Executive Summary / Key Takeaways

• Stoke Therapeutics is pioneering a novel RNA-based approach, Targeted Augmentation of Nuclear Gene Output (TANGO), to develop disease-modifying therapies for severe genetic diseases by upregulating protein expression.
• The company's lead candidate, zorevunersen for Dravet syndrome, has demonstrated substantial and durable reductions in seizures and continued improvements in cognition and behavior in long-term open-label extension studies, positioning it as a potential first-in-class treatment.
• A significant collaboration with Biogen International GmbH , including a $165 million upfront payment and substantial potential milestones, has provided critical funding and global validation for zorevunersen, leading to a notable financial inflection point with net income reported for the nine months ended September 30, 2025.
• Despite a history of operating losses and the inherent risks of clinical development for rare diseases, Stoke's cash, cash equivalents, and marketable securities are projected to fund operations until mid-2028, supported by recent capital raises and collaboration revenue.
• Investors should closely monitor the progress of the global Phase 3 EMPEROR study for zorevunersen and the Phase 1 OSPREY study for STK-2, as well as the company's ability to navigate a highly competitive landscape dominated by larger, more established players in genetic medicine.

Unlocking Genetic Potential: Stoke's TANGO Platform and the Pursuit of Disease Modification

Stoke Therapeutics, Inc. is an emerging force in the biopharmaceutical industry, dedicated to addressing the fundamental causes of severe genetic diseases through its innovative RNA-based medicines. Founded in 2014, the company has strategically focused its efforts on developing therapies that upregulate protein expression using its proprietary Targeted Augmentation of Nuclear Gene Output (TANGO) approach. This foundational technology, licensed exclusively worldwide from the University of Southampton in 2016, represents a differentiated strategy in the rapidly evolving landscape of genetic medicine, aiming to restore normal protein levels rather than merely managing symptoms.

The biopharmaceutical sector, particularly in genetic and neurological disorders, is characterized by intense competition, rapid technological advancements, and a strong emphasis on intellectual property. Stoke operates within this dynamic environment, positioning itself as a niche innovator against larger, more established players like Ionis Pharmaceuticals , Alnylam Pharmaceuticals , and Biogen . These industry giants often possess significantly greater financial, technical, and commercialization resources, allowing them to pursue broader pipelines and achieve regulatory approvals more rapidly. Stoke's strategy, however, centers on the precision and potential disease-modifying capabilities of its TANGO platform, which could offer a distinct advantage in specific, underserved patient populations.

The TANGO Advantage: Precision in Genetic Medicine

Stoke's core technological differentiator lies in its TANGO approach, which employs antisense oligonucleotides (ASOs) to selectively increase the expression of a healthy gene copy in haploinsufficiency diseases. This mechanism is designed to restore protein levels to a therapeutic range, thereby addressing the underlying genetic cause of the disease. The tangible benefits of this precision-based technology are becoming increasingly evident in its lead programs.

For zorevunersen (STK-1), an investigational medicine for Dravet syndrome, clinical data have shown compelling results. Long-term open-label extension (OLE) studies have demonstrated "substantial and durable reductions in convulsive seizure frequency when administered on top of standard of care anti-seizure medicines" through three years of treatment. Crucially, these studies also indicate "continued improvements in cognition and behavior during the 3-year OLE period," a significant differentiator from existing symptom-focused treatments. Further analysis presented in October 2025 revealed "continuing improvements in cognition and behavior at two years that contrast with findings from a two-year natural history study in which patients with Dravet syndrome who were treated with standard of care showed minimal changes." Zorevunersen has also been "generally well tolerated across the studies." These outcomes suggest a potential disease-modifying effect, which could command premium pricing and establish a strong competitive moat if approved.

The company's second clinical candidate, STK-2 for Autosomal Dominant Optic Atrophy (ADOA), also leverages the TANGO platform to upregulate OPA1 protein expression. Preclinical studies in a non-human primate model of ADOA indicated that STK-2 was "well tolerated and helped protect, and possibly improve, eye health," suggesting it "may help preserve the function of important vision-related nerve cells, which could potentially improve or maintain vision." These early results highlight the broad applicability and potential of the TANGO platform across different genetic conditions.

Stoke's R&D initiatives are progressing, with the global Phase 3 EMPEROR study for zorevunersen actively recruiting patients in the U.S., UK, and Japan, and European sites expected to initiate in 2026. The company plans to meet with the FDA before the end of 2025 to review four years of safety and efficacy data and discuss potential expedited regulatory pathways, supported by its Breakthrough Therapy Designation for zorevunersen. For STK-2, the Phase 1 OSPREY study initiated in the UK in August 2025, with European sites anticipated to activate in early 2026. Data from the FALCON natural history study are also informing STK-2's clinical development.

Strategic Collaborations and a Financial Inflection Point

Strategic partnerships have been instrumental in validating Stoke's technology and bolstering its financial position. The most significant development in this regard was the License and Collaboration Agreement with Biogen International GmbH on February 14, 2025. This agreement focuses on the joint development and commercialization of zorevunersen and other compounds targeting the SCN1A gene. Stoke received a substantial upfront payment of $165 million and is eligible for up to $50 million in development milestones and $335 million in commercial milestones, in addition to tiered, double-digit royalties on future net sales in territories outside the U.S., Canada, and Mexico. This collaboration not only provides significant non-dilutive funding but also leverages Biogen's global development and commercialization expertise, extending Stoke's reach. The parties share global development costs, with Stoke responsible for 70% and Biogen for 30%.

For the nine months ended September 30, 2025, the company reported a remarkable revenue of $183.02 million, a substantial increase from $13.94 million in the same period of 2024. This surge was primarily driven by $150.80 million related to the IP license performance obligation and $11.50 million for global development activities under the Biogen Agreement. This collaboration revenue also contributed to a significant financial inflection point, with Stoke reporting a net income of $51.05 million for the nine months ended September 30, 2025, a stark contrast to the net loss of $78.50 million in the prior year period.

While the company's gross profit margin (TTM) stands at an impressive 94.83%, and operating and net profit margins (TTM) are 13.23% and 19.73% respectively, it is crucial for investors to recognize that these profitability metrics are currently driven by collaboration revenue rather than product sales.

Research and development expenses have also increased, reflecting the company's investment in its pipeline. For the nine months ended September 30, 2025, R&D expenses rose to $96.20 million from $65.70 million in the prior year, with a $23 million increase specifically for the zorevunersen program. This increased spending underscores the capital-intensive nature of drug development.

Another collaboration, initiated in January 2022 with Acadia Pharmaceuticals Inc. (ACAD), for RNA-based medicines in neurodevelopmental diseases, provided an upfront payment of $60 million. While the SYNGAP1 program remains ongoing, Acadia terminated the MECP2 and an undisclosed neurodevelopmental program effective September 3, 2025. This termination means Stoke is no longer eligible for up to $662.50 million in potential milestones or related royalties from those discontinued programs, highlighting the inherent risks and shifting priorities in pharmaceutical partnerships.

Capital Position and Funding Runway

As of September 30, 2025, Stoke Therapeutics maintained a solid liquidity position with $328.60 million in cash, cash equivalents, and marketable securities. This was further augmented by $48.70 million in net proceeds from the sale of approximately 1.80 million shares of common stock subsequent to the quarter-end, up to the 10-Q filing date of November 4, 2025. Based on its current operating plan, management believes these funds will be sufficient to support operations until mid-2028. This extended runway is critical for an early-stage biotechnology company with an accumulated deficit of $439.80 million as of September 30, 2025.

However, the company acknowledges that it will require substantial additional financing to advance its product candidates through clinical development, acquire or in-license new candidates, and fund future operations. Stoke plans to seek these funds through equity offerings, debt financings, or further collaborations, but recognizes the risk of being unable to raise capital on favorable terms or at all. The absence of a credit facility or committed capital sources underscores this dependency on future financing.

Competitive Arena: ASO Innovation vs. Established Giants

Stoke Therapeutics operates in a highly competitive arena, where its niche innovator status is juxtaposed against the formidable resources of industry leaders. While Stoke's TANGO platform offers a unique approach to upregulating protein expression, its direct competitors, such as Ionis Pharmaceuticals (IONS), possess a more mature ASO platform, a diversified pipeline, and established commercialization capabilities. Ionis's more stable revenue streams and improving profitability margins from marketed products contrast with Stoke's aggressive R&D investment and early-stage financial vulnerability.

Similarly, Alnylam Pharmaceuticals (ALNY), a pioneer in RNA interference (RNAi) therapies, has multiple FDA approvals and robust partnerships. While Stoke's upregulation mechanism may address different therapeutic needs than Alnylam's gene-silencing, Alnylam's superior product diversity, regulatory experience, and stronger cash flow from commercialized drugs present a significant competitive challenge. Biogen (BIIB), a major player in neurological diseases and Stoke's current partner for zorevunersen, exemplifies the scale and market reach that Stoke aims to achieve. Biogen's extensive resources and established treatments provide a broad competitive advantage, making it challenging for Stoke to gain significant market share independently.

Indirect competition also looms from companies developing gene therapies (e.g., Bluebird Bio (BLUE)) and CRISPR-based gene editing technologies (ee.g., CRISPR Therapeutics (CRSP)), which could offer potentially more permanent solutions or alternative treatment modalities. These alternatives could impact Stoke's market share and financial performance if they prove more accessible, cost-effective, or faster to develop. Stoke's competitive advantages, primarily its proprietary TANGO technology and strategic partnerships, are crucial for its differentiation. However, its early-stage status, high R&D dependency, and limited commercialization experience remain significant vulnerabilities that could affect its growth rates and profitability. The high barriers to entry in the biopharmaceutical industry, including substantial R&D costs and stringent regulatory hurdles, both protect Stoke's niche from new entrants and simultaneously challenge its financial performance due to its smaller scale.

Risks to the Investment Thesis

Investing in Stoke Therapeutics carries inherent risks typical of early-stage biotechnology companies. The success of its product candidates, zorevunersen and STK-2, is contingent on successful clinical trial outcomes, which are inherently uncertain. Positive results in early-stage studies may not translate to later-stage trials, and unexpected safety issues or side effects could emerge, potentially leading to clinical holds or termination of programs. Regulatory approval pathways are complex and lengthy, with no guarantee of success or broad indication approval. The low prevalence of Dravet syndrome and ADOA also poses challenges for patient enrollment in trials and could limit commercial revenue growth if approved, necessitating high per-patient pricing.

Furthermore, the company faces intense competition from companies with greater resources and more advanced pipelines. The potential for competitors to develop safer, more effective, or cheaper therapies, or to achieve regulatory approval more rapidly, could significantly erode Stoke's market opportunity. Reliance on third parties for preclinical studies, clinical trials, and manufacturing introduces operational risks, including potential delays or failures to meet regulatory requirements. Macroeconomic conditions, such as inflation, changing interest rates, and instability in the global banking system, could adversely impact Stoke's ability to raise additional capital or affect its operational costs. Geopolitical conflicts and government shutdowns also pose risks of regulatory delays and disruptions to capital markets.

Conclusion

Stoke Therapeutics stands at a pivotal juncture, driven by the innovative promise of its TANGO platform and the significant validation provided by its collaboration with Biogen. The recent financial inflection point, marked by substantial collaboration revenue and a shift to net income for the nine months ended September 30, 2025, underscores the potential of its disease-modifying therapies in development. With zorevunersen advancing into a global Phase 3 study and STK-2 progressing in early clinical development, the company is demonstrating operational momentum in addressing severe genetic diseases with high unmet needs.

While the path to commercialization remains long and fraught with the inherent risks of drug development, including clinical uncertainties, regulatory hurdles, and intense competition, Stoke's current liquidity position provides a runway to mid-2028. The company's ability to execute on its clinical programs, secure further non-dilutive funding, and effectively differentiate its TANGO technology against established players will be critical determinants of its long-term success. For discerning investors, Stoke Therapeutics represents a compelling, albeit high-risk, opportunity in the precision genetic medicine space, where technological leadership and strategic partnerships are key to unlocking significant future value.