What changed in this filing

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Item 1. Financial Statements

2022-11-14 compared with 2022-08-08 · 77 added, 56 removed, 392 unchanged (25% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

Current assets:

23 unchanged sentences

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

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

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

Additional paid-in capital

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six months ended

Three Months Ended September 30,

Nine months ended September 30,

Operating expenses:

10 unchanged sentences

Comprehensive loss:

Other comprehensive loss:

Unrealized loss on marketable securities

Other comprehensive gain (loss):

Unrealized gain (loss) on marketable securities

Total other comprehensive loss

4 unchanged sentences

(in thousands, except share and per share amounts)

paid-in capital

Accumulated other comprehensive loss

comprehensive

Stockholders’

9 unchanged sentences

Balance as of June 30, 2021

Stock-based compensation

Unrealized gain on marketable securities

Issuance of common stock upon exercise of stock options

Issuance of common stock related to employee stock purchase plan

Balance as of September 30, 2021

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

Stoke Therapeutics, Inc.

Condensed consolidated statements of stockholders’ equity continued

(in thousands, except share and per share amounts)

paid-in capital

Accumulated other comprehensive loss

Stockholders’

Balance as of December 31, 2021

10 unchanged sentences

Balance as of June 30, 2022

Stock-based compensation

Unrealized loss on marketable securities

Issuance of common stock upon exercise of stock options

Issuance of common stock related to employee stock purchase plan

Balance as of September 30, 2022

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

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

Amortization and accretion of marketable securities

6 unchanged sentences

Deferred revenue

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

34 unchanged sentences

The $ 150,000,000 of common stock that may be offered, issued and sold under the sales agreement prospectus is included in the $ 400,000,000 of securities that may be offered, issued and sold by the Company under the base prospectus.

As of June 30, 2022, the Company had not issued any shares pursuant to the Sales Agreement.

Subsequent to June 30, 2022, the Company did not sell any shares of its common stock under the Sales Agreement.

As of September 30, 2022, the Company had not issued any shares pursuant to the Sales Agreement.

Subsequent to September 30, 2022, the Company did not sell any shares of its common stock under the Sales Agreement.

Uncertainties

14 unchanged sentences

Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and related footnotes as of and for the year ended December 31, 2021, which was filed with the SEC on March 10, 2022.

The Company’s financial information as of June 30, 2022 and for the six months ended June 30, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The Company’s financial information as of September 30, 2022 and for the nine months ended September 30, 2022 and 2021 is unaudited, but in the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented of the results of these interim periods have been included.

The balance sheet information as of December 31, 2021 was derived from audited financial statements.

7 unchanged sentences

The Company deposits its cash in checking, sweep and money market accounts.

At June 30, 2022, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

At September 30, 2022, restricted cash consisted of money market accounts collateralizing letters of credit issued as security deposits in connection with the Company’s leases of its corporate facilities.

Cash and cash equivalents, and restricted cash in the condensed consolidated statements of cash flows consists of the following (in thousands):

As of June 30,

As of September 30,

Cash and cash equivalents

14 unchanged sentences

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to

sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier value hierarchy that distinguishes between the following:

6 unchanged sentences

Revenue recognition

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers , or ASC 606.

The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

This standard applies to all contracts with customers, except for contracts that are within the scope of other standards.

62 unchanged sentences

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values (in thousands):

Fair value measurements as of June 30, 2022

Fair value measurements as of September 30, 2022

Cash equivalents:

14 unchanged sentences

The Company’s assets with fair value categorized as Level 1 within the fair value hierarchy include money market funds.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021.

Money market funds are publicly traded mutual funds and are presented as cash equivalents on the condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021.

The Company measures its marketable securities at fair value on a recurring basis and classifies those instruments within Level 2 of the fair value hierarchy.

4 unchanged sentences

Marketable Securities

The following table summarizes the Company’s marketable securities as of June 30, 2022 (in thousands):

June 30, 2022

The following table summarizes the Company’s marketable securities as of September 30, 2022 (in thousands):

September 30, 2022

Amortized Cost

14 unchanged sentences

US Government debt securities

The weighted average maturity of the Company’s marketable securities as of June 30, 2022 ranged from approximately 0.3 years to 0.8 years.

The weighted average maturity of the Company’s marketable securities as of September 30, 2022 ranged from approximately 0.4 years to 0.7 years.

As of December 31, 2021 the weighted average maturity of the Company’s marketable securities ranged from approximately 0.2 years to 1.1 years.

The Company did no t record an allowance for credit losses as of June 30, 2022 related to its marketable securities.

The Company did no t record an allowance for credit losses as of September 30, 2022 related to its marketable securities.

Further, given the lack of significant change in the credit risk of these investments, the Company did not recognize any other-than-temporary impairment losses.

1 unchanged sentence

Accrued and other current liabilities consisted of the following (in thousands):

September 30,

Accrued employee compensation costs

11 unchanged sentences

The expense is included in operating expenses in the condensed consolidated statements of operations and comprehensive loss.

Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the right-of-use assets and lease liabilities.

The Company’s lease agreements also contain variable payments, primarily maintenance-related costs, which are expensed as incurred and not included in the measurement of the right-of-use assets and lease liabilities.

In August 2018, the Company entered into an agreement to lease approximately 23,000 square feet of space for a term of three years .

14 unchanged sentences

In 2021, the Company recognized a right-of-use asset and operating lease liabilities of $ 0.7 million for the extension of the lease to April 30, 2025 and a right-of-use asset and operating lease liabilities of $ 0.8 million for the additional 2,357 square feet of rentable space.

Future minimum lease payments under non-cancellable leases as of June 30, 2022 (in thousands):

Future minimum lease payments under non-cancellable leases as of September 30, 2022 (in thousands):

Total lease payments

1 unchanged sentence

Present value of lease liabilities

Lease balances as of June 30, 2022 were as follows (in thousands):

Lease balances as of September 30, 2022 were as follows (in thousands):

Operating right-of-use assets

2 unchanged sentences

Total operating lease liabilities

The weighted average remaining lease term and weighted average discount rate of the Company’s operating leases as of June 30, 2022 were as follows:

The weighted average remaining lease term and weighted average discount rate of the Company’s operating leases as of September 30, 2022 were as follows:

Weighted average remaining lease term in years

Weighted average discount rate

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 0.6 million for the three months ended June 30, 2022 and for the three months ended June 30, 2021 was $ 0.3 million.

Lease expenses incurred in the six months ended June 30, 2022 were $ 1.0 million and for the six months ended June 30, 2021 were $ 0.6 million.

In accordance with Topic 842, lease expense incurred under operating leases was approximately $ 0.6 million for the three months ended September 30, 2022 and for the three months ended September 30, 2021 was $ 0.3 million.

Lease expenses incurred in the nine months ended September 30, 2022 were $ 1.6 million and for the nine months ended September 30, 2021 were $ 0.9 million.

Scientific Advisory Board Agreement

In June 2020, the Company entered into a scientific advisory board agreement with a member of the Company’s board of directors, who is also an employee of Cold Spring Harbor Laboratory (“CSHL”), to provide scientific advisory services related to the Company’s Targeted Augmentation of Nuclear Gene Output (“TANGO”) antisense oligonucleotide technology and other antisense oligonucleotide technologies, as well as current and future therapeutic targets and programs.

Following the expiration of the initial scientific agreement in June 2021 and a renewal agreement in June 2022, the parties entered into subsequent scientific board

agreements on substantially the same terms.

The Company recognized expense of $ 0.01 million in the three-month period ended June 30, 2022, and $ 0.02 million for the six-month period ended June 30, 2022, compared to $ 0.01 million for the three month period ended June 30, 2021 and $ 0.02 million for the six month period ended June 30, 2021 for such scientific advisory services.

Following the expiration of the initial scientific agreement in June 2021 and a renewal agreement in June 2022, the parties entered into subsequent scientific board agreements on substantially the same terms.

The Company did no t recognize any expense in the three month period ended September 30, 2022, and recognized $ 0.02 million for the nine month period ended September 30, 2022, compared to $ 0.01 million for the three month period ended September 30, 2021 and $ 0.03 million for the nine month period ended September 30, 2021, respectively, for such scientific advisory services.

The term of the renewal agreement is 12 months.

3 unchanged sentences

The CSHL Agreement obligates the Company to make payments that are contingent upon certain milestones being achieved.

The Company is also required to pay royalties, tiered based on the scope of patent coverage for each licensed product, ranging from a low-single digit percentage to a mid-single digit percentage on annual net sales.

The Company is also required to pay royalties, tiered based on the scope of patent coverage for each licensed product, ranging from a low-single digit percentage to a mid-

single digit percentage on annual net sales.

These royalty obligations apply on a licensed product-by-licensed product and country-by-country basis until the latest of ( i ) the expiration of the last valid claim of a CSHL patent covering the applicable licensed product or (ii) the expiration of any regulatory exclusivity for the applicable licensed product.

2 unchanged sentences

The maximum aggregate potential milestone payments payable total approximately $ 0.9 million.

Additionally, certain licenses under the CSHL Agreement require the Company to reimburse CSHL for certain past and ongoing patent related expenses, however, there were no expenses related to these reimbursable patent costs during the six months ended June 30, 2022 and 2021.

Additionally, certain licenses under the CSHL Agreement require the Company to reimburse CSHL for certain past and ongoing patent related expenses, however , there were no expenses related to these reimbursable patent costs during the nine months ended September 30, 2022 a nd 20 2 1 .

In April 2016, the Company entered into an exclusive, worldwide license agreement with the University of Southampton (the “Southampton Agreement”), whereby the Company acquired rights to foundational technologies related to the Company’s TANGO technology.

3 unchanged sentences

In addition, if the Company sublicenses its rights under the Southampton Agreement, the Company is required to pay a mid-single digit percentage of the sublicense revenue to the University of Southampton.

As of June 30, 2022, the Company has recorded a liability of $ 0.7 million under the Southampton Agreement due to the Acadia Pharmaceuticals Inc.

license and collaboration agreement (see Note 7) and had no recorded liability as of June 30, 2021.

As of September 30, 2022, the Company had paid $ 0.7 million under the Southampton Agreement as a result of entering into the Acadia Pharmaceuticals Inc.

license and collaboration agreement in January 2022 (see Note 7).

Additionally, certain licenses under the Southampton Agreement require the Company to reimburse the University of Southampton for certain past and ongoing patent related expenses.

For the three months ended June 30, 2022 these expenses were $ 0.06 million compared to $ 0.05 million for the three months ended June 30, 2021, and for the six months ended June 30, 2022 these expenses were $ 0.14 million compared to $ 0.06 million for the six months ended June 30, 2021.

For the three months ended September 30, 2022 these expenses were $ 0.03 million compared to $ 0.03 million for the three months ended September 30, 2021, and for the nine months ended September 30, 2022 these expenses were $ 0.17 million compared to $ 0.09 million for the nine months ended September 30, 2021.

License and Collaboration Agreement with Acadia Pharmaceuticals Inc.

In January 2022, the Company entered into a license and collaboration agreement with Acadia Pharmaceuticals Inc.

(“Acadia”) for the discovery, development and commercialization of novel RNA-based medicines for the treatment of severe and rare genetic neurodevelopmental diseases of the central nervous system (CNS).

The agreement focuses on the targets SYNGAP1, MECP2 (Rett syndrome), and an undisclosed neurodevelopmental target of mutual interest.

8 unchanged sentences

For SYNGAP1 licensed products that the Company is co-developing and co-commercializing, the Company will be responsible for 50% of the development and commercialization costs and will receive 50% of the profits from global commercialization.

The Company is provided with a co-development and co-

commercialization opt out option relating to the SYNGAP1 target indication at the Company’s discretion.

The Company is provided with a co-development and co-commercialization opt out option relating to the SYNGAP1 target indication at the Company’s discretion.

Such opt-out would reduce development and commercialization milestones but would provide the Company with royalties on an escalating basis attributable to net sales milestones.

2 unchanged sentences

The exclusive or co-exclusive licenses granted to Acadia to conduct pre-clinical research activities on each of the three targets, and participation on each of the respective joint research committees were identified as promised services.

However, the licenses granted to Acadia and the research activities were determined to be not distinct from each other, and therefore are considered a combined performance obligation for each of the three targets.

However, the licenses granted to Acadia and the research activities were determined to be not distinct from each other, and therefore are considered a combined performance

obligation for each of the three targets.

Participation on each of the joint research committees was determined to be quantitatively and qualitatively immaterial in the context of the arrangement with Acadia.

9 unchanged sentences

Any such adjustments will be recorded on a cumulative catch-up basis.

As of June 30, 2022, the Company had $ 55.8 million in upfront consideration associated with the Acadia agreement relating to performance obligations that are unsatisfied or partially unsatisfied.

As of September 30, 2022, the Company had $ 53.9 million in upfront consideration associated with the Acadia agreement relating to performance obligations that are unsatisfied or partially unsatisfied.

Equity incentive plans

2 unchanged sentences

The number of shares reserved for issuance under the Company’s 2019 Plan will increase automatically on January 1 of each of 2020 through 2029 by the number of shares equal to 4 % of the aggregate number of outstanding shares of the Company’s common stock as of the immediately preceding December 31, or a lesser number as may be determined by the Company’s board of directors.

As of June 30, 2022, there were no shares available for future issuance under the 2014 Plan and 1,797,543 shares were available under the 2019 Plan.

During the three months ended June 30, 2022, the Company granted options to purchase 360,400 shares of common stock to certain of its employees.

As of September 30, 2022, there were no shares available for future issuance under the 2014 Plan and 1,893,739 shares were available under the 2019 Plan.

During the three months ended September 30, 2022, the Company granted options to purchase 79,400 shares of common stock to certain of its employees.

The options vest up to four years and are exercisable at a per share price equal to the fair value of the common stock on the grant date.

Stock-based compensation

As of June 30, 2022, there was $ 62.2 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of 2.86 years as of June 30, 2022.

As of September 30, 2022, there was $ 54.5 million of unrecognized compensation cost related to unvested stock-based compensation arrangements granted under the 2014 and 2019 Plans.

The compensation is expected to be recognized over a weighted average period of 2.72 years as of September 30, 2022.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

3 unchanged sentences

The Company initially reserved 315,000 shares of common stock for sale under the ESPP.

At June 30, 2022, the Company had 995,298 shares available for issuance under the plan.

The average grant date fair value per share under the plan was $ 23.01 for 2022.

The total ESPP stock-based compensation expense for the three and six months ended June 30, 2022 was $ 0.1 million and $ 0.2 million, respectively, and for the three and six months ended June 30, 2021 was $ 0.08 million and $ 0.16 million, respectively.

At September 30, 2022, the Company had

959,603 sha res available for issuance under the ESPP plan.

The average grant date fair value per share under the ESPP plan was $ 18.39 for 2022 .

The total ESPP stock-based compensation expense for the three and nine months ended September 30, 2022 was $ 0.1 million and $ 0.3 million, respectively, and for the three and nine months ended September 30, 2021 was $ 0.07 million and $ 0.2 million, respectively.

The number of shares reserved for issuance under the ESPP will increase automatically on January 1st of each of the first ten calendar years following the first offering date by the number of shares equal to the lesser of 1 % of the total outstanding shares of the Company’s common stock as of the immediately preceding December 31 or a lower amount determined by the Company’s board of directors.

2 unchanged sentences

The following table summarizes the computation of basic and diluted net loss per share of the Company (in thousands except share and per share amounts):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Weighted-average number of common shares,

4 unchanged sentences

The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share indicated because including them would have had an anti-dilutive effect:

September 30,

Outstanding options to purchase common stock

The Company did no t record an income tax benefit in its condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company did no t record an income tax benefit in its condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021 as it is more likely than not that the Company will not recognize the federal and state deferred tax benefits generated by its losses.

The Company had net deferred tax assets and liabilities of $ 66.0 million at December 31, 2021.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of June 30, 2022 and December 31, 2021, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company did no t record any amounts for unrecognized tax benefits as of June 30, 2022 or December 31, 2021.

The Company has provided a valuation allowance for the full amount of its net deferred tax assets and liabilities as of September 30, 2022 and December 31, 2021, as management has determined it is more likely than not that any future benefit from deductible temporary differences and net operating loss and tax credit carryforwards would not be realized.

The Company did no t record any amounts for unrecognized tax benefits as of September 30, 2022 or December 31, 2021.

Subsequent events

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements