Shattuck Labs, Inc. quarterly report, Q3 FY2023

Shattuck Labs, Inc. — Q3 2023 Form 10-Q

Reporting period: Three and nine months ended September 30, 2023; filed November 9, 2023. Shattuck is a clinical-stage biotechnology company with no approved products or product sales. Its lead candidate, SL-172154, is in Phase 1 trials for ovarian cancer and certain hematologic malignancies.

Financial position and results

MetricQ3 / September 30, 2023Comparable period / prior year-end
Collaboration revenue$0.7 million for Q3; $0.9 million for nine months$0.2 million and $0.3 million, respectively, in 2022
Research and development expense$24.2 million for Q3; $59.1 million for nine months$18.9 million and $61.0 million, respectively, in 2022
General and administrative expense$5.1 million for Q3; $14.9 million for nine months$6.6 million and $16.3 million, respectively, in 2022
Net loss$27.5 million for Q3; $69.6 million for nine months$24.6 million and $76.5 million, respectively, in 2022
Net loss per share, basic and diluted$0.65 for Q3; $1.64 for nine months$0.58 and $1.81, respectively, in 2022
Cash, cash equivalents and investments$101.1 million$161.3 million at December 31, 2022
Operating cash used$61.8 million for nine months$70.7 million for nine months in 2022

Q3 operating expenses were $29.3 million and operating loss was $28.6 million; nine-month operating expenses were $73.9 million and operating loss was $73.0 million. Revenue is immaterial relative to expenses, and the filing does not provide a meaningful product margin. Other income, principally interest, was $3.4 million for the first nine months, versus $0.5 million in 2022.

At September 30, current assets were $113.0 million and current liabilities were $14.1 million, implying working capital of approximately $98.9 million. Total liabilities were $17.7 million, including operating lease liabilities; the filing does not report borrowings or other funded debt. Cash and investments consisted of $40.6 million in cash and cash equivalents and $60.4 million in U.S. Treasury investments.

Changes and management outlook

  • Q3 net loss increased 11.8% year over year, as R&D expense rose 28.4%, primarily due to increased clinical-trial and manufacturing activity. G&A fell 22.9%, mainly because the prior-year quarter included a $1.4 million litigation settlement expense.
  • For the first nine months, net loss decreased 9.0%; R&D declined 3.2%, reflecting lower GMP manufacturing costs partly offset by higher clinical-trial, personnel and other pipeline costs. Higher interest income also reduced the net loss.
  • Management said cash and investments were sufficient to fund projected operations through year-end 2024. The company expects ongoing losses and cash use, and may need additional equity, debt, collaboration or licensing funding; availability on acceptable terms is not assured.
  • After quarter-end, the company reported preliminary Phase 1 findings: in AML/HR-MDS, early responses or activity were observed in small patient groups; in platinum-resistant ovarian cancer, three partial responses (one confirmed) were reported among 11 evaluable patients receiving SL-172154 with pegylated liposomal doxorubicin. These are early, limited data, not established efficacy. Enrollment in the ovarian-cancer dose-expansion cohort was expected to be completed in Q4 2023.

Risks, contingencies and notable items

  • Clinical, regulatory and manufacturing outcomes remain uncertain; the company depends on third-party CROs and CMOs, and disruption could affect its programs. Management also cited macroeconomic, inflation, supply-chain and geopolitical uncertainty.
  • A court approved a $1.4 million settlement of consolidated securities class-action claims on November 6, 2023. The company had paid the amount to escrow in June 2023.
  • A license agreement with Nighthawk Biosciences provides for up to $20.6 million in contingent development, regulatory and commercial milestones, plus low-single-digit royalties on specified sales. A $0.1 million milestone was paid in 2023; further milestone liabilities were not recorded because achievement was not considered probable.
  • The company reported an accumulated deficit of $288.6 million and expects significant future development expenses. It has a $75 million at-the-market sales facility, with no sales under it through September 30, 2023.

Investor verification points

  • Confirm the latest cash runway assumptions and the rate of operating cash use relative to the stated year-end 2024 funding horizon.
  • Review updated SL-172154 trial results, including response durability, safety, patient counts and whether preliminary responses are confirmed.
  • Track clinical-trial, manufacturing and pipeline spending, and any resulting changes to the need for external financing or use of the ATM facility.
  • Monitor contingent Nighthawk milestone and royalty exposure, and any material developments in the settled litigation.