Form 4: Redmile Group Boosts Shattuck Labs Stake via Warrants

Redmile Group, a 10% owner and director, acquired pre-funded and common warrants in Shattuck Labs as part of a private placement.

Summary

• Redmile Group, LLC and its principal Jeremy Green, both 10% owners and directors of Shattuck Labs, Inc., reported the acquisition of derivative securities.
• On August 25, 2025, Redmile Clients acquired 4,097,730 Pre-Funded Warrants to purchase common stock at an exercise price of $0.0001.
• Concurrently, they acquired 4,097,730 Common Warrants to purchase common stock at an exercise price of $1.0846.
• The combined purchase price for both the Pre-Funded Warrants and Common Warrants was $0.8676 per unit.
• These acquisitions were part of a private placement to institutional investors, as per a securities purchase agreement dated August 4, 2025.
• The Pre-Funded Warrants have no expiration date, while the Common Warrants expire 30 days after the public announcement of Phase 1 clinical trial data for SL-325 and the design of its Phase 2 clinical trial.
• All warrants are exercisable on or after the closing date, subject to a 9.99% beneficial ownership blocker.

Sentiment

Score: 7

Explanation: The filing reports a significant capital infusion through a private placement from a major institutional investor, Redmile Group, which is generally a positive signal of investor confidence. While there's potential for dilution from warrants, the immediate capital raise and the investor's continued involvement are favorable. The management change (resignation of Michael Lee) is noted but without negative context.

Positives

• Significant investment by a major institutional investor (Redmile Group) and its principal, indicating confidence in Shattuck Labs' future prospects.
• The private placement provides capital to Shattuck Labs, strengthening its financial position for ongoing operations and clinical development.
• The structure of the warrants, particularly the low exercise price for pre-funded warrants, suggests a strategic long-term view by the investor.

Negatives

• The issuance of warrants could lead to dilution for existing shareholders if and when they are exercised, although the pre-funded warrants have a very low exercise price.
• The expiration of common warrants is tied to clinical trial data, introducing a time-sensitive element and potential pressure related to development milestones.

Risks

• **Dilution Risk**: Exercise of the warrants will increase the number of outstanding shares, potentially diluting the value of existing common stock.
• **Clinical Trial Risk**: The value and exercise of Common Warrants are linked to the outcome and announcement of Phase 1 clinical trial data for SL-325, which carries inherent development and regulatory risks.
• **Beneficial Ownership Blocker**: The 9.99% beneficial ownership blocker could limit immediate full exercise, potentially affecting the timing of capital infusion from warrant exercise.

Future Outlook

The expiration of Common Warrants is tied to the public announcement of Phase 1 clinical trial data for SL-325 and the design of its Phase 2 clinical trial, indicating a future milestone for the company's drug development pipeline.

Management Comments

• Redmile and Mr. Green disclaim beneficial ownership of the reported securities except to the extent of its or his pecuniary interest therein, if any, and this Form 4 shall not be deemed an admission that Redmile or Mr. Green is the beneficial owner of the reported securities for purposes of Section 16 of the Securities Exchange Act of 1934, as amended, or for any other purpose.

Industry Context

This private placement by a significant institutional investor in a biotechnology company (Shattuck Labs, likely focused on drug development given the mention of clinical trials) is a common method for companies to raise capital, especially in the pre-revenue or early-stage clinical development phases. It signals continued investor interest in the company's pipeline, particularly SL-325, within the competitive biotech landscape.

Comparison to Industry Standards

• Private placements with institutional investors are a standard financing mechanism for biotechnology companies, particularly those in clinical development, to raise capital without the extensive regulatory requirements and market volatility associated with public offerings.
• The inclusion of warrants is typical in such deals, offering investors additional upside potential while providing the company with potential future capital infusion upon exercise.
• The beneficial ownership blocker (9.99%) is a common provision to avoid triggering certain regulatory thresholds or change of control provisions.
• The linking of warrant expiration to clinical trial data is a specific, but not unheard of, mechanism to align investor incentives with key development milestones, similar to other biotech financing structures.

Management Changes

Corporate Governance

Related Party Transactions

• Redmile Group, LLC, a 10% owner and with a director (Jeremy Green) on Shattuck Labs' board, participated in the private placement through its managed investment vehicles (Redmile Clients). This constitutes a related party transaction due to Redmile's significant ownership and board representation.

Stakeholder Impact

• **Shareholders**: Potential for future dilution upon warrant exercise, but the capital raise strengthens the company's financial position, potentially supporting R&D and operations. The continued investment by a major shareholder could be seen as a positive signal.
• **Company (Shattuck Labs)**: Receives capital from the private placement, which can fund ongoing operations and clinical trials, particularly for SL-325, extending its cash runway.
• **Redmile Group**: Increases its stake and potential upside in Shattuck Labs through the acquisition of warrants, aligning its interests with the company's long-term success.

Next Steps

• Public announcement of data from the Issuer's Phase 1 clinical trial for SL-325 in healthy volunteers.
• Public announcement of the design of the Issuer's Phase 2 clinical trial for SL-325.

Key Dates

Recommendation

The filing details a capital raise through a private placement involving a significant existing institutional investor. While the capital infusion is positive for the company's operations and clinical development, the issuance of warrants introduces potential future dilution for existing shareholders. The resignation of a Redmile director from the board, while another remains, is a governance change to note. Without more information on the company's current valuation, clinical trial progress, or broader market conditions, a 'hold' recommendation is appropriate, acknowledging both the positive capital raise and the potential for dilution, suggesting investors monitor future developments, especially clinical trial results.

Keywords

Shattuck Labs, STTK, Redmile Group, Jeremy Green, Form 4, SEC filing, private placement, warrants, pre-funded warrants, common warrants, beneficial ownership, institutional investment, clinical trial, SL-325, dilution, corporate governance