Business Overview and History
Stoke Therapeutics, a biotechnology company dedicated to restoring protein expression through RNA medicine, is making significant strides in developing a potentially groundbreaking treatment for Dravet syndrome, a rare and devastating genetic epilepsy. With its lead candidate, zorevunersen, Stoke is positioned to revolutionize the management of this debilitating condition.
Stoke Therapeutics was founded in June 2014 and incorporated under the laws of the state of Delaware. The company's mission is to address the underlying causes of severe diseases by upregulating protein expression with RNA-based medicines. In 2016, Stoke entered into an exclusive, worldwide license agreement with the University of Southampton, acquiring rights to foundational technologies related to the company's TANGO (Targeted Augmentation of Nuclear Gene Output) technology. This licensed intellectual property formed the basis for Stoke's proprietary approach to selectively restore protein levels.
The company's TANGO platform serves as the foundation for its drug development efforts, focusing on diseases characterized by haploinsufficiency, where a loss of approximately 50% of normal protein levels leads to the disease. In 2019, Stoke received Orphan Drug Designation from the FDA for zorevunersen, its lead candidate for the treatment of Dravet syndrome. That same year, Stoke submitted an investigational new drug (IND) application to the FDA for zorevunersen.
Stoke initiated its first clinical trials for zorevunersen in 2020, with the MONARCH Phase 1/2a study in the United States and the ADMIRAL study in the United Kingdom. These studies demonstrated promising results, with patients experiencing substantial and durable reductions in convulsive seizure frequency, as well as continuous improvements in cognitive and behavioral measures. Encouraged by these findings, Stoke has worked closely with regulatory agencies globally to align on the design of a pivotal Phase 3 study, which is expected to commence in mid-2025.
In November 2021, the company announced the nomination of STK-2 as its lead product candidate for the treatment of autosomal dominant optic atrophy (ADOA), another genetic disease. Stoke submitted a Clinical Trial Authorization (CTA) application to the UK Medicines and Healthcare Products Regulatory Agency (MHRA) for STK-2 in early 2023. Throughout its history, Stoke has faced challenges common to early-stage biotechnology companies, including successfully advancing its product candidates through preclinical and clinical development, securing sufficient funding to support its operations, and navigating the regulatory approval process. The company has relied on partnerships and collaborations, such as its 2022 agreement with Acadia Pharmaceuticals, to help fund its research and development efforts.
Financial Performance and Outlook
Stoke Therapeutics has been focused on advancing its pipeline and has not yet generated significant revenue from product sales. For the fiscal year ended December 31, 2023, the company reported total revenue of $8.78 million, a 29% decrease from the previous year, primarily due to the timing of milestones achieved under its collaboration with Acadia Pharmaceuticals. Net loss for the year was $104.70 million, compared to a net loss of $101.07 million in the prior year. The company's annual operating cash flow for 2023 was -$81.07 million, and annual free cash flow was -$82.68 million.
For the third quarter of 2024, Stoke reported revenue of $4.89 million, a 47.7% increase from $3.31 million in Q3 2023. This increase was driven by progress made in the company's collaboration agreement with Acadia Pharmaceuticals. Net loss for Q3 2024 was $26.43 million, slightly higher than the $24.54 million loss in Q3 2023.
As of September 30, 2024, Stoke Therapeutics had $269.20 million in cash, cash equivalents, and marketable securities, providing the company with a runway to fund its operations and clinical development activities, including the upcoming Phase 3 study of zorevunersen, through at least the end of 2025. Specifically, the company held $150.02 million in cash and cash equivalents, $89.18 million in current marketable securities, and $494,000 in restricted cash for long-term lease obligations.
Stoke's liquidity position remains strong, with a current ratio and quick ratio both at 5.08 as of September 30, 2024. The company's debt-to-equity ratio was 0.01, indicating a low level of debt relative to equity. In April 2024, Stoke completed an underwritten public offering, raising $119.9 million in net proceeds to support the continued development of its pipeline. The company also has an active at-the-market (ATM) offering program, through which it has issued approximately 7 million shares for net proceeds of $61 million as of September 30, 2024.
Research and development expenses were $22.2 million and $65.7 million for the three and nine months ended September 30, 2024, respectively, reflecting the company's focus on advancing its clinical programs. General and administrative expenses were $12.7 million and $36.0 million for the same respective periods, as Stoke supports its ongoing operations and prepares for potential future commercialization of its products.
Regulatory Milestones and Breakthrough Therapy Designation
Stoke's progress with zorevunersen has been bolstered by key regulatory milestones. In December 2024, the company announced that the U.S. Food and Drug Administration (FDA) had granted Breakthrough Therapy Designation for zorevunersen in the treatment of Dravet syndrome. This designation is intended to expedite the development and review of therapies for serious or life-threatening conditions where preliminary clinical evidence indicates the drug may provide a substantial improvement over available therapies.
The FDA's Breakthrough Therapy Designation for zorevunersen underscores the significant unmet need in Dravet syndrome and the potential for Stoke's investigational therapy to become a transformative treatment option. This designation is expected to enhance Stoke's ability to work closely with the FDA to optimize the development and regulatory pathway for zorevunersen.
Additionally, Stoke has achieved global regulatory alignment with the FDA, the European Medicines Agency (EMA), and Japan's Pharmaceuticals and Medical Devices Agency (PMDA) on the design of the pivotal Phase 3 EMPEROR study of zorevunersen. This alignment provides a clear path forward for the development of zorevunersen as potentially the first disease-modifying medicine for Dravet syndrome.
Competitive Landscape and Unmet Need
Dravet syndrome is a rare and severe genetic epilepsy that affects approximately 1 in 16,000 individuals worldwide. Currently, there are no approved disease-modifying therapies for Dravet syndrome, and existing treatments are primarily focused on managing seizures and providing supportive care. Patients with Dravet syndrome often experience significant developmental delays, cognitive impairments, and a high risk of premature mortality.
Stoke's zorevunersen represents a unique approach to addressing the underlying genetic cause of Dravet syndrome. By upregulating the expression of the SCN1A gene, zorevunersen has the potential to restore the appropriate levels of the sodium channel protein, which is crucial for normal neuronal function. This novel mechanism of action differentiates zorevunersen from existing seizure management therapies, which primarily focus on symptom relief rather than targeting the root cause of the disease.
The successful development of zorevunersen could transform the treatment landscape for Dravet syndrome, providing patients and their families with a much-needed disease-modifying option that could potentially improve long-term outcomes and quality of life.
Risks and Challenges
As with any biotechnology company, Stoke Therapeutics faces several risks and challenges that investors should consider:
1. Clinical Development Risk: The successful completion of the pivotal Phase 3 EMPEROR study for zorevunersen is critical to the company's future success. Delays or setbacks in the clinical development process could significantly impact Stoke's timeline and financial resources.
2. Regulatory Approval Risk: While the Breakthrough Therapy Designation provides a favorable regulatory pathway, there is no guarantee that zorevunersen will receive marketing approval from the FDA or other regulatory agencies. Unfavorable regulatory decisions could derail the company's commercialization plans.
3. Commercial Execution Risk: Even with regulatory approval, Stoke will need to effectively commercialize zorevunersen and build a successful market presence in the rare disease space. Challenges in pricing, reimbursement, and patient identification could hinder the product's commercial success.
4. Competition and Technological Advancements: Stoke's TANGO platform and zorevunersen may face competition from other emerging technologies or therapies targeting Dravet syndrome or similar genetic disorders. Rapid advancements in the field could impact the company's competitive positioning.
5. Financing and Liquidity Risks: As a clinical-stage biotechnology company, Stoke Therapeutics will likely require additional capital to fund its operations and clinical development activities. Failure to secure necessary financing could jeopardize the company's ability to execute on its strategic plans.
Despite these risks, Stoke Therapeutics' focus on addressing the underlying genetic causes of disease through its innovative TANGO platform, combined with the promising data for zorevunersen and the Breakthrough Therapy Designation, position the company as a promising player in the rare disease treatment landscape.
Product Pipeline and Development Updates
Stoke Therapeutics' primary focus is on the development of zorevunersen (STK-1.00) for the treatment of Dravet syndrome. The company has completed two Phase 1/2a open-label studies of zorevunersen, MONARCH in the United States and ADMIRAL in the United Kingdom. Additionally, Stoke has two ongoing open-label extension (OLE) studies, SWALLOWTAIL in the U.S. and LONGWING in the U.K., designed to evaluate the long-term safety and tolerability of repeat doses of zorevunersen in children and adolescents with Dravet syndrome.
In August 2024, Stoke announced that the FDA had removed the partial clinical hold on higher doses of zorevunersen in the MONARCH and SWALLOWTAIL studies. As a result, patients in the SWALLOWTAIL OLE study in the U.S. now receive chronic dosing of 45mg of zorevunersen every four months, while patients in the LONGWING OLE study in the U.K. receive the same 45mg dose on the same schedule. This development represents a significant milestone in the advancement of zorevunersen's clinical program.
Stoke is currently in discussions with global regulatory agencies and is on track to provide an update on Phase 3 registrational plans for zorevunersen in the second half of 2024. The company anticipates initiating the pivotal Phase 3 EMPEROR study of zorevunersen in Dravet syndrome in the second quarter of 2025, with an expected data readout in the second half of 2027.
In addition to its lead program in Dravet syndrome, Stoke is developing STK-2.00 as a potential treatment for autosomal dominant optic atrophy (ADOA), the most common inherited optic nerve disorder. In November 2021, Stoke nominated STK-2.00 as the lead product candidate for the treatment of ADOA. The company has received authorization in the U.K. to proceed with a Phase 1 open-label study (OSPREY) of STK-2.00 in children and adults ages 6 to 55 who have an established diagnosis of ADOA and evidence of an OPA1 gene mutation. However, Stoke has decided to delay the start of the OSPREY study as it continues to focus resources on the development of zorevunersen for Dravet syndrome.
Conclusion
Stoke Therapeutics is at the forefront of a revolution in the treatment of Dravet syndrome, a devastating genetic epilepsy with significant unmet medical needs. The company's lead candidate, zorevunersen, has the potential to become the first disease-modifying therapy for this condition, addressing the underlying genetic cause rather than just managing symptoms.
With the support of the FDA's Breakthrough Therapy Designation, global regulatory alignment, and a strong financial position, Stoke is poised to execute on its ambitious clinical development plans and potentially transform the lives of Dravet syndrome patients and their families. As the company advances zorevunersen through the pivotal Phase 3 EMPEROR study, investors will closely monitor its progress and the potential for this investigational therapy to redefine the treatment landscape for this rare and debilitating disease.
Stoke's focus on innovative RNA-based medicines, supported by its proprietary TANGO platform, positions the company as a key player in the biotechnology industry's efforts to address severe genetic diseases. While challenges remain, including the successful completion of clinical trials and potential regulatory hurdles, Stoke Therapeutics represents a compelling opportunity for investors interested in companies at the cutting edge of genetic medicine and rare disease treatment.