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I covered Stoke Therapeutics (NASDAQ:STOK) thrice in the last few years. If you read those articles, you will see I have held divergent views about this company over the years. First, I held the view that STOK was overvalued when it had a market cap of $1.88bn – the stock is down 73% since then; then, 3 years later, I thought it was undervalued when it had a market cap of $364mn, and the stock is up 64% since then; but in my last article, after it produced unsatisfactory data in a phase 1/2 epilepsy trial, and had a market cap of $234mn, I said the company was being unable to derisk its stock. The stock is up 185% since then.
In that last article, which didn’t age well, I had noted that despite a very solid efficacy profile, possibly stemming from its differentiating curative approach, the molecule, zorevunersen or STK-001, had a poor safety profile. In March, the company posted data that saw the stock go up hugely overnight, so let us take a look at that data, see what it says about safety and efficacy, and also put the company in its proper competitive position vis-a-vis other approved and pipeline drugs.
Dravet Syndrome target market
Dravet Syndrome is characterized by a range of severe and complex symptoms that typically begin in infancy, usually around 6 to 12 months of age. The symptoms evolve over time, and the condition is lifelong.
Dravet syndrome occurs due to a genetic mutation in the SCN1A gene. According to the Cleveland Clinic, “nearly 80% of children diagnosed with Dravet syndrome have the SCN1A gene mutation.”
Dravet Syndrome produces many severe symptoms, starting in infancy with prolonged febrile seizures that often evolve into multiple seizure types. Over time, patients may have developmental delays, cognitive impairments, and motor difficulties such as ataxia and hypotonia. Other symptoms may include behavioral issues like hyperactivity, autistic-like behaviors, and sleep disorders, as well as heightened susceptibility to infections, which can exacerbate seizure activity, and an increased risk of Sudden Unexpected Death in Epilepsy (SUDEP).
According to the company, 35,000 people are born with DS “in the U.S., Canada, Japan, Germany, France and the UK.” There could be as many as 300,000 patients worldwide. There are two drugs approved targeting seizures in DS in patients two years or older. Fintepla (fenfluramine), approved in 2020, is priced at around $96,000 per year per patient. Epidiolex (cannabidiol), approved in 2018, costs about $32,500 per year per patient. That gives you a rough idea of the market.
STK-001 previous data
Previously, I discussed early trial data indicating that the drug was therapeutically active, with a numerical advantage over Epidiolex in a specific metric. However, safety concerns—particularly increased protein in the cerebrospinal fluid potentially linked to dosage—led to dosing limitations and caused a dip in the stock price. Since then, additional challenges have emerged.
In July, the company released new data that highlighted strong efficacy but raised significant safety concerns. According to the company, citing ongoing trials named MONARCH and ADMIRAL, 74 patients aged 2 to 18 who received the therapy tolerated STK-001 at single or multiple doses ranging from 10mg to 70mg. However, 32% of patients experienced a treatment-emergent adverse event related to STK-001, and 20% experienced a serious treatment-emergent adverse event.
In terms of efficacy, at the highest dose of 70mg, mean reductions in convulsive seizure frequency reached 80% (n = 6) and 89% (n = 3) from baseline to three and six months after the last dose, respectively. For the 45mg dose, the mean reduction in convulsive seizure frequency was 19% (n = 14) at three months and 45% (n = 8) at six months post-dose among 16 patients.
While the efficacy data, particularly in reducing convulsive seizures, has improved, albeit in a small patient population, the worsening safety profile is concerning. With 20% of patients experiencing a serious adverse event, this data is disappointing and led to a 30% drop in the stock’s value overnight.
However, I should note that of the 15 patients who experienced a treatment emergent serious adverse event or TESAE, the TESAEs experienced by 14 of the 15 were not taken to be related to the treatment. The problem, therefore, is not with the “serious” adverse event data but with the milder adverse event data, which was 32%. On the other hand, there was high efficacy, and as the 2-year BUTTERFLY natural history study of DS patients carried out by the company showed“…despite treatment with the best available anti-seizure medicines, on average, patients continued to experience convulsive seizures over 24 months at similar frequency to baseline.”
March data
In March, the company presented new data from two open-label Phase 1/2a studies and two open-label extension studies.
This new data revealed that 70mg doses of the drug led to significant and sustained reductions in convulsive seizure frequency, even when used alongside the best available anti-seizure medications. Specifically, the median reduction in seizure frequency was 85% (n=10) at three months and 74% (n=9) at six months after the last dose.
Similarly, the ongoing Open Label Extension studies showed that continued dosing at 30mg and 45mg resulted in durable reductions in seizures over 12 months. These studies also reported clinically meaningful improvements in multiple measures of cognition and behavior, indicating the drug’s potential to positively impact both seizure control and overall quality of life.
Comparing this to the previous data, we see that the efficacy of the 70mg dose remains strong, with slightly better median reductions in seizure frequency at three months, though the reduction at six months appears somewhat lower. The Open Label Extension results offer encouraging signs of sustained benefit over a year, particularly with the improvements in cognition and behavior.
Commenting on this data, Joseph Sullivan, M.D., a prominent DS expert and professor of neurology, said:
A 50% reduction in seizures is an important measure of clinical efficacy, so an 80% reduction on top of any benefit patients may already be getting from their baseline anti-seizure regimen is profound.
I must note that in the OLE studies, a higher incidence of cerebrospinal fluid (CSF’) protein elevation was observed, with 74% of patients (50 out of 68) showing at least one CSF protein level above 50 mg/dL. Elevated CSF protein levels, which are typically low, can indicate various conditions like inflammation or neurological issues. In this case, the elevation might be linked to the drug treatment, as it was seen in a significant portion of participants.
Despite this finding, no clinical symptoms or adverse effects associated with the elevated protein levels have been observed in the patients. This suggests that, so far, the protein elevation is an isolated laboratory finding without corresponding physical symptoms like headaches, nausea, or neurological impairments.
However, the presence of elevated CSF protein in such a large number of patients needs to be monitored. While the absence of immediate symptoms is reassuring, the long-term impact remains uncertain. This complicates the assessment of the drug’s safety profile, as the high incidence of CSF protein elevation raises questions about potential long-term risks. The FDA will likely require more data to determine whether these protein elevations could lead to future issues.
Competitive positioning
Three drugs are approved for Dravet – epidiolex, fintepla and Diacomit, the latter as an adjunct therapy, meaning it will be used only with one of the other approved drugs.
With epidiolex, there was a 42% reduction in drop seizures at the highest dose compared to 17% in the placebo group. It was determined that the drug may cause serious side effects like sleepiness, increase in liver enzymes, suicidal ideation, and severe allergic reactions.
For Finteplathe “placebo-adjusted percent reduction in monthly convulsive seizure frequency was 70.0% for FINTEPLA 0.7 mg/kg/day (P<0.001) and 31.7% for FINTEPLA 0.2 mg/kg/day (P=0.043).” AEs included “reduced appetite, diarrhea, pyrexia, weariness, upper respiratory tract infection, lethargy, somnolence and bronchitis.”
Coming to pipeline drugs, we have Soticlestat (OV935) from Takeda (TAK) and Ovid Therapeutics (OVID), currently in phase 3 trials. In June, phase 3 topline data was announced, which “narrowly” missed the primary endpoint.
We also have Eisai’s Lorcaserin, which has been tested for a few years in DS. None of these therapies are curative, and they target seizures, not DS itself per se.
As I noted before, over 80-90% of cases DS results from a mutation in one copy of the SCN1A gene. This mutation causes a condition known as haploinsufficiency. While delivering a healthy gene copy as a genetic therapy could address this condition, the large size of the SCN1A gene presents a significant challenge, as it cannot easily fit into the vectors used in current genetic therapies. Moreover, targeting brain cells for this therapy is particularly difficult due to the complexities of reaching the brain compared to other organs.
Two gene therapies are currently in trials, and STK-001 is the leader of the two. STK-001 aims to replace the mutant copy of the gene with a healthy copy, thus directly addressing the root cause of Dravet Syndrome. On the other hand, Encoded Therapeutics tries to deliver, not a replacement copy of the SCN1A gene, but a “regulatory gene that acts to specifically increase expression of SCN1A.” This gene is much smaller than the SCN1A gene. Patients are being enrolled in a first in human trial since May 2024.
Fundamentals
STOK has a market cap of $815mn and a cash balance of $282mn. Research and development expenses for the three months ended June 30, 2024 were $21.1 million, while general and administrative expenses were $13.0 million. At that rate, the company has a cash runway of 7-8 quarters.
The FDA put a partial clinical hold on zorevunersen, which was lifted recently. STOK is on track to begin ad phase 3 trial later this year. If the trial runs for a year or so, we can expect topline data no later than mid-2026, or well within the cash runway of the company.
Risks
As I noted here, increase in CSF protein levels, although not yet causing symptoms, is a problem that the company may need to look at to satisfy regulators. There have been other (anti-seizure) medicines that were removed from the market post approval due to health issues that were unknown at the time of approval.
Other than that, the cash balance is fine, but could have been improved upon.
Thesis
STOK is at the forefront of the genetic approach to treating Dravet Syndrome. Its sole clinical stage molecule has produced strong efficacy data and possibly manageable safety data. It has a decent amount of cash. There are not too many negatives to the company, except that in recent months it has gone up a lot. I will consider taking a position later this year, around when they announce enrollment in phase 3 trials.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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