8-K: Shattuck Labs Terminates Collaboration, Restructures to Focus on DR3 Program

Shattuck Labs is discontinuing its SL-172154 program and restructuring its operations, including a 40% workforce reduction, to prioritize the development of its SL-325 DR3 antagonist program.

Summary

• Shattuck Labs has mutually terminated its collaboration agreement with Ono Pharmaceutical Co., Ltd. effective September 30, 2024.
• The company is discontinuing the development of its SL-172154 program due to modest overall survival improvements in clinical trials for TP53m AML and HR-MDS.
• Shattuck is implementing a restructuring plan, including a 40% reduction in workforce, to focus on its SL-325 DR3 antagonist program.
• The company expects to incur restructuring charges between $1.5 million and $1.75 million in the fourth quarter of 2024, primarily for employee severance costs.
• As of June 30, 2024, Shattuck had approximately $105.3 million in cash, cash equivalents, and investments.
• The company anticipates its current cash resources will fund operations into 2027, beyond the planned Phase 1 clinical trial of SL-325.

Sentiment

Score: 4

Explanation: The document reflects a strategic shift due to disappointing clinical trial results and includes a significant workforce reduction, which is generally viewed negatively. However, the focus on a new program and extended cash runway provide some positive aspects.

Positives

• The company is prioritizing a potentially first-in-class DR3 antagonist antibody, SL-325, which has shown promising preclinical results.
• The restructuring is expected to extend the company's cash runway into 2027.
• The company is focusing on a program with a higher probability of success.
• Shattuck has a clear strategic direction with a focus on the SL-325 program.

Negatives

• The termination of the Ono collaboration means the loss of potential future research reimbursements, milestone payments, and royalties.
• The discontinuation of the SL-172154 program represents a setback in the company's clinical development pipeline.
• The restructuring will result in a significant workforce reduction of approximately 40%.
• The company will incur restructuring charges between $1.5 million and $1.75 million.

Risks

• The company's estimates of restructuring costs are contingent on various assumptions and actual results may differ materially.
• The company may incur additional costs not currently contemplated due to events related to or resulting from these strategic steps.
• The success of the SL-325 program is not guaranteed and is subject to clinical trial risks.
• The company's cash runway guidance excludes potential future capital raises or business development transactions.

Future Outlook

The company expects its current cash resources to fund operations into 2027, beyond the planned Phase 1 clinical trial of SL-325. This guidance excludes potential future capital raises or business development transactions.

Management Comments

• We are disappointed that the promising complete remission rates we previously shared from our Phase 1 clinical trial did not translate to clinically meaningful improvements in median overall survival for TP53m AML and HR-MDS patients treated with SL-172154 in combination with azacitidine.
• We must accept this result as it stands and move on to other opportunities with a higher probability of success.
• We are announcing a strategic shift to focus on SL-325, a DR3 antagonist antibody designed to achieve a more complete blockade of the clinically validated TL1A/DR3 signaling pathway.
• This strategic shift in our clinical development plans and subsequent realignment of our organization with an approximate 40% reduction in workforce will allow us to use our resources most efficiently to position Shattuck for long-term success.

Industry Context

The decision to discontinue SL-172154 reflects the challenges in developing effective treatments for TP53m AML and HR-MDS, where overall survival improvements have been difficult to achieve. The focus on DR3 antagonism aligns with a growing interest in targeting TNF superfamily receptors for inflammatory and autoimmune diseases.

Comparison to Industry Standards

• The median overall survival (OS) for TP53m HR-MDS patients treated with SL-172154 in combination with azacitidine was 15.6 months, compared to a benchmark of 9-12 months for azacitidine alone, which is considered a modest improvement.
• The median OS for TP53m AML patients treated with SL-172154 was 10.5 months, compared to a benchmark of 5-8 months for azacitidine alone, again a modest improvement.
• The company noted that no CD47 inhibitor has shown a significant efficacy signal in any indication to date, which influenced the decision to discontinue SL-172154.
• The company is pivoting to SL-325, a DR3 antagonist, which is a different approach than the more common TL1A blocking antibodies, and is based on the rationale that blocking the receptor may be more potent than blocking the ligand, similar to the PD-1/PD-L1 paradigm.

Stakeholder Impact

• Shareholders may experience short-term negative sentiment due to the program discontinuation and restructuring.
• Employees will be significantly impacted by the 40% workforce reduction.
• Patients may benefit from the focus on SL-325, a potentially more effective treatment for IBD.
• The company's suppliers and creditors may be affected by the restructuring.

Next Steps

• The company will complete the reduction in force in the fourth quarter of 2024.
• Shattuck plans to file an IND for SL-325 in the third quarter of 2025.
• The company will focus on the clinical development of SL-325 in IBD.

Key Dates

Keywords

Shattuck Labs, SL-325, SL-172154, DR3 antagonist, restructuring, clinical trials, Ono Pharmaceutical, workforce reduction, TL1A, IBD