursement uncertainty.
- The filing identified COVID-19 as a potential source of delays to development, clinical trials, suppliers and operations; the extent of impact was uncertain.
- Stoke received U.S. Orphan Drug Designation for STK-001 in August 2019. Designation does not ensure approval or market exclusivity.
- The company reported no material pending legal proceedings. Its audited financial statements received an unqualified independent auditor opinion.
Most important facts for investors to verify
- Current cash, cash burn and whether the stated runway remains achievable as clinical and pipeline spending increases.
- FDA status of the Part B partial hold, results of additional toxicology work, and actual clinical start, enrollment and data timing for STK-001.
- Whether human safety and efficacy support the proposed disease-modifying benefits, beyond seizure-frequency measures.
- Progress and funding needs for the planned second preclinical candidate and other pipeline programs.
- Manufacturing capacity, intellectual-property protection, and any future collaboration, financing or dilution terms.