Executive Summary / Key Takeaways

• Shattuck Labs is undergoing a significant strategic pivot, transitioning from its earlier immuno-oncology programs (SL-172154, SL-279252) to a focused pipeline in inflammatory and immune-mediated diseases, spearheaded by its lead asset, SL-325.
• SL-325, a potentially first-in-class DR3 blocking antibody, offers a differentiated mechanism of action with preclinical data suggesting superior and more durable blockade of the TL1A-DR3 pathway compared to existing TL1A antibodies, positioning it for best-in-class potential in inflammatory bowel disease (IBD).
• The company has secured substantial funding, with a private placement of up to $103 million in August 2025, projected to extend its cash runway into 2029 and support SL-325 through multiple Phase 2 clinical trials.
• Recent financial performance reflects this strategic shift, with a notable reduction in net loss for the nine months ended September 30, 2025, driven by decreased R&D expenses from discontinued programs, while SL-325 development costs are increasing.
• Key risks include the inherent uncertainties of clinical development, potential impacts from global macroeconomic conditions and government shutdowns on regulatory timelines, and the reliance on third-party manufacturing and research organizations.

A Strategic Reorientation Towards Inflammation and Immunology

Shattuck Labs, Inc. (NASDAQ:STTK), a biotechnology company founded in 2016, is undergoing a profound strategic transformation, refocusing its innovative protein engineering capabilities from oncology to the high-unmet-need areas of inflammatory and immune-mediated diseases. This pivot is centered around its lead program, SL-325, a novel Death Receptor 3 (DR3) antagonist antibody. The company's journey has been marked by pioneering work in its Agonist Redirected Checkpoint (ARC) platform, leading to its initial public offering in October 2020 and early clinical development of candidates like SL-172154 and SL-279252. However, recent strategic decisions, including the discontinuation of these earlier programs, underscore a clear commitment to a redefined path.

The biotechnology sector, particularly in immunology and inflammation, continues to be a fertile ground for innovation, driven by a deeper understanding of disease mechanisms and the potential for targeted therapies. Shattuck Labs aims to carve out a significant position within this landscape by leveraging its expertise in novel TNF receptor therapeutics. Its strategic response to competitive dynamics involves focusing on differentiated mechanisms that promise superior efficacy and safety profiles, thereby addressing limitations observed in prior therapeutic approaches.

Technological Edge: DR3 Antagonism and the ARC Platform's Evolution

Shattuck Labs' core technological strength lies in its protein engineering, which underpins both its original ARC platform and its current focus on DR3 antagonism. The ARC platform was designed to create bi-functional fusion proteins that simultaneously modulate immune checkpoints and activate co-stimulatory receptors. This approach aimed to overcome limitations of traditional monoclonal antibodies, such as toxicity and bell-shaped dose-response curves.

The company's prior lead candidate, SL-172154, exemplified this approach by inhibiting CD47 and activating CD40. It was specifically engineered to be Fc-silenced, a design choice that successfully avoided the destructive anemia and other cytopenias that plagued other CD47-targeted agents in the industry. In a Phase 1B trial for platinum-resistant ovarian cancer (PROC), SL-172154 in combination with pegylated liposomal doxorubicin (PLD) demonstrated an overall response rate of 27% as of October 31, 2023. This figure, if sustained, would notably exceed the 4% response rate observed with PLD monotherapy in the Pfizer (PFE)-sponsored JAVELIN Ovarian 200 trial. Furthermore, in a Phase 1A/B trial for acute myeloid leukemia (AML) and higher-risk myelodysplastic syndromes (MDS), SL-172154 showed rapid monotherapy responses in heavily pre-treated TP53 mutant AML patients and anti-tumor activity in combination with azacitidine in previously untreated TP53 mutant higher-risk MDS patients. The ability to dose SL-172154 at 3 mg/kg, a dose ten-fold higher than the maximum tolerated dose for prior CD40 agonist antibody therapies, highlighted the ARC platform's potential to achieve an "immunologically active therapeutic window" without dose-limiting toxicities.

However, the company's strategic focus has now shifted to SL-325, a DR3 blocking monoclonal antibody. This candidate represents a new generation of therapeutics designed to achieve a more complete and durable blockade of the clinically validated DR3/TL1A pathway. Preclinical studies have shown SL-325's high-affinity binding and superior activity over sequence equivalents of leading TL1A blocking antibodies. A key differentiator is that DR3 is a membrane-restricted target, meaning immune complex formation, a challenge seen with some TL1A blocking antibodies like AMG966 (which led to immunogenicity and discontinuation), is not expected for SL-325. Moreover, SL-325 selectively binds to DR3 but not to DcR3, preserving DcR3's natural anti-inflammatory role. This targeted approach is anticipated to translate into improved efficacy in patients with inflammatory bowel disease (IBD) due to a more complete and durable blockade of the axis.

Shattuck is also advancing SL-425, a half-life extended version of SL-325, and exploring a series of bispecific antibodies targeting DR3 and other clinically validated targets, further demonstrating its commitment to expanding its DR3-focused pipeline. Beyond the ARC platform, the GADLEN platform is exploring novel therapeutics to harness gamma delta T cells, with preclinical compounds like a CD20 GADLEN for autoimmune disease and a B7-H3 GADLEN for solid tumors. These initiatives underscore Shattuck's commitment to continuous innovation and building a robust, differentiated pipeline.

Competitive Landscape and Strategic Positioning

Shattuck Labs operates as an emerging player in the highly competitive biotechnology market. While it does not hold a market-leading position, its strategy is to differentiate through novel mechanisms of action and targeted therapies. In its prior immuno-oncology focus, SL-172154 aimed to stand out against other CD47 inhibitors by avoiding destructive anemia and incorporating CD40 agonism. Management had set ambitious benchmarks, aiming to exceed azacitidine's complete response rate in higher-risk MDS by at least double (from ~22%) and significantly surpass the low-30% CR rates seen with AZA-Magrolimab combinations in TP53 mutant AML.

The discontinuation of SL-172154 and SL-279252 (a PD1-Fc-OX40L fusion protein that failed to meet a 20% ORR target in PD1 inhibitor-experienced patients) highlights the intense competition and high bar for efficacy in oncology. Larger, established pharmaceutical companies like Merck & Co., Inc. (MRK), Bristol-Myers Squibb Company (BMY), and Gilead Sciences, Inc. (GILD) dominate the oncology space with broad portfolios, extensive R&D capabilities, and robust commercial infrastructures. These giants benefit from consistent revenue growth, strong profitability, and significant cash flow from their commercialized products, as reflected in their positive P/E and P/B ratios compared to Shattuck's negative P/E.

Shattuck's current focus on SL-325 in inflammatory and immune-mediated diseases positions it against a different set of competitors, including those developing TL1A blocking antibodies. Shattuck believes its DR3-targeting approach offers a superior, more complete, and durable blockade compared to TL1A antibodies, potentially leading to best-in-class clinical remission rates. This technological differentiation is crucial for Shattuck to establish a competitive moat.

Indirect competitors include traditional therapies, emerging AI-driven drug discovery platforms that could accelerate competitor advancements, and companies in adjacent therapeutic areas. Shattuck's smaller scale makes it more agile in early-stage innovation but also exposes it to vulnerabilities in commercialization and market penetration compared to its larger rivals. High R&D costs and stringent regulatory hurdles act as significant barriers to entry in the biotech sector, which, while challenging for Shattuck, also protect its innovative niche. The company's dependence on a limited number of contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) for its clinical programs also presents an operational vulnerability.

Financial Performance and Liquidity Reflect a Pivotal Year

Shattuck Labs' financial performance for the nine months ended September 30, 2025, clearly illustrates the ongoing strategic shift. The company reported a net loss of $36.20 million, a significant improvement from the $56.70 million net loss for the same period in 2024. This reduction in loss was primarily driven by a substantial decrease in research and development (R&D) expenses, which fell by $25.60 million (49.4%) to $26.20 million. This decline was largely attributable to the discontinuation of the SL-172154 program, which saw a $20.70 million reduction in expenses, and workforce reductions in 2024. Conversely, R&D expenses for the new lead candidate, SL-325, increased by $4.90 million to $7.29 million, reflecting its accelerated development.

License and collaboration revenue saw a sharp decrease, falling by $4.70 million (82.5%) to $1 million for the nine months ended September 30, 2025. This was due to the completion of all obligations and revenue recognition from the Ono Pharmaceutical Co., Ltd. (4528) and ImmunoGen (IMGN) collaboration agreements in 2024, partially offset by a $1 million license revenue from the Kayak Agreement in August 2025. General and administrative expenses also decreased by $1.90 million (12.9%) to $12.90 million, primarily due to workforce reductions and lower legal and insurance costs. Other income decreased by $2.30 million (54.2%) to $1.90 million, mainly due to a decrease in investments and funds held in money market accounts.

As of September 30, 2025, Shattuck Labs had an accumulated deficit of $417.90 million, underscoring its pre-commercial stage and ongoing investment in R&D. However, its liquidity position has been significantly bolstered. The company's cash and cash equivalents and short-term investments stood at $86.10 million as of September 30, 2025. Crucially, in August 2025, Shattuck Labs closed a private placement that could generate up to approximately $103 million in gross proceeds, assuming the full exercise of common stock warrants. This financing is expected to extend the company's cash runway into 2029, providing ample capital to fund the clinical development of SL-325 through multiple Phase 2 trials.

Net cash used in operating activities for the nine months ended September 30, 2025, was $31.40 million, while net cash provided by financing activities was $44.40 million, primarily from the recent equity offering.

Outlook and Forward-Looking Initiatives

Shattuck Labs' future is now firmly anchored to SL-325 and its potential in inflammatory and immune-mediated diseases. The Investigational New Drug (IND) application for SL-325 became effective in August 2025, and the company initiated a Phase 1 clinical trial in healthy volunteers in the third quarter of 2025. Enrollment for this randomized, double-blind, placebo-controlled, single-ascending dose (SAD) and multiple-ascending dose (MAD) trial is expected to be completed in the second quarter of 2026. The data from this trial will be critical in guiding the doses and schedules for subsequent Phase 2 clinical trials, which are planned for inflammatory bowel disease (IBD), including ulcerative colitis (UC) and Crohn's disease (CD), and potentially other autoimmune diseases.

Management's guidance is clear: the current cash and cash equivalents, combined with the potential proceeds from warrant exercises, are believed to be sufficient to fund operations into 2029. This extended runway provides the financial stability necessary to advance SL-325 through significant clinical milestones, including placebo-controlled, randomized Phase 2 trials. The company's strategic repositioning as an immunology and inflammation-focused organization, coupled with the promising preclinical profile of SL-325, signals a clear path forward.

Risks and Challenges

Despite the promising strategic shift, Shattuck Labs faces several inherent risks. The success of SL-325 is contingent on positive clinical trial results, and the unpredictable nature of drug development means there is no guarantee of regulatory approval or commercialization. Global macroeconomic conditions, including inflation and fluctuating interest rates, could increase operational costs and impact the company's financial stability.

Furthermore, the U.S. government shutdown, which began in October 2025, poses a significant risk. A prolonged shutdown could delay the FDA's review and processing of regulatory submissions, impacting clinical trial timelines and potential product launches. The uncertainty surrounding the exercise of common stock warrants also presents a liquidity risk, as holders are not obligated to exercise, and cashless exercises would reduce cash proceeds. Changes in healthcare legislation, such as the Inflation Reduction Act (IRA), while potentially beneficial for orphan drugs with recent amendments, could still impact future pricing and reimbursement. Finally, the company's reliance on third-party CDMOs and CROs for manufacturing and clinical trial support introduces supply chain and operational risks.

Conclusion

Shattuck Labs is at a pivotal juncture, having decisively reoriented its strategic focus towards inflammatory and immune-mediated diseases with SL-325 as its flagship program. The company's differentiated protein engineering expertise, particularly in DR3 antagonism, offers a compelling investment thesis built on the potential for superior efficacy and reduced immunogenicity compared to existing therapies. The recent capital infusion provides a robust financial runway, enabling the advancement of SL-325 through critical clinical milestones.

While the path ahead is not without risks, including the inherent uncertainties of clinical development and broader macroeconomic and regulatory challenges, Shattuck's clear strategic vision, technological differentiation, and strengthened financial position underscore its potential. Investors will closely monitor the progress of SL-325's Phase 1 trial and the subsequent initiation of Phase 2 studies, as these will be crucial indicators of the company's ability to translate its innovative science into tangible clinical and commercial success in the evolving immunology and inflammation landscape.