Stoke Therapeutics, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; filed March 9, 2021. This is an annual report, not a standalone fourth-quarter filing. Stoke is a clinical-stage biotechnology company developing antisense oligonucleotide medicines using its TANGO platform. It had no approved products and generated no product revenue.
Key financial metrics
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $32.2 million | $23.8 million |
| General and administrative expense | $20.8 million | $11.9 million |
| Total operating expenses | $53.0 million | $35.7 million |
| Net loss | $52.2 million | $32.3 million |
| Net loss per share, basic and diluted | $1.56 | $1.80 |
| Net cash used in operating activities | $42.2 million | $31.1 million |
For Q4 2020, operating expenses were $14.6 million, net loss was $14.6 million, and basic and diluted loss per share was $0.42; revenue was zero. The filing does not present meaningful operating margins because the company had no revenue.
At December 31, 2020, cash, cash equivalents and restricted cash totaled $287.5 million, versus $222.7 million a year earlier. Current assets were $293.9 million and current liabilities were $11.4 million. Total liabilities were $11.8 million, including operating lease liabilities; the filing reports no credit facility or committed capital sources and does not disclose borrowings as debt. Management estimated existing cash would fund operating expenses and capital spending into 2024, subject to assumptions and execution.
Financing provided $108.1 million of net cash in 2020, principally from a November follow-on offering that generated $104.9 million in net proceeds. The company also had an unused at-the-market program authorizing up to $150 million of stock sales at year-end. Shares outstanding were 36.6 million at December 31, 2020.
Material changes versus FY2019
- Net loss increased by $19.9 million as operating expenses rose 48.7% to $53.0 million. R&D increased $8.4 million, primarily from personnel, stock compensation and facilities costs; G&A increased $8.9 million, including higher personnel, stock compensation, insurance and intellectual-property legal costs.
- Operating cash use increased by $11.2 million. Cash increased overall due primarily to the follow-on equity offering.
- The lead candidate STK-001 entered human testing: the first patient was dosed in the MONARCH Phase 1/2a study in August 2020. OPA1 was nominated for preclinical development in autosomal dominant optic atrophy in November 2020.
Outlook, risks and unusual items
- Development outlook: Management expected R&D and G&A spending to increase as clinical and preclinical programs advance. It expected no product sales for years, if ever, and anticipated further financing would be needed before profitability. No revenue or earnings guidance was provided.
- STK-001 safety and trial status: The FDA’s partial clinical hold on doses above 20 mg was modified in October 2020 to permit testing through 30 mg; doses above 30 mg remained on hold. The filing describes hind-limb paresis in nonhuman primates at doses above the then-current no-observed-adverse-effect level, as well as acute convulsions at very high doses. The company planned to report initial single-ascending-dose safety and pharmacokinetic data in the second half of 2021.
- COVID-19: The company reported no substantial delay to the clinical trial at the time of filing, but cited potential effects on enrollment, site operations, observational follow-up, suppliers and timelines. It reported slower new enrollment in the BUTTERFLY observational study but believed participation was sufficient for informative natural-history data.
- Business risks: Results remain dependent on clinical safety and efficacy, regulatory approval, patient enrollment, manufacturing and third-party suppliers, intellectual-property protection, reimbursement and access to additional capital. Early preclinical results may not predict human outcomes. The company had a history of losses and no product revenue.
- Other items: The company raised its workforce to 79 employees by year-end. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not attest to internal-control effectiveness. No material legal proceedings were reported.
Important facts for investors to verify
- Progress and safety findings in MONARCH, including the FDA dose restriction and timing and content of clinical data.
- Actual cash burn, financing needs and whether the stated runway into 2024 remains achievable.
- Evidence that TANGO and STK-001 can translate preclinical findings into meaningful clinical benefit, including non-seizure outcomes.
- COVID-19 effects on clinical enrollment, study operations and supply continuity, and progress of the OPA1 program.
- Potential dilution from future equity issuance, including use of the unused at-the-market program, and the assumptions behind management’s cash-runway estimate.