On Tuesday, TD Cowen affirmed its Buy rating on shares of Shattuck Labs (NASDAQ:STTK), following the biotechnology company's strategic shift in its development programs. The company has decided to halt its SL-172154 project, which targeted HR-MDS/AML, due to lackluster overall survival (OS) results when compared to historical controls.
Shattuck Labs is now focusing its resources on a new set of programs aimed at autoimmunity through targeting the DR3 receptor with its proprietary TL1A™ technology. The firm anticipates filing an Investigational New Drug (IND) application for SL-325, an anti-DR3 monoclonal antibody, in the third quarter of 2025, with initial clinical trial results expected in 2026.
This change in direction comes with a financial update from the company, indicating an extension of its cash runway. Previously expected to support operations until 2026, the company now projects its current funds will sustain its operations into 2027.
The announcement marks a significant transition for Shattuck Labs as it adapts its research and development focus. The company's strategic decision to discontinue one program in favor of another reflects its ongoing efforts to align with promising therapeutic areas and maximize the potential of its proprietary technologies.
Investors are keeping an eye on Shattuck Labs as it navigates through this pivot, with TD Cowen's reiteration of a Buy rating signaling confidence in the company's long-term prospects despite the recent program cessation.
In other recent news, Shattuck Labs has discontinued its SL-172154 clinical program, shifting focus to SL-325, an antagonist antibody for the treatment of inflammatory bowel disease. This strategic pivot followed modest improvements in overall survival rates for SL-172154. Shattuck Labs also announced a workforce reduction of approximately 40% to support this shift. The company's financial restructuring is expected to extend its cash runway into 2027.
Furthermore, Shattuck Labs terminated a collaboration agreement with Ono Pharmaceutical Co., which won't affect the development of SL-325. H.C. Wainwright maintained a Buy rating on Shattuck Labs, citing the company's resilience in the face of challenges affecting the CD47 pathway. In contrast, BTIG analysts maintained a Neutral rating, emphasizing the need for randomized trial data.
Shattuck Labs' therapeutic candidate SL-172154 has received an orphan drug designation from the U.S. Food and Drug Administration, potentially accelerating the drug's development. The company also reported promising interim data from a Phase 1B trial for SL-172154, indicating promising response rates in HR-MDS and TP53m AML patients. Shattuck Labs was also added to the Russell 2000® and Russell 3000® Indexes, reflecting its progress in the biotechnology sector.
InvestingPro Insights
Shattuck Labs' strategic shift aligns with several key financial metrics and insights from InvestingPro. The company's decision to extend its cash runway into 2027 is particularly significant given that InvestingPro data shows the company holds more cash than debt on its balance sheet. This financial prudence is crucial as an InvestingPro Tip indicates that Shattuck Labs is "quickly burning through cash."
The pivot towards autoimmunity programs targeting the DR3 receptor could potentially address the company's profitability challenges. InvestingPro data reveals that Shattuck Labs is not profitable over the last twelve months, with a negative gross profit margin. However, there's a silver lining as analysts anticipate sales growth in the current year, according to another InvestingPro Tip.
Despite the recent program cessation, the stock has shown resilience with a high return over the last year, boasting a 129.61% price total return. This performance is noteworthy, especially considering that the stock has taken a significant hit over the last six months, with a -60.74% price total return in that period.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Shattuck Labs, providing deeper insights into the company's financial health and market position.
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