Executive Summary / Key Takeaways

• Stoke Therapeutics is pioneering a novel RNA-based approach, TANGO, to upregulate protein expression for severe genetic diseases caused by haploinsufficiency, offering potential disease modification beyond symptom management.
• The company's lead candidate, zorevunersen, is advancing into a pivotal Phase 3 EMPEROR study for Dravet syndrome in Q2 2025, supported by positive Phase 1/2a data showing durable seizure reduction and improvements in cognition/behavior.
• A significant collaboration with Biogen (BIIB), finalized in February 2025, provides a substantial $165 million upfront payment, bolstering liquidity and funding global development (ex-US/Canada/Mexico) with shared costs.
• The Biogen payment contributed significantly to a net income of $112.9 million and positive operating cash flow of $131.8 million in Q1 2025, extending the cash runway estimate to mid-2028.
• While facing intense competition and execution risks inherent in biotech, Stoke's differentiated technology and strategic partnerships position it for potential future growth, contingent on successful clinical trial outcomes and regulatory approvals.

A Novel Approach to Genetic Disease: Upregulating Protein with TANGO

Stoke Therapeutics, founded in 2014, set out with an ambitious goal: to address the root causes of severe genetic diseases, particularly those stemming from haploinsufficiency. This condition, where a patient has only one functional copy of a gene, results in approximately 50% of the normal protein level, leading to disease. Rather than replacing the faulty gene or inhibiting a downstream pathway, Stoke developed its proprietary Targeted Augmentation of Nuclear Gene Output (TANGO) technology, an RNA-based approach designed to precisely upregulate the expression of the healthy copy of the gene.

The TANGO platform utilizes antisense oligonucleotides (ASOs) to target specific RNA sequences, aiming to increase the production of the needed protein. This differentiated mechanism offers a potential advantage over traditional gene therapies by avoiding viral vectors and potentially providing titratable dosing. While precise, directly comparable quantitative metrics on TANGO's protein upregulation efficiency versus all alternative technologies are not publicly detailed, the company's preclinical and early clinical data suggest the potential for meaningful protein restoration, which is foundational to their disease-modifying strategy. The strategic intent behind ongoing R&D is to expand the TANGO platform to address a broader pipeline of haploinsufficiency diseases, leveraging this core technological strength.

The Pipeline Takes Shape: Zorevunersen Leads the Way

Stoke's lead program, zorevunersen (STK-1.00), targets Dravet syndrome, a severe genetic epilepsy primarily caused by haploinsufficiency of the SCN1A gene. This debilitating condition is characterized by frequent, prolonged seizures and significant developmental delays. Current treatments primarily focus on symptom management, highlighting the high unmet need for a disease-modifying therapy.

Positive results from the Phase 1/2a MONARCH and ADMIRAL studies, along with their open-label extensions, have shown promising signs. Data indicated substantial and durable reductions in convulsive seizure frequency in patients receiving zorevunersen on top of standard of care. Importantly, ongoing treatment also suggested continuous improvements in cognition and behavior, as measured by Vineland-3 subdomains, through two years. These clinical observations underscore the potential of the TANGO approach to address not just seizures but also the significant neurodevelopmental impairments associated with Dravet syndrome.

Building on these results, zorevunersen received Breakthrough Therapy Designation from the FDA in December 2024 for Dravet syndrome with a confirmed SCN1A mutation. This designation, while not guaranteeing approval or a faster review, provides access to intensive FDA guidance and an organizational commitment from senior FDA management, reflecting the preliminary clinical evidence of potential substantial improvement over available therapies. Regulatory alignment has been achieved with the FDA, EMA, and PMDA on the design of the pivotal Phase 3 EMPEROR study. This global, randomized, double-blind, sham-controlled trial is expected to enroll approximately 150 children and adolescents (ages 2-18) and is planned to initiate in the second quarter of 2025, with pivotal data anticipated in the second half of 2027.

Beyond Dravet syndrome, Stoke is also advancing STK-2.00 for autosomal dominant optic atrophy (ADOA), the most common inherited optic nerve disorder caused by OPA1 haploinsufficiency. STK-2.00 is designed to upregulate OPA1 protein expression to potentially stop or slow vision loss. The company received authorization in the UK for a Phase 1 study (OSPREY) in April 2023. However, the company is currently conducting additional preclinical activities to optimize clinical plans and better understand the broader opportunity for targeting OPA1, indicating a measured approach to advancing this program.

Strategic Partnerships and Financial Fortification

Recognizing the significant resources required for late-stage clinical development and potential commercialization, Stoke has strategically pursued collaborations. A key development occurred in February 2025 with the License and Collaboration Agreement with Biogen International GmbH. This partnership focuses on the joint development and commercialization of zorevunersen and other SCN1A-targeting compounds outside the United States, Canada, and Mexico.

Under the terms of the Biogen agreement, Stoke received a substantial $165 million upfront payment. The parties will share global development costs, with Stoke responsible for 70% and Biogen for 30%. Stoke retains exclusive rights in North America, while Biogen gains exclusive commercialization rights in the rest of the world. This collaboration not only provides significant non-dilutive funding but also leverages Biogen's global expertise in rare neurological diseases and commercialization, particularly with ASOs like Spinraza. Stoke is also eligible for up to approximately $50 million in development milestones and $335 million in commercial milestones, plus tiered double-digit royalties on future net sales in the Biogen territory.

This influx of cash from the Biogen collaboration had a transformative impact on Stoke's recent financial results. For the three months ended March 31, 2025, the company reported revenue of $158.6 million, a dramatic increase from $4.2 million in the same period of 2024. This surge was primarily driven by the recognition of $150.8 million related to the IP license performance obligation under the Biogen agreement. This revenue contributed to a net income of $112.9 million for the quarter, a significant improvement from the net loss of $26.4 million in Q1 2024.

Operating expenses also increased, with research and development expenses rising to $32.7 million in Q1 2025 from $22.4 million in Q1 2024, reflecting increased personnel costs and spending on the zorevunersen program. General and administrative expenses similarly increased to $14.7 million from $10.2 million.

Despite increased spending, the strong revenue from the Biogen deal resulted in positive net cash provided by operating activities of $131.8 million in Q1 2025, a stark contrast to the $24.6 million used in operations in Q1 2024. As of March 31, 2025, Stoke held $380.3 million in cash, cash equivalents, and marketable securities, up from $246.7 million at the end of 2024. Based on its current operating plan, the company estimates this capital is sufficient to fund operations through mid-2028.

Stoke also maintains a collaboration with Acadia Pharmaceuticals (ACAD), initiated in January 2022, focused on RNA-based medicines for neurodevelopmental diseases, including SYNGAP1. While Acadia recently elected to discontinue two programs under this agreement (MECP2 and an undisclosed target) in May 2025, the SYNGAP1 collaboration, which involves co-development and co-commercialization with shared costs and profits, remains ongoing. Revenue recognized from the Acadia collaboration was $6.1 million in Q1 2025.

Competitive Landscape and Strategic Positioning

The biotechnology and pharmaceutical industries are highly competitive, particularly in the genetic medicine and rare disease spaces. Stoke faces competition from companies developing various RNA-based therapies, including ASOs (like Ionis Pharmaceuticals (IONS) and Biogen), RNAi therapies (like Alnylam Pharmaceuticals (ALNY)), and gene therapies (like Sarepta Therapeutics (SRPT) and Encoded Therapeutics). Many of these competitors, such as Biogen, Ionis, and Alnylam, possess significantly greater financial, technical, and commercial resources, as well as established market presence and approved products.

While larger players like Ionis and Alnylam have broader pipelines and established commercial infrastructures, Stoke's competitive edge lies in its unique TANGO technology specifically designed for protein upregulation in haploinsufficiency diseases. This targeted approach could potentially offer superior efficacy or a more favorable safety profile for specific indications compared to competitors' technologies, which may focus on gene silencing or replacement. For example, while Ionis and Biogen have commercialized ASOs like Spinraza, Stoke's TANGO aims for a different mechanism of action – increasing functional protein from the non-mutant allele – which could be particularly well-suited for haploinsufficiencies.

Stoke's strategic partnerships, particularly with Biogen for zorevunersen, are critical for competing effectively. This collaboration provides access to Biogen's global development and commercialization capabilities, offsetting Stoke's relative lack of scale compared to larger competitors. However, dependence on collaborators also presents risks, as partners may not prioritize Stoke's programs or may terminate agreements, as seen with Acadia's decision on two programs.

Financially, Stoke's recent performance, boosted by the Biogen upfront payment, shows a significant improvement in liquidity and a positive shift to net income and operating cash flow in Q1 2025. While its historical financial ratios reflect its early-stage, R&D-intensive nature (e.g., negative operating margins historically), the recent revenue and cash flow demonstrate the potential impact of successful collaboration deals. Compared to larger, profitable competitors like Biogen, Stoke operates at a much smaller scale but exhibits higher revenue growth potential from a low base, driven by pipeline progress and partnerships. The company's ability to translate its technological differentiation into successful clinical outcomes and commercial products will be key to its long-term competitive positioning.

Risks and Challenges Ahead

Despite recent progress and financial fortification, Stoke faces significant risks inherent in the biotechnology sector. The success of the investment thesis hinges heavily on the outcome of the pivotal Phase 3 EMPEROR study for zorevunersen. Clinical trials can fail at any stage, and positive results from earlier phases do not guarantee success in later, larger trials. The anticipated data readout in the second half of 2027 represents a major binary event for the company.

Regulatory approval is not guaranteed, and even if approved, zorevunersen may face limitations on its label or require costly post-marketing studies. The low prevalence of Dravet syndrome and ADOA presents challenges for patient identification and enrollment in trials, as well as for commercialization and reimbursement if approved. Obtaining adequate pricing, coverage, and reimbursement from third-party payors for rare disease therapies is uncertain and critical for commercial success.

Reliance on third-party contract organizations for manufacturing, preclinical studies, and clinical trials introduces execution risk, including potential delays or quality issues. The recent CEO transition also adds a layer of uncertainty, although the company has appointed an interim CEO and initiated a search for a permanent replacement. Furthermore, intellectual property protection is vital but challenging to maintain, facing potential challenges from competitors or changes in patent law. Macroeconomic conditions, including inflation and instability in the banking system, and geopolitical conflicts could also adversely impact operations and funding.

Conclusion

Stoke Therapeutics stands at a pivotal juncture, leveraging its innovative TANGO technology to pursue disease-modifying treatments for severe genetic diseases. The recent Biogen collaboration has significantly strengthened its financial position, providing crucial funding and validation as its lead program, zorevunersen, enters a pivotal Phase 3 study for Dravet syndrome. The positive early clinical data and Breakthrough Therapy Designation underscore the potential of this novel approach to address a high unmet medical need.

While the path forward is marked by the inherent risks of clinical development, regulatory hurdles, and intense competition from larger, more established players, Stoke's differentiated technology and strategic partnerships provide a foundation for potential future success. The initiation of the EMPEROR study and the anticipated data readout in 2027 are critical milestones that will shape the company's trajectory. For investors, the story of Stoke is one of technological innovation in rare diseases, bolstered by strategic alliances, with the near-term focus squarely on executing its lead clinical program to demonstrate the potential of its unique protein upregulation platform.