Stoke Therapeutics, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter report. The company is a clinical-stage biotechnology company developing antisense oligonucleotide medicines using its TANGO platform; it has no approved products and has generated no product-sales revenue.
Financial performance and position
| Metric | 2023 | 2022 | Change |
|---|---|---|---|
| Revenue | $8.8 million | $12.4 million | Down 29% |
| Research and development expense | $82.2 million | $77.8 million | Up $4.4 million |
| General and administrative expense | $41.3 million | $38.9 million | Up $2.4 million |
| Total operating expenses | $123.6 million | $116.8 million | Up $6.8 million |
| Operating loss | $114.8 million | $104.4 million | Loss increased |
| Net loss | $104.7 million | $101.1 million | Loss increased |
| Basic and diluted loss per share | $2.38 | $2.60 | Loss per share narrowed |
| Cash, cash equivalents and marketable securities at year-end | $201.4 million | $229.6 million | Down $28.2 million |
- Revenue was primarily from the Acadia collaboration; recognized revenue declined from $12.4 million to $8.8 million as collaboration services were performed. No product revenue was reported.
- Gross margin is not applicable to the company’s reported results. Operating expenses exceeded revenue substantially.
- Net interest income increased to $9.9 million from $3.1 million, reflecting higher cash balances during the year and higher interest rates.
- Operating cash use was $81.1 million, versus $31.9 million in 2022. The prior-year cash flow included $51.7 million of deferred revenue received under the Acadia collaboration; 2023 operating cash use also reflected the net loss and working-capital movements.
- Investing activities provided $105.9 million, mainly reflecting marketable-security sales, compared with $45.9 million used in 2022. Financing provided $53.0 million, including $52.1 million of net proceeds from at-the-market equity sales.
- Year-end total assets were $228.3 million, total liabilities $68.8 million, and stockholders’ equity $159.6 million. The filing reports no credit facility or committed source of capital; liabilities included deferred collaboration revenue and operating lease obligations, not reported financial debt.
Material changes and business developments
- Operating expenses rose as development activity and personnel costs increased. R&D spending on STK-001 increased to $27.1 million from $25.3 million; STK-002 spending decreased to $8.0 million from $9.1 million.
- The company sold approximately 6.3 million shares through its controlled equity offering in 2023 for $52.1 million net proceeds, increasing year-end shares outstanding to 45.9 million from 39.4 million.
- Cash, cash equivalents and marketable securities declined despite equity proceeds, reflecting operating cash use and investment activity. The company estimated, based on its operating plan, that year-end liquidity plus $1.3 million of post-year-end ATM proceeds would fund operations and capital needs through the end of 2025.
- The company terminated its Cold Spring Harbor Laboratory license agreement in May 2023 and said it did not expect a significant effect on current candidates or TANGO development. It continues to rely on foundational licensed intellectual property from the University of Southampton.
Outlook, clinical programs and key risks
- STK-001, Dravet syndrome: In March 2024, after the fiscal year-end, the company announced end-of-study results from the open-label MONARCH and ADMIRAL Phase 1/2a studies. Pooled data from 81 patients showed the drug was generally well tolerated; 30% had a treatment-emergent adverse event assessed as related to study drug, most commonly cerebrospinal-fluid protein elevations and procedural vomiting. The filing reports seizure reductions in patients receiving multiple 70 mg doses and exploratory improvements in some cognition and behavior measures in open-label extension data. These are early, open-label findings, not confirmatory controlled-trial results.
- The FDA partial clinical hold remains in place. The filing reports limits on U.S. dosing, including evaluation of three 70 mg doses in MONARCH and chronic dosing up to 45 mg in SWALLOWTAIL following March 2024 FDA clearance. The company planned regulatory discussions on a registrational study using initial 70 mg doses followed by 45 mg dosing, with an update anticipated later in 2024.
- STK-002, autosomal dominant optic atrophy: The U.K. authorized a Phase 1 open-label study, OSPREY, which the company expected to start in 2024. The candidate remains an early-stage program supported by preclinical evidence.
- Acadia collaboration: The agreement covers SYNGAP1, MECP2/Rett syndrome and an undisclosed target. Stoke may receive up to $907.5 million in milestone payments, plus royalties on certain programs; these are contingent potential payments, not guaranteed revenue. At year-end, $48.4 million of upfront consideration related to unsatisfied or partially unsatisfied performance obligations remained deferred.
- Management expects continued operating losses and rising R&D, G&A and capital expenditures. Additional financing will be needed before the company can expect profitability; equity financing could dilute shareholders, and financing may not be available on acceptable terms.
- Principal risks include clinical and regulatory failure or delay, the continuing FDA partial hold and dose limits, uncertain translation of early data to controlled or later-stage trials, difficulty enrolling small patient populations, dependence on third-party manufacturers and research providers, intellectual-property and licensing risks, reimbursement uncertainty, competition, and reliance on external capital.
- Management reported effective disclosure controls and internal control over financial reporting as of December 31, 2023. KPMG issued an unqualified audit opinion on the financial statements; it did not express an opinion on internal control effectiveness.
Important facts for investors to verify
- Whether full STK-001 study datasets, patient-level results, safety follow-up and controlled registrational-trial plans support the reported open-label seizure and exploratory cognition findings.
- The current status and practical effect of the FDA partial clinical hold, permitted dose levels, required toxicology work and regulatory-agency feedback.
- Whether the estimated liquidity runway through year-end 2025 remains valid as trial, manufacturing and staffing costs evolve, and how much additional ATM or other financing may be required.
- How quickly Acadia deferred revenue is recognized, and whether any development, regulatory or sales milestones become sufficiently probable to affect reported revenue.
- The dilution and remaining capacity under the equity offering program, alongside the timing and terms of any future financing.