Shattuck Labs, Inc. — Q2 2022 Form 10-Q
Reporting period: Three and six months ended June 30, 2022. Shattuck is a clinical-stage biotechnology company developing ARC and GADLEN biologic platforms. It has no approved products and has generated no product-sales revenue. Its clinical-stage candidates include SL-172154 and SL-279252.
Financial performance and position
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $0.05m | $(4.23)m | $0.05m | $(1.96)m |
| Research and development | $22.96m | $14.88m | $42.15m | $25.22m |
| General and administrative | $4.75m | $5.40m | $9.72m | $9.76m |
| Net loss | $(27.37)m | $(23.60)m | $(51.90)m | $(35.41)m |
| Net loss per share | $(0.65) | $(0.56) | $(1.22) | $(0.85) |
- At June 30, 2022, cash and cash equivalents were $37.87m and investments were $176.37m, totaling $214.24m. Total assets were $251.34m; current liabilities were $24.25m; total liabilities were $28.81m. No borrowings are reported.
- Six-month operating cash use was $42.59m, versus $25.41m in 2021. Investing cash use was $11.95m, including $10.17m for property and equipment. Financing provided $0.14m. Cash and cash equivalents declined $54.40m to $37.87m.
- Operating expenses rose, particularly R&D, which increased 67% for the six-month period. R&D spending on SL-172154 increased to $19.74m from $7.19m; spending on SL-279252 fell to $1.00m from $5.61m. No margin measure is meaningful given the company’s development-stage operations and minimal collaboration revenue.
- Accumulated deficit was $168.97m. The company recorded a $0.4m impairment charge for lab equipment no longer needed and $0.55m of unrealized investment losses in the first half.
Material changes and management outlook
- Q2 2021 collaboration revenue was negative because a one-time $4.2m cumulative adjustment followed an increase in estimated SL-279252 program costs under the Takeda agreement. That agreement was mutually terminated in November 2021. In Q2 2022, Shattuck entered a new collaboration and recognized $0.05m; it expects less than $1.0m of total revenue from it.
- Management expects R&D expenses to increase during the remainder of 2022 and anticipates continued operating losses and negative operating cash flows. It says cash and investments at June 30, 2022 are sufficient to fund projected operations into the second half of 2024. The notes separately state that resources are sufficient for at least the next 12 months.
- SL-172154 is being studied in Phase 1 trials in ovarian cancer and hematologic malignancies, including AML and HR-MDS. SL-279252 is in a Phase 1 trial in advanced solid tumors and lymphoma; management has not planned additional trial-related spending for it beyond the ongoing Phase 1 study. The company planned to nominate a third clinical candidate in 2022.
- Management cited COVID-19-related manufacturing, raw-material, clinical-trial enrollment, treatment, vendor, and research delays, with potential added costs. Other risks include clinical and regulatory uncertainty, manufacturing and third-party provider dependence, inflation, and the possibility that additional financing may not be available on acceptable terms.
- A consolidated putative securities class action alleges misleading omissions concerning clinical-trial results and the former Takeda collaboration. The company and individual defendants deny wrongdoing and intend to defend the case; damages sought are unspecified. The company reports no material changes to its previously disclosed risk factors.
Important facts for investors to verify
- Whether the stated runway into the second half of 2024 remains supportable given the higher operating cash use and planned R&D spending.
- Clinical-trial progress, safety and efficacy data, timelines, and manufacturing readiness for SL-172154 and SL-279252.
- The terms, expected work, and revenue contribution of the new collaboration, which management expects to generate less than $1.0m total.
- Developments and potential financial exposure from the securities litigation, as well as any material changes in clinical, vendor, or COVID-19-related risks.