Stoke Therapeutics (NASDAQ:STOK) stock gained following the report of updated data from a Phase 1/2 study of its STK-001, a drug for treating Dravet syndrome in children and adolescents. Additionally, the company announced FDA clearance for specific dosage levels of this drug, paving the way for a Phase 3 study of STK-001. Year-to-date, the stock has surged by an impressive 157%. With more potential upside yet to come, the stock looks to be a promising candidate for growth-oriented biotech investors.
Promising Treatment Candidate
Stoke Therapeutics is an emerging biopharmaceutical company that specializes in the research and development of treatments for genetic diseases. The company employs RNA-based medicines to combat severe genetic diseases that impact various body systems, including the central nervous system, eye, ear, kidney, and liver.
The company’s primary compound in its research pipeline is STK-001, which has been designed for the treatment of Dravet syndrome, a severe and progressive form of genetic epilepsy. Stoke revealed recent data from the Phase 1/2a studies for the drug, which showed significant reductions in convulsive seizure frequency and improvements in cognition and behavior, suggesting the drug’s potential to modify the disease.
Furthermore, the company received approval from the FDA that allows patients to receive three doses of 70mg, followed by continued dosing at 45mg, opening the door for the Phase 3 clinical study. The company anticipates further discussions with regulatory agencies regarding a randomized, controlled registrational study, details of which are expected in 2024.
The treatment market for Dravet syndrome is anticipated to reach USD 1 billion by the end of 2036, growing at a CAGR of 11%.
Q4 Results and Outlook
Stoke released its Q4 financials, reporting earnings per share (EPS) of -$0.60, which narrowly outperformed the consensus of -$0.63. This was on revenue of $2.8M, a decrease of 14.4% year-over-year.
The company reported a net loss of $27.0 million, or $0.60 per share, for the quarter. This is a slight increase compared to the same period in 2022, wherein the loss amounted to $25.7 million, or $0.65 per share. The net loss for the entire year of 2023 was still higher, reaching $104.7 million, or $2.38 per share, versus $101.1 million, or $2.60 per share, the previous year.
However, Stoke maintains a robust cash position, with $201.4 million in cash, cash equivalents, and marketable securities on hand as of the end of 2023. This is expected to sustain operations until the end of 2025. Further, the company recently initiated a public offering, sold over 5.5 million shares, and issued pre-funded warrants for approximately 3.7 million shares. It expects to realize a net gain of roughly $119.8 million from these sales. These funds are slated to be invested in research and clinical development of product candidates, positioning the company well to bring a treatment such as STK-001 to market.
What is the Price Target for STOK?
The stock is up over 156% YTD and trades in the upper quarter of its 52-week price range of $3.35-$16.40. It exhibits positive upward price momentum, trading above the 20-day (8.07) and 50-day (6.76) moving averages.
Analysts following the stock have been bullish. For example, Needham analyst Joseph Stringer recently reiterated a Buy rating on the company and raised the firm’s price target on STOK to $22 from $14. He cites the “impressive data” from the recent clinical trial that fit the firm’s best-case scenario and exceeded investor expectations.
The stock is rated a Strong Buy based on eight Wall Street analysts’ ratings and price targets issued in the past three months. The average price target for STOK is $22.14, representing a 64.00% upside from current levels.
Big Picture on Stoke Therapeutics
Stoke Therapeutics has set the stage for the next leg of growth. With its lead drug on track for Phase 3 trials, bolstered by robust financials, the company seems well-equipped to navigate the future. The stock seems to be a promising candidate with significant future potential for growth-oriented biotech investors.
