Stoke Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 10, 2022. This is an annual report, not a standalone fourth-quarter report. Stoke is a clinical-stage biotechnology company developing RNA-based antisense medicines using its TANGO platform. It had no approved products and generated no product revenue.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $54.2 million | $32.2 million |
| General and administrative expense | $31.9 million | $20.8 million |
| Total operating expenses | $86.1 million | $53.0 million |
| Net loss | $85.8 million | $52.2 million |
| Basic and diluted loss per share | $2.34 | $1.56 |
| Net cash used in operating activities | $66.9 million | $42.2 million |
Losses increased as Stoke expanded research and development, clinical programs, personnel and stock-based compensation. R&D growth reflected higher personnel and facility costs and increased STK-001 and STK-002 program spending. G&A growth was driven mainly by personnel costs, including stock compensation, and public-company support costs. The company reported no operating margin because it had no revenue and incurred operating losses.
At year-end, cash and cash equivalents were $144.9 million, marketable securities $74.9 million, and restricted cash $0.6 million: $220.4 million in total. Total assets were $238.9 million; total liabilities were $21.1 million, including $7.0 million of operating lease liabilities. The filing reports no credit facility or committed sources of capital. Management estimated that year-end liquidity, together with the subsequent Acadia payment and ATM proceeds, would fund operations into the second half of 2024.
Cash, cash equivalents and restricted cash decreased $142.0 million during 2021. Investing cash outflow was $76.4 million, largely reflecting purchases of marketable securities; operating cash use was $66.9 million. There was no 2021 public-offering proceeds in financing cash flow. The filing reported an unrealized marketable-securities loss of $0.2 million in other comprehensive loss.
Material changes and business developments
- Net loss grew by $33.6 million year over year, while operating expenses rose by $33.0 million.
- Liquidity including marketable securities and restricted cash fell from $287.5 million to $220.4 million. The company shifted a portion of cash into short-term marketable securities.
- In January 2022, after the reporting period, Stoke entered a collaboration with Acadia Pharmaceuticals and received a $60 million upfront payment. The agreement covers SYNGAP1, MECP2 and an undisclosed target; potential milestone payments total up to $907.5 million, subject to achievement. Stoke shares SYNGAP1 development and commercialization costs and profits 50/50, while Acadia funds research for the other two targets. Stoke may receive tiered royalties on those targets.
- After year-end, Stoke sold approximately 403,000 shares under its ATM sales agreement, receiving $7.5 million net.
Programs, outlook and key risks
- STK-001 / Dravet syndrome: Two open-label Phase 1/2a studies, MONARCH in the United States and ADMIRAL in the United Kingdom, were ongoing. In a 2021 interim MONARCH analysis, 12 of 17 patients in specified single-dose or 20mg multiple-dose cohorts had reduced convulsive seizure frequency from baseline; median reductions across cohorts ranged from 17% to 37%. The small, early-stage analysis is not confirmatory evidence of efficacy. Among 22 patients in the safety analysis, 4 had a study-drug-related treatment-emergent adverse event, none severe; 5 had a serious event, none considered drug-related.
- The FDA partial clinical hold on MONARCH doses above 45mg remained in place. It followed hind-limb paresis observed in non-human primates at higher doses. The filing also described acute convulsions at very high animal doses. Management expected preliminary data on 30mg multiple ascending doses in the second half of 2022; that is historical guidance from this filing, not current guidance.
- STK-002 / ADOA: The preclinical candidate was intended to increase OPA1 protein. Preclinical studies showed target engagement and improvements in protein or mitochondrial-function measures; toxicology work was underway to support future clinical trials. No clinical-stage data were reported.
- Management expects continued operating losses and increased R&D, G&A and capital spending. There was no product-sales guidance. Future financing may be needed; if unavailable on acceptable terms, Stoke could delay, reduce or terminate programs. Equity financing could dilute stockholders.
- Key risks include clinical failure or safety findings, regulatory delays and the dose hold, difficulty enrolling patients in rare-disease trials, reliance on third-party manufacturers and research organizations, COVID-19-related disruption, intellectual-property and licensing risks, and uncertain reimbursement and commercialization. The company relies on contract manufacturers and had no commercial manufacturing operation.
- The independent auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Whether subsequent STK-001 trial results confirm, broaden or qualify the early seizure-frequency observations, and how safety and the FDA dose hold evolve.
- Whether STK-002 advances from preclinical work into clinical testing and whether its findings translate to patients.
- Acadia collaboration economics and execution: the $60 million upfront is received, but milestone amounts are contingent; confirm ongoing research obligations, especially Stoke’s 50% share of SYNGAP1 costs.
- Cash burn, marketable-security levels and actual runway versus management’s estimate into the second half of 2024; the estimate includes post-year-end cash proceeds and depends on assumptions.
- Potential future financing, share dilution, and the effect of stock-based compensation; 2021 stock-based compensation was $16.5 million.