Executive Summary / Key Takeaways

• Shattuck Labs has strategically pivoted its lead development focus from oncology to inflammatory and immune-mediated diseases, centering on SL-325, a potentially first-in-class DR3 antagonist antibody for Inflammatory Bowel Disease (IBD).
• SL-325 leverages Shattuck's protein engineering expertise, aiming for a more complete and durable blockade of the clinically validated TL1A/DR3 pathway compared to existing or competitor TL1A approaches, supported by promising preclinical data.
• The company expects to file an IND for SL-325 in Q3 2025 and complete enrollment in the Phase 1 trial by Q2 2026, representing critical near-term milestones for the new lead program.
• Financially, Shattuck reported a reduced net loss in Q1 2025 ($13.7M vs $18.5M in Q1 2024), driven by lower R&D and G&A expenses following program discontinuations and workforce reductions, and holds $60.9M in cash as of March 31, 2025, providing a runway into 2027.
• While the cash position supports upcoming SL-325 milestones, the company faces significant clinical development risks, dependence on external partners, and the need for substantial future funding to advance SL-325 and other pipeline candidates through later stages and potential commercialization.

The Strategic Pivot: A New Chapter in Inflammatory Disease

Shattuck Labs, a biotechnology company founded in 2016 with a focus on protein engineering to develop novel therapeutics targeting TNF superfamily receptors, is embarking on a significant strategic shift. Having initially concentrated its lead clinical efforts in oncology with programs like SL-172154 and SL-279252, the company has now decisively pivoted towards inflammatory and immune-mediated diseases. This new chapter is defined by the advancement of SL-325, a potentially first-in-class death receptor 3 (DR3) antagonist antibody, as its lead program.

The decision to discontinue the clinical development of SL-172154 in October 2024 and the earlier discontinuation of the SL-279252 program in Q4 2022 underscores the inherent challenges and high attrition rates in oncology drug development. While SL-172154 had shown promising early signals, such as a 27% overall response rate in a small cohort of platinum-resistant ovarian cancer patients when combined with PLD (compared to a 4% benchmark for PLD alone) and some anti-leukemic activity in heavily pre-treated AML, these results ultimately did not pave a clear path forward. The SL-279252 program, targeting PD1 and OX40, also failed to demonstrate sufficient efficacy in PD-1 experienced patients to warrant further development. These experiences, while leading to program closures and workforce reductions in 2024, have presumably refined the company's focus and capital allocation strategy.

Unpacking SL-325: A Differentiated Approach to the DR3/TL1A Pathway

The core of Shattuck's new investment thesis lies in SL-325 and its potential to offer a differentiated approach to inflammatory diseases, particularly Inflammatory Bowel Disease (IBD), including Ulcerative Colitis (UC) and Crohn's Disease (CD). SL-325 is designed as a high-affinity DR3 blocking monoclonal antibody. The target, DR3, is the sole known signaling receptor for TL1A, a cytokine implicated in chronic inflammation.

Shattuck believes that targeting the receptor (DR3) rather than the ligand (TL1A) offers distinct advantages. Preclinical studies conducted by Shattuck demonstrate that SL-325 blocked TL1A binding to DR3 more effectively than sequence equivalents of leading TL1A blocking antibodies. This suggests a potentially more complete and durable blockade of the clinically validated DR3/TL1A pathway. The biological rationale for this approach is rooted in the differential expression patterns of DR3 and TL1A in IBD patients' gastrointestinal tracts. While TL1A is primarily upregulated only in actively inflamed areas, DR3 is more abundant and upregulated in both inflamed and adjacent non-inflamed tissue. Blocking the stably expressed receptor (DR3) may therefore be more effective at reducing the spread of inflammation and potentially lead to higher rates of clinical and endoscopic remission compared to blocking the transiently expressed ligand (TL1A).

Beyond its target mechanism, SL-325 incorporates key technological differentiators aimed at improving safety and pharmacokinetics. The antibody is engineered to lack Fc gamma receptor binding function, which Shattuck believes supports a potentially de-risked safety profile, avoiding issues seen with some other immune-modulating antibodies. Preclinical data also indicate that SL-325 binds an epitope on DR3 that does not trigger receptor-mediated endocytosis, contributing to highly durable and specific binding. The observed receptor occupancy (RO) and pharmacokinetic (PK) profile in preclinical studies suggest the potential for extended dosing intervals, which could be a significant benefit for patient convenience.

Based on the clinical success observed with several TL1A blocking antibodies, Shattuck anticipates that SL-325 may demonstrate monotherapy disease-modifying activity early in clinical development. The initial clinical focus will be on IBD, with plans to explore other inflammatory and immune-mediated diseases where the DR3/TL1A axis is implicated in the future.

Pipeline Depth and Technological Platforms

While SL-325 is the current flagship, Shattuck maintains a research organization exploring other candidates and leveraging its protein engineering platforms. The company is developing a series of DR3 bispecific antibodies, combining DR3 targeting with other clinically validated pathways. This approach is designed to avoid the immune complex formation issues observed with prior bispecifics targeting TL1A (like AMG966, which was discontinued due to immunogenicity), as DR3 is a membrane-restricted target. Nomination of a lead bispecific candidate from this preclinical pipeline is expected in 2025.

Shattuck also continues to evaluate its GADLEN platform, which targets Gamma Delta T Cells and is considered distinct from other approaches in this space. Preclinical GADLEN compounds include candidates targeting CD20 (for autoimmune disease) and B7-H3 (for solid tumors). Additionally, the company is exploring mRNALNP administered multifunctional GLP-1 constructs and the TRIM7 program, evaluating options that may include independent financing or spinning out these efforts. This broader pipeline, though earlier stage, demonstrates the company's continued commitment to leveraging its protein engineering expertise across multiple targets and therapeutic areas.

Financial Health and Outlook

Shattuck's financial position reflects its stage as a clinical-stage biotech focused on R&D. For the three months ended March 31, 2025, the company reported a net loss of $13.7 million, a decrease from the $18.5 million loss in the same period of 2024. This improvement was primarily driven by reduced operating expenses. Research and development expenses decreased by $6.3 million (39%) to $9.9 million, largely due to the discontinuation of the SL-172154 program and related oncology projects, as well as workforce reductions in 2024 and the completion of work under the Ono (4528) collaboration. General and administrative expenses also decreased by $0.4 million (8.7%) to $4.5 million, mainly due to lower compensation costs from workforce reductions.

Collaboration revenue was $0 for Q1 2025, down from $1.1 million in Q1 2024, as all obligations under the Ono and ImmunoGen (IMGN) collaboration agreements were completed in 2024. The company does not expect to generate significant product revenue for several years, if ever, until a product candidate is successfully developed, approved, and commercialized.

As of March 31, 2025, Shattuck held $60.9 million in cash and cash equivalents. Management believes this cash position is sufficient to fund projected operations into 2027. This guidance is based on current operating plans and excludes potential future capital raises or business development proceeds. Primary cash uses are R&D, manufacturing, administrative support, and working capital. The company anticipates continued cash usage in operations as it advances SL-325 through clinical trials. To support future development and potential commercialization, Shattuck will need additional funding, which may come from equity or debt financing, or new collaborations. The company's ATM facility currently has a capacity of up to $24.5 million after March 27, 2025, subject to public float limitations.

Competitive Positioning in the Inflammatory Landscape

In the inflammatory disease space, particularly IBD, Shattuck's SL-325 enters a competitive landscape that includes companies developing TL1A blocking antibodies. While precise, directly comparable market share figures for all niche competitors are not publicly detailed, larger pharmaceutical companies like Bristol-Myers Squibb (BMY), Merck & Co. (MRK), Gilead Sciences (GILD), and Amgen (AMGN) have significant scale, financial resources, and established market presence in related therapeutic areas (oncology, immunology) that could allow them to quickly enter or dominate new markets. These larger players benefit from extensive patent portfolios, global distribution networks, and robust cash flow generation (e.g., BMY's positive free cash flow exceeding $5 billion in 2024, MRK's around $10 billion), enabling substantial R&D investment and potential acquisitions.

Shattuck's competitive strategy with SL-325 is to differentiate through a potentially first-in-class mechanism (DR3 blockade vs. TL1A blockade) and specific technological advantages. The preclinical data suggesting superior blocking of TL1A binding compared to competitor TL1A antibodies, the potentially de-risked safety profile due to lack of Fc gamma binding, and the durable binding profile are key elements of its technological moat. By targeting DR3, Shattuck aims to achieve a more complete blockade than ligand-targeting approaches, which may be limited by the transient expression of TL1A in inflamed tissue. Furthermore, Shattuck's DR3 bispecific efforts are designed to avoid the immune complex issues that have plagued some prior TL1A bispecifics.

However, as a smaller, clinical-stage company, Shattuck faces significant disadvantages compared to large pharma. Its financial metrics (negative margins, negative operating cash flow of $-12.03M in Q1 2025) highlight its dependence on external funding, contrasting sharply with the profitability and cash generation of its larger peers. While Shattuck leads in specific innovation for the DR3 pathway, its R&D costs are high relative to its limited revenue, and it lacks the manufacturing scale and global commercial infrastructure of established players. The company's dependence on a limited number of CDMOs and CROs for manufacturing and clinical trial support also represents a vulnerability that larger companies with in-house capabilities may not face to the same extent.

Shattuck's strategic positioning relies on the potential clinical superiority of SL-325 to overcome the scale and financial advantages of larger competitors and existing approaches. The success of the upcoming Phase 1 trial will be critical in validating this hypothesis and attracting the necessary funding or partnerships for later-stage development.

Risks and Challenges

Investing in Shattuck Labs carries significant risks, typical of a clinical-stage biotechnology company. The primary risk is the uncertainty of clinical trial success. Despite promising preclinical data and a strong biological rationale, SL-325 may not demonstrate sufficient safety or efficacy in human trials to warrant further development or regulatory approval. The timeline for clinical development is long and costly, with no guarantee of success.

The company is highly dependent on third-party contract development and manufacturing organizations (CDMOs) for drug supply and contract research organizations (CROs) for managing clinical trials. Any disruption in these relationships or issues with manufacturing quality or capacity could significantly delay or halt development.

Shattuck will require substantial additional funding beyond its current cash runway to complete clinical development, seek regulatory approvals, and potentially commercialize SL-325 or any other product candidate. The ability to raise this capital depends on market conditions and the success of its clinical programs, and there is no assurance that funding will be available on acceptable terms, or at all. Failure to secure funding when needed would force the company to delay, reduce, or abandon its development programs.

Furthermore, the global macroeconomic environment, including inflation, fluctuating interest rates, changes in trade policies, and geopolitical events, could adversely affect the company's operations, increasing costs and potentially impacting clinical trial timelines or funding availability. The competitive landscape is dynamic, and competitors may develop more effective therapies or bring them to market faster.

Conclusion

Shattuck Labs is undergoing a critical transformation, shifting its primary focus to SL-325 and the potential of DR3 antagonism in inflammatory diseases like IBD. This pivot is grounded in the company's protein engineering expertise and preclinical data suggesting SL-325 offers a differentiated approach with potential advantages over existing TL1A-targeting therapies. With a cash runway extending into 2027, Shattuck has the financial capacity to reach key near-term milestones for SL-325, including the expected IND filing in Q3 2025 and Phase 1 enrollment completion in Q2 2026.

However, the investment thesis is characterized by high risk. The success of SL-325 in clinical trials is paramount, and the company faces the significant financial and operational challenges inherent in advancing a novel therapy through development. While Shattuck's technological differentiation provides a potential competitive edge, it operates in a landscape dominated by large, well-funded pharmaceutical companies. The ability to secure future funding and navigate the complex clinical and regulatory pathways will ultimately determine whether Shattuck's strategic pivot unlocks significant value for investors. The upcoming clinical data from the SL-325 program will be crucial indicators of the potential for this new chapter.