Shattuck Labs, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Shattuck is a clinical-stage biotechnology company developing ARC and GADLEN biologic platforms. It had no approved products and generated no product-sales revenue; reported revenue came solely from its Takeda collaboration.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $1.9 million | $2.4 million | $(0.1) million | $8.6 million |
| Research and development expense | $15.1 million | $11.8 million | $40.4 million | $27.7 million |
| General and administrative expense | $4.3 million | $2.5 million | $14.1 million | $5.8 million |
| Net loss | $(17.4) million | $(11.8) million | $(52.8) million | $(24.6) million |
| Basic and diluted loss per share | $(0.41) | $(1.54) | $(1.26) | $(3.21) |
- At September 30, 2021, cash and cash equivalents were $85.1 million and short-term investments were $205.1 million, totaling $290.2 million. Total assets were $310.6 million, total liabilities $49.4 million, and stockholders’ equity $261.2 million. Accumulated deficit was $124.9 million.
- Cash used in operating activities for the first nine months was $38.4 million, versus $19.6 million in 2020. Capital expenditures were $5.9 million. Cash and cash equivalents declined $72.8 million to $85.1 million; investing cash flows also reflected purchases and maturities of short-term investments.
- The filing reports no borrowings or debt balance. No meaningful gross margin is reported, as the company had no product sales.
- Management estimated that cash, cash equivalents and short-term investments would fund projected operations into the second half of 2024.
Material changes and unusual items
- Nine-month collaboration revenue was negative $61,000 because a second-quarter change in estimated total SL-279252 development costs caused a one-time cumulative revenue adjustment under the cost-based recognition method. The estimate change increased 2021 net loss by $4.2 million and loss per share by $0.10; expected total consideration under the collaboration was unchanged.
- R&D expense rose 45.7% for the first nine months, driven by increased headcount, clinical and preclinical work, manufacturing, and laboratory and facilities costs. G&A expense rose 142.4%, including higher personnel and public-company costs. Net loss more than doubled year over year.
- On November 8, 2021, after quarter-end, Shattuck and Takeda mutually terminated their collaboration. Shattuck was released from remaining performance obligations, and neither party will make or receive future milestone or royalty payments; Takeda’s licensing options and rights of first negotiation ended. The filing says the remaining deferred revenue—approximately $30.1 million—is expected to be recognized in Q4 2021. Termination did not affect the September 30 financial statements.
Outlook, commentary and risks
- Management expects significant ongoing losses and higher expenses as it advances SL-172154 and SL-279252, develops additional candidates, and expands clinical, manufacturing and operational capabilities. The company expects no significant product revenue for several years, if ever, and may need additional capital; financing may be unavailable or dilutive.
- Clinical plans disclosed include further Phase 1 development of SL-172154 and SL-279252, a planned SL-172154 ovarian-cancer combination trial in the first half of 2022, and expected initial trial data in 2022. The company also anticipated nominating another ARC-derived candidate in the first half of 2022. These are forward-looking plans, not assured outcomes.
- COVID-19 had caused and could continue to cause manufacturing and raw-material delays, clinical-trial enrollment and treatment disruptions, and delays at laboratories and service providers. Shattuck also depends heavily on one contract manufacturer and a small number of CROs and other vendors.
- Other disclosed risks include clinical and regulatory uncertainty, manufacturing and supply challenges, competition, intellectual-property protection, and the ability to obtain future financing. The filing reports no material legal proceedings and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- How the Takeda termination and Q4 recognition of remaining deferred revenue affect reported results, cash receipts, and future collaboration income.
- Whether the disclosed second-half-2024 cash runway remains achievable as clinical and manufacturing spending increases.
- Progress, safety and efficacy data, enrollment, and timelines for SL-172154 and SL-279252 trials, including the impact of COVID-19 and manufacturing constraints.
- The assumptions behind the SL-279252 cost-based revenue estimate and the resulting negative nine-month revenue adjustment.
- Future funding needs, potential dilution, and the company’s dependence on third-party manufacturers, CROs and service providers.