10-Q: Shattuck Labs Reports Second Quarter 2024 Financial Results and Provides Business Update

Shattuck Labs reported its second quarter 2024 financial results, highlighting progress in clinical trials and research collaborations.

Summary

• Shattuck Labs, a clinical-stage biotechnology company, released its financial results for the second quarter of 2024.
• The company is focused on developing dual-sided fusion proteins for cancer and autoimmune diseases.
• Shattuck Labs reported a net loss of $21.55 million for the three months ended June 30, 2024, and a net loss of $40.06 million for the six months ended June 30, 2024.
• Collaboration revenue increased significantly to $1.6 million for the quarter and $2.7 million for the six months, primarily due to the Ono Pharmaceutical collaboration.
• Research and development expenses were $19.2 million for the quarter and $35.5 million for the six months.
• As of June 30, 2024, the company had $60.7 million in cash and cash equivalents and $44.7 million in investments.
• Management believes that the company's current cash, cash equivalents, and investments are sufficient to fund operations for at least the next twelve months.
• The company is advancing its lead product candidate, SL-172154, in clinical trials for hematologic malignancies.
• Shattuck Labs is also developing other potential product candidates in preclinical stages for autoimmune, inflammatory, and cardiometabolic diseases.

Sentiment

Score: 6

Explanation: The document presents a mixed picture. While there is positive progress in clinical trials and collaborations, the company continues to incur significant losses and may need to raise additional capital. The sentiment is cautiously optimistic, reflecting the inherent risks and potential rewards of biotech investments.

Positives

• Collaboration revenue has significantly increased due to the Ono agreement, providing a new revenue stream.
• The company has a strong cash position of $105.3 million, which is expected to fund operations for at least the next twelve months.
• Clinical data for SL-172154 in combination with azacitidine showed improved clinical response and complete remission rates in HR-MDS and TP53m AML compared to azacitidine alone.
• The company is expanding its clinical trials for SL-172154 in AML and HR-MDS, indicating confidence in the drug's potential.
• Shattuck Labs is actively developing a diverse pipeline of preclinical compounds, including TRIM7 inhibitors and mRNA/LNP-based therapies.
• The company has demonstrated the feasibility of delivering dual-sided fusion proteins as lipid-encapsulated mRNA.

Negatives

• The company continues to incur significant net losses, with a $40.06 million loss for the first six months of 2024.
• Research and development expenses remain high, reflecting the costs of clinical trials and preclinical development.
• The company is dependent on external funding and may need to raise additional capital in the future.
• The company has an accumulated deficit of $346.4 million as of June 30, 2024.
• The company has not generated any revenue from product sales.

Risks

• The company is subject to risks associated with clinical trials, including the timing of initiation, progress, and expected results.
• There is a risk that the company may not be able to maintain orphan drug designation for SL-172154.
• The company's ability to enroll patients in clinical trials is a risk factor.
• The company faces risks related to the costs of nonclinical studies, clinical trials, and research and development programs, including the impact of inflation.
• The company's ability to retain key executives and hire qualified professionals is a risk.
• There are risks associated with the timing or likelihood of regulatory filings and approvals.
• The company faces risks related to the commercialization of product candidates, if approved.
• The company's ability to manufacture and supply product candidates for clinical trials and commercial use is a risk.
• The company faces risks related to the pricing, coverage, and reimbursement of product candidates, if approved.
• The company's ability to maintain intellectual property rights is a risk.
• The company may need to obtain additional licenses of third-party technology, which may not be available or may be costly.
• The company's ability to enter into strategic arrangements and collaborations is a risk.
• The company is dependent on third-party suppliers and manufacturers.
• The company's estimates regarding market opportunity, expenses, capital requirements, and the need for additional financing are subject to risk.
• The company's financial performance is subject to risk.
• The company faces risks related to competitors and industry developments.
• The global macroeconomic environment, including trade disputes, instability in capital markets, supply chain weaknesses, and inflationary pressures, poses a risk to the company's operations.

Future Outlook

The company expects to continue to incur significant expenses and operating losses in the near term as it advances its product candidates and expands its research and development activities. The company believes its current cash and investments are sufficient to fund operations into 2026.

Management Comments

• Management believes that the company's cash, cash equivalents and investments of $105.3 million as of June 30, 2024 are sufficient to fund projected operations of the Company for at least the next twelve months.
• Management is focused on advancing SL-172154 in AML and HR-MDS due to the strength of the emerging efficacy results in those patient populations.
• Management believes that SL-172154 may provide clinical benefit for AML patients regardless of TP53 mutation status.
• Management expects increasing year-over-year operating expense over the next several years in the event that we conduct additional nonclinical studies and clinical trials.

Industry Context

The company's focus on dual-sided fusion proteins and immune modulation aligns with the broader industry trend of developing novel immunotherapies for cancer and autoimmune diseases. The collaboration with Ono Pharmaceutical highlights the increasing interest in these types of therapies. The company's approach to targeting DR3 and developing mRNA-based therapies also reflects innovative strategies in the biotechnology sector.

Comparison to Industry Standards

• Shattuck Labs' cash burn rate is typical for a clinical-stage biotech company, but the company's cash runway is longer than many of its peers, with funding projected into 2026.
• The company's collaboration revenue is a positive sign, as many early-stage biotech companies rely solely on equity financing.
• The clinical data for SL-172154 in AML and HR-MDS is promising, but it is still early-stage and needs to be compared to other therapies in development, such as those from companies like Forty Seven (acquired by Gilead) and Trillium Therapeutics (acquired by Pfizer) which are also developing CD47 inhibitors.
• The company's focus on mRNA-based therapies is similar to companies like Moderna and BioNTech, but Shattuck is applying this technology to a different class of therapeutics.
• The development of TRIM7 inhibitors is a novel approach, and it is difficult to compare to industry standards as it is a unique target.

Stakeholder Impact

• Shareholders may experience dilution if the company raises additional capital through equity offerings.
• Employees may benefit from the company's growth and development of new therapies.
• Patients with cancer and autoimmune diseases may benefit from the company's development of new treatments.
• The company's suppliers and manufacturers may benefit from increased business activity.
• Creditors may be impacted by the company's financial performance and ability to repay debts.

Next Steps

• The company plans to continue advancing the clinical development of SL-172154.
• The company will initiate a randomized, controlled dose expansion cohort in TP53m AML patients.
• The company plans to evaluate SL-172154 in patients with TP53wt AML.
• The company may evaluate SL-172154 in other hematologic indications, including multiple myeloma and myelofibrosis.
• The company expects to nominate one or more additional product candidates to its clinical pipeline in the future.
• The company will continue to advance lead TRIM7 inhibitors through preclinical development.
• The company will continue to develop its platform of mRNA/LNP administered GLP-1 containing multifunctional constructs.

Key Dates

Keywords

biotechnology, clinical trials, dual-sided fusion proteins, oncology, autoimmune diseases, SL-172154, hematologic malignancies, AML, HR-MDS, research and development, collaboration, mRNA, GLP-1, TRIM7