Shattuck Labs, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Shattuck is a clinical-stage biotechnology company developing ARC and GADLEN dual-sided fusion protein platforms. Its lead clinical candidate, SL-172154, is being studied in Phase 1 trials for ovarian cancer and certain hematologic malignancies. The company had no approved products and no product-sales revenue.
Financial performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Collaboration revenue | $0.057 million | None |
| Research and development expense | $16.7 million | $19.2 million |
| General and administrative expense | $5.1 million | $5.0 million |
| Operating loss | $21.7 million | $24.2 million |
| Other income (expense) | $0.9 million | $(0.4) million |
| Net loss | $20.7 million | $24.5 million |
| Basic and diluted loss per share | $0.49 | $0.58 |
| Net cash used in operations | $26.5 million | $26.3 million |
At March 31, 2023, cash and cash equivalents were $66.0 million and investments were $69.5 million, totaling $135.5 million. Current assets were $157.8 million; current liabilities were $16.0 million. Total liabilities were $20.0 million, including $4.0 million of non-current operating lease liabilities; the filing reports no debt balance. Accumulated deficit was $239.7 million. The company reported no product margins; collaboration revenue was immaterial relative to operating expenses.
Changes and cash flows
- Net loss narrowed by $3.8 million year over year, primarily alongside lower R&D expense and higher other income.
- R&D expense fell $2.5 million (13.1%). Lower clinical-material manufacturing costs, including a $7.0 million decrease in GMP manufacturing, were partly offset by higher clinical-trial, compensation, facility, and pipeline costs.
- Operating cash use was broadly similar to the prior-year quarter. Investing activities provided $45.1 million, mainly reflecting a $45.2 million net change in investments; cash and cash equivalents increased $18.7 million during the quarter.
- Collaboration revenue arose from the ImmunoGen clinical-trial collaboration. Shattuck expects to recognize up to $2.0 million under that agreement beginning in 2023 and continuing into or through 2024.
Outlook, risks, and contingencies
- Management expects significant R&D expense and operating losses to continue, and anticipates increasing year-over-year operating expense over the next several years if it advances additional or later-stage programs. It expects no significant product revenue unless candidates are developed, approved, and commercialized.
- The filing gives two runway formulations: the liquidity note says available cash and investments should fund projected operations for at least the next 12 months; MD&A says funding is expected through year-end 2024. Additional capital may be needed, and may not be available on acceptable terms. An ATM facility permits up to $75 million of stock sales; no sales had occurred as of March 31, 2023.
- A $1.4 million proposed securities-litigation settlement is accrued; final agreement, stockholder notice, and court approval remained pending as of May 8, 2023. The company also paid Nighthawk Biosciences $0.1 million for a Phase 1 completion milestone and may owe up to $20.6 million in aggregate contingent development, regulatory, and commercial milestones, plus specified sublicense payments and low-single-digit royalties.
- Risks include clinical, regulatory, manufacturing, trial-enrollment, financing, intellectual-property, and collaboration uncertainties; dependence on limited CROs and CMOs; macroeconomic and inflation pressures; and possible disruption to suppliers. Shattuck disclosed that it had held cash at Silicon Valley Bank before depositors were protected through the bank’s resolution and said it was transferring cash to another institution.
Important facts for investors to verify
- Progress, safety, enrollment, timing, and spending for SL-172154 trials and the broader pipeline.
- Assumptions supporting the stated cash runway, quarterly operating cash burn, and potential need for financing or ATM issuance.
- Actual collaboration revenue and timing under the ImmunoGen agreement.
- Status and final terms of the litigation settlement and any contingent Nighthawk milestone obligations.
- Clinical-material supply and CRO/CMO capacity, along with the company’s cash-depository arrangements.