Stoke Therapeutics, Inc. (NASDAQ:STOK) is a clinical-stage biotechnology company dedicated to addressing the underlying causes of severe genetic diseases by upregulating protein expression with RNA-based medicines. The company's proprietary TANGO (Targeted Augmentation of Nuclear Gene Output) approach is driving the development of antisense oligonucleotides (ASOs) to selectively restore protein levels.
Stoke's lead product candidate, STK-001, is currently in clinical trials for the treatment of Dravet syndrome, a severe and progressive genetic epilepsy. The company also has STK-002 in development for the treatment of autosomal dominant optic atrophy (ADOA), the most common inherited optic nerve disorder.
Financials
In the fiscal year ended December 31, 2023, Stoke reported annual revenue of $8,780,000 and a net loss of $104,699,000. The company's annual operating cash flow was -$81,067,000, and its annual free cash flow was -$82,683,000.
For the three months ended March 31, 2024, Stoke reported revenue of $4,216,000, a net loss of $26,374,000, operating cash outflow of $24,566,000, and free cash outflow of $24,578,000.
Business Overview
Stoke Therapeutics was founded in 2014 with the goal of developing novel RNA-based therapies to treat severe genetic diseases caused by haploinsufficiency, a condition in which a loss of approximately 50% of normal protein levels leads to disease. The company's lead product candidate, STK-001, is being evaluated for the treatment of Dravet syndrome, a rare and devastating epileptic encephalopathy that typically begins in the first year of life.
Dravet syndrome is characterized by frequent, prolonged, and treatment-resistant seizures, as well as developmental delays and cognitive impairment. It is estimated to affect approximately 1 in 16,000 individuals worldwide. STK-001 is designed to selectively upregulate the expression of the SCN1A gene, which is mutated in Dravet syndrome, with the goal of restoring normal protein levels and reducing seizures.
In addition to STK-001, Stoke is advancing STK-002 for the treatment of ADOA, the most common inherited optic nerve disorder. ADOA is caused by mutations in the OPA1 gene, leading to progressive vision loss. STK-002 is designed to upregulate OPA1 protein expression, with the aim of stopping or slowing vision loss in patients with ADOA.
Stoke's TANGO platform has demonstrated proof of concept in multiple organ systems, supporting the broad potential of the company's approach to selectively restore protein expression. The company is also leveraging TANGO to identify additional targets for the development of future product candidates.
Financial Overview
Stoke Therapeutics reported annual revenue of $8,780,000 and a net loss of $104,699,000 for the fiscal year ended December 31, 2023. The company's annual operating cash flow was -$81,067,000, and its annual free cash flow was -$82,683,000.
For the three months ended March 31, 2024, Stoke reported revenue of $4,216,000, a net loss of $26,374,000, operating cash outflow of $24,566,000, and free cash outflow of $24,578,000. The decrease in revenue compared to the prior-year period was primarily due to the timing of milestone payments from the company's collaboration with Acadia Pharmaceuticals.
Stoke's research and development expenses for the three months ended March 31, 2024 were $22,368,000, an increase of $2,737,000 compared to the same period in 2023. This increase was driven by higher costs related to the company's STK-001 and STK-002 programs, as well as increased spending on facilities and other research and development activities.
General and administrative expenses for the first quarter of 2024 were $10,220,000, relatively flat compared to the prior-year period. The company continues to invest in building out its infrastructure and capabilities to support the advancement of its pipeline.
Liquidity
As of March 31, 2024, Stoke had $178,581,000 in cash and cash equivalents, and $0 in marketable securities. The company believes its current cash position, combined with the $120,300,000 in net proceeds from its April 2024 public offering, will enable it to fund its operating expenses and capital expenditure requirements at least through the end of 2025.
Dravet Syndrome Program Update
In March 2024, Stoke announced end-of-study data from the Phase 1/2a open-label studies of STK-001 in Dravet syndrome. The pooled data demonstrated that STK-001 was generally well-tolerated, with 30% of patients experiencing a treatment-emergent adverse event related to the study drug, the most common being cerebrospinal fluid protein elevations and procedural vomiting.
The data also showed substantial reductions in convulsive seizure frequency among patients treated with multiple doses of 70mg of STK-001, with median reductions of 44% at three months and 55% at six months after the last dose. Patients who continued treatment in the open-label extension studies demonstrated durable reductions in seizure frequency over 12 months.
Additionally, the data indicated clinically meaningful improvements from baseline in multiple measures of cognition and behavior, including the Vineland Adaptive Behavior Scale. Based on these results, Stoke plans to meet with regulatory authorities to discuss a registrational study design that includes initial doses of 70mg followed by continued dosing at 45mg of STK-001.
ADOA Program Update
In November 2021, Stoke announced the nomination of STK-002 as the lead product candidate for the treatment of ADOA. The company has received authorization in the United Kingdom to proceed with a Phase 1 open-label study (OSPREY) of STK-002 in children and adults with ADOA, and expects the study to start in 2024.
Stoke's in-licensed patents and patent applications cover the mechanism of action of STK-002, compositions related to STK-002, and uses of those compositions for treating ADOA. The company is currently pursuing patent protection for STK-002 in several economically significant countries.
Collaboration with Acadia Pharmaceuticals
In January 2022, Stoke entered into a license and collaboration agreement with Acadia Pharmaceuticals for the discovery, development, and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system. The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target.
Under the terms of the agreement, Stoke received an upfront payment of $60,000,000 from Acadia. The company is eligible to receive up to $907,500,000 in potential milestone payments based on the achievement of certain development, regulatory, and sales milestones across the three target programs. Stoke is also entitled to tiered royalties on future net sales of licensed products for MECP2 and the undisclosed neurodevelopmental target.
For the SYNGAP1 target, Stoke and Acadia are co-developing and co-commercializing licensed products, with Stoke responsible for 50% of the development and commercialization costs and entitled to 50% of the profits from global commercialization.
Intellectual Property and Regulatory Designations
Stoke's owned and in-licensed patent portfolio covers the company's TANGO technology, STK-001, STK-002, and other product candidates. The company has received Orphan Drug Designations for STK-001 in the treatment of Dravet syndrome in the United States and the European Union, as well as for STK-002 in the treatment of ADOA in the United States.
Additionally, the FDA has granted Rare Pediatric Disease Designation to STK-001 for the treatment of Dravet syndrome. This designation makes Stoke eligible to receive a priority review voucher upon approval of an NDA for STK-001, which could expedite the regulatory review process and provide a competitive advantage.
Risks and Challenges
Stoke's success will depend on its ability to successfully develop, obtain regulatory approval for, and commercialize STK-001, STK-002, and any future product candidates. The company faces risks inherent to the biotechnology industry, including the challenges of navigating the regulatory approval process, managing clinical trial enrollment, and securing adequate funding to support its operations and research and development activities.
Additionally, Stoke's target indications, Dravet syndrome and ADOA, have low prevalence, which could make it difficult to identify and enroll sufficient numbers of eligible patients in the company's clinical trials. The company also faces competition from other therapies and potential future competitors, as well as risks related to intellectual property protection and potential manufacturing and supply chain disruptions.
Outlook
Stoke Therapeutics is making significant progress in its mission to develop transformative RNA-based therapies for severe genetic diseases. The company's lead programs, STK-001 for Dravet syndrome and STK-002 for ADOA, have demonstrated promising results in early clinical studies and have the potential to address significant unmet medical needs.
With a strong cash position, a robust intellectual property portfolio, and strategic collaborations, Stoke is well-positioned to continue advancing its pipeline and exploring the broader potential of its TANGO platform. As the company navigates the challenges inherent to drug development, investors will closely monitor Stoke's ability to execute on its clinical and regulatory milestones, as well as its progress in expanding its pipeline and securing additional partnerships.
Conclusion
Overall, Stoke Therapeutics' unique approach to selectively restoring protein expression holds significant promise for patients suffering from severe genetic diseases, and the company's continued execution could unlock substantial value for shareholders in the years to come.