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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to ____________

Commission File Number: 001-38938

 

Stoke Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-1144582

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

45 Wiggins Ave

Bedford, Massachusetts

01730

(Address of principal executive offices)

(Zip Code)

(781430-8200

(Registrant’s telephone number, including area code)

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

STOK

 

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

Smaller reporting company

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of October 31, 2022 the registrant had 39,430,747 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 

 

 


 

Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

4

Item 1.

Financial Statements (Unaudited)

4

 

Condensed consolidated balance sheets

4

 

Condensed consolidated statements of operations and comprehensive loss

5

 

Condensed consolidated statements of stockholders’ equity

6

 

Condensed consolidated statements of cash flows

8

 

Notes to unaudited condensed consolidated financial statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

PART II.

OTHER INFORMATION

36

Item 1.

Legal Proceedings

36

Item 1A.

Risk Factors

36

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

76

Item 3.

Defaults Upon Senior Securities

76

Item 4.

Mine Safety Disclosures

76

Item 5.

Other Information

76

Item 6.

Exhibits

77

Signatures

78

 

2


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy, prospective products, planned preclinical studies and clinical or field trials, regulatory approvals, research and development costs, and timing and likelihood of success, as well as plans and objectives of management for future operations, may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions, although not all forward-looking statements contain these words.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to us. Such statements are subject to a number of known and unknown risks, uncertainties and assumptions, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in Part I. Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II. Item 1A “Risk Factors.” These risks and uncertainties include, but are not limited to:

 

our ability to become profitable;

 

our ability to procure sufficient funding;

 

our limited operating history;

 

our ability to develop, obtain regulatory approval for and commercialize STK-001, STK-002 and our future product candidates;

 

the direct and indirect impact of COVID-19, inflation, interest rates, foreign currency exchange rates and macroeconomic conditions on our business, financial condition and operations, including on our expenses, supply chain, strategic partners, research and development costs, clinical trials and employees;

 

our success in early preclinical studies or clinical trials, which may not be indicative of results obtained in later studies or trials;

 

our ability to obtain regulatory approval to commercialize STK-001, STK-002 or any other future product candidate;

 

the success of our collaboration with Acadia Pharmaceuticals and our ability to enter into successful collaborations in the future;

 

our ability to identify patients with the diseases treated by STK-001, STK-002 or our future product candidates, and to enroll patients in trials;

 

the success of our efforts to use TANGO to expand our pipeline of product candidates and develop marketable products;

 

our ability to obtain, maintain and protect our intellectual property;

 

our reliance upon intellectual property licensed from third parties;

 

our ability to identify, recruit and retain key personnel;

 

our financial performance; and

 

developments or projections relating to our competitors or our industry.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

3


PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Stoke Therapeutics, Inc.

Condensed consolidated balance sheets

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

113,396

 

 

$

144,895

 

Marketable securities

 

 

138,259

 

 

 

74,915

 

Prepaid expenses and other current assets

 

 

12,551

 

 

 

9,159

 

Deferred financing costs

 

 

 

 

 

117

 

Interest receivable

 

 

395

 

 

132

 

Total current assets

 

$

264,601

 

 

$

229,218

 

Restricted cash

 

 

569

 

 

569

 

Operating lease right-of-use assets

 

 

5,295

 

 

 

4,939

 

Property and equipment, net

 

 

7,161

 

 

 

4,139

 

Total assets

 

$

277,626

 

 

$

238,865

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

1,911

 

 

$

2,385

 

Accrued and other current liabilities

 

 

14,046

 

 

 

14,754

 

Deferred revenue - current portion

 

 

12,838

 

 

 

 

Total current liabilities

 

$

28,795

 

 

$

17,139

 

Deferred revenue - net of current portion

 

 

41,078

 

 

 

 

Other long term liabilities

 

 

3,610

 

 

 

3,949

 

Total long term liabilities

 

 

44,688

 

 

 

3,949

 

Total liabilities

 

$

73,483

 

 

$

21,088

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

Common stock, par value of $0.0001 per share; 300,000,000 shares

   authorized, 39,426,440 and 36,902,499 shares issued and outstanding as

   of September 30, 2022 and December 31, 2021, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

477,337

 

 

 

414,024

 

Accumulated other comprehensive loss

 

 

(1,703

)

 

 

(168

)

Accumulated deficit

 

 

(271,495

)

 

 

(196,083

)

Total stockholders’ equity

 

$

204,143

 

 

$

217,777

 

Total liabilities and stockholders’ equity

 

$

277,626

 

 

$

238,865

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


Stoke Therapeutics, Inc.

Condensed consolidated statements of operations and comprehensive loss

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine months ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

2,905

 

 

$

 

 

$

9,137

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

20,109

 

 

 

14,358

 

 

 

56,777

 

 

 

38,366

 

General and administrative

 

 

9,944

 

 

 

8,325

 

 

 

29,540

 

 

 

23,173

 

Total operating expenses

 

 

30,053

 

 

 

22,683

 

 

 

86,317

 

 

 

61,539

 

Loss from operations

 

 

(27,148

)

 

 

(22,683

)

 

 

(77,180

)

 

 

(61,539

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

995

 

 

 

44

 

 

 

1,643

 

 

 

84

 

Other income (expense), net

 

 

42

 

 

 

42

 

 

 

125

 

 

 

98

 

Total other income

 

 

1,037

 

 

 

86

 

 

 

1,768

 

 

 

182

 

Net loss

 

$

(26,111

)

 

$

(22,597

)

 

$

(75,412

)

 

$

(61,357

)

Net loss per share, basic and diluted

 

$

(0.66

)

 

$

(0.61

)

 

$

(1.95

)

 

$

(1.67

)

Weighted-average common shares outstanding, basic

   and diluted

 

 

39,420,310

 

 

 

36,759,319

 

 

 

38,716,615

 

 

 

36,706,647

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(26,111

)

 

$

(22,597

)

 

$

(75,412

)

 

$

(61,357

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on marketable securities

 

 

(427

)

 

 

20

 

 

 

(1,535

)

 

 

(22

)

Total other comprehensive loss

 

$

(427

)

 

$

20

 

 

$

(1,535

)

 

$

(22

)

Comprehensive loss

 

$

(26,538

)

 

$

(22,577

)

 

$

(76,947

)

 

$

(61,379

)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5


Stoke Therapeutics, Inc.

Condensed consolidated statements of stockholders’ equity

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Common Stock

 

 

Additional

paid-in

capital

 

 

Accumulated

other

comprehensive

loss

 

 

Accumulated

deficit

 

 

Stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

Amount

 

 

Amount

 

 

Amount

 

 

Amount

 

Balance as of December 31, 2020

 

 

36,577,149

 

 

$

4

 

 

$

396,352

 

 

$

 

 

$

(110,278

)

 

$

286,078

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,793

)

 

 

(16,793

)

Stock-based compensation

 

 

 

 

 

 

 

 

2,698

 

 

 

 

 

 

 

 

 

2,698

 

Issuance of common stock upon exercise of stock options

 

 

111,858

 

 

 

 

 

 

371

 

 

 

 

 

 

 

 

 

371

 

Issuance of common stock upon follow-on offering, net of underwriting discounts and offering costs

 

 

 

 

 

 

 

 

(64

)

 

 

 

 

 

 

 

 

(64

)

Issuance of common stock related to employee stock purchase plan

 

 

8,801

 

 

 

 

 

 

175

 

 

 

 

 

 

 

 

 

175

 

Balance as of March 31, 2021

 

 

36,697,808

 

 

$

4

 

 

$

399,532

 

 

$

 

 

$

(127,071

)

 

$

272,465

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21,967

)

 

 

(21,967

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,452

 

 

 

 

 

 

 

 

 

4,452

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(42

)

Issuance of common stock upon exercise of stock options

 

 

24,861

 

 

 

 

 

 

161

 

 

 

 

 

 

 

 

 

161

 

Balance as of June 30, 2021

 

 

36,722,669

 

 

$

4

 

 

$

404,145

 

 

$

(42

)

 

$

(149,038

)

 

$

255,069

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,597

)

 

 

(22,597

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,614

 

 

 

 

 

 

 

 

 

4,614

 

Unrealized gain on marketable securities

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Issuance of common stock upon exercise of stock options

 

 

46,032

 

 

 

 

 

 

73

 

 

 

 

 

 

 

 

 

73

 

Issuance of common stock related to employee stock purchase plan

 

 

11,692

 

 

 

-

 

 

 

334

 

 

 

-

 

 

 

-

 

 

 

334

 

Balance as of September 30, 2021

 

 

36,780,393

 

 

$

4

 

 

$

409,166

 

 

$

(22

)

 

$

(171,635

)

 

$

237,513

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6


Stoke Therapeutics, Inc.

Condensed consolidated statements of stockholders’ equity continued

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

Common Stock

 

 

Additional

paid-in capital

 

 

Accumulated other comprehensive loss

 

 

Accumulated

deficit

 

 

Stockholders’

equity

 

 

 

Shares

 

 

Amount

 

 

Amount

 

 

Amount

 

 

Amount

 

 

Amount

 

Balance as of December 31, 2021

 

 

36,902,499

 

 

$

4

 

 

$

414,024

 

 

$

(168

)

 

$

(196,083

)

 

$

217,777

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,649

)

 

 

(24,649

)

Stock-based compensation

 

 

 

 

 

 

 

 

4,975

 

 

 

 

 

 

 

 

 

4,975

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(516

)

 

 

 

 

 

(516

)

Issuance of common stock upon exercise of stock options

 

 

53,377

 

 

 

 

 

 

93

 

 

 

 

 

 

 

 

 

93

 

Shares sold as part of controlled equity offering sales agreement

 

 

2,080,486

 

 

 

 

 

 

42,128

 

 

 

 

 

 

 

 

 

42,128

 

Issuance of common stock related to employee stock purchase plan

 

 

8,307

 

 

 

 

 

 

169

 

 

 

 

 

 

 

 

 

169

 

Balance as of March 31, 2022

 

 

39,044,669

 

 

$

4

 

 

$

461,389

 

 

$

(684

)

 

$

(220,732

)

 

$

239,977

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,652

)

 

 

(24,652

)

Stock-based compensation

 

 

 

 

 

 

 

 

6,163

 

 

 

 

 

 

 

 

 

6,163

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(592

)

 

 

 

 

 

(592

)

Issuance of common stock upon exercise of stock options

 

 

194,498

 

 

 

 

 

 

326

 

 

 

 

 

 

 

 

 

326

 

Shares sold as part of controlled equity offering sales agreements

 

 

143,300

 

 

 

 

 

 

3,099

 

 

 

 

 

 

 

 

 

3,099

 

Balance as of June 30, 2022

 

 

39,382,467

 

 

$

4

 

 

$

470,977

 

 

$

(1,276

)

 

$

(245,384

)

 

$

224,321

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,111

)

 

 

(26,111

)

Stock-based compensation

 

 

 

 

 

 

 

 

5,926

 

 

 

 

 

 

 

 

 

5,926

 

Unrealized loss on marketable securities

 

 

 

 

 

 

 

 

 

 

 

(427

)

 

 

 

 

 

(427

)

Issuance of common stock upon exercise of stock options

 

 

8,278

 

 

 

 

 

 

33

 

 

 

 

 

 

 

 

 

33

 

Issuance of common stock related to employee stock purchase plan

 

 

35,695

 

 

 

 

 

 

401

 

 

 

 

 

 

 

 

 

401

 

Balance as of September 30, 2022

 

 

39,426,440

 

 

$

4

 

 

$

477,337

 

 

$

(1,703

)

 

$

(271,495

)

 

$

204,143

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7


Stoke Therapeutics, Inc.

Condensed consolidated statements of cash flows

(in thousands)

(unaudited)

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(75,412

)

 

$

(61,357

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation

 

 

937

 

 

 

739

 

Amortization and accretion of marketable securities

 

 

(60

)

 

 

86

 

Stock-based compensation

 

 

17,064

 

 

 

11,764

 

Loss on disposal of property and equipment

 

 

 

 

 

29

 

Reduction in the carrying amount of right of use assets

 

 

1,446

 

 

 

870

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(3,655

)

 

 

(2,073

)

Accounts payable and accrued liabilities

 

 

(3,729

)

 

 

(707

)

Deferred revenue

 

 

53,916

 

 

 

 

Net cash used in operating activities

 

$

(9,493

)

 

$

(50,649

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of marketable securities

 

 

(206,190

)

 

 

(87,226

)

Purchases of property and equipment

 

 

(3,553

)

 

 

(997

)

Sales of marketable securities

 

 

141,371

 

 

 

 

Net cash used in investing activities

 

$

(68,372

)

 

$

(88,223

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from Employee Stock Purchase Plan

 

 

570

 

 

 

509

 

Proceeds from issuance of common stock upon exercise of stock options

 

 

452

 

 

 

605

 

Proceeds from controlled equity offering sales agreements

 

 

45,344

 

 

 

 

Other

 

 

 

 

 

(1

)

Net cash provided by financing activities

 

$

46,366

 

 

$