FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38938 Stoke Therapeutics, Inc. (Exact name of Registrant as specified in its Charter) Delaware 47-1144582 (State or other jurisdictio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 WASHINGTON, DC 20549 FORM 10-Q For the transition period from __________ to ____________ Commission File Number: 001-38938 Stoke Therapeutics, Inc. (Exact Name of Registrant as Specified in its Charter) (State or other ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements reflect a significant increase in cash to $242.7 million due to the June 2019 IPO, alongside a net loss of $13.6 million for the first half of 2019 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $246.4 million by June 30, 2019, primarily due to a rise in cash and cash equivalents following the IPO Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2019 (unaudited) | December 31, 2018 (audited) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $242,680 | $105,399 | | Total current assets | $244,445 | $106,143 | | Total assets | $246,372 | $107,539 | | **Liabilities & Stockholders' Equity** | | | | Total liabilities | $4,836 | $2,471 | | Total stockholders' equity | $241,536 | $105,068 | | Total liabilities and stockholders' equity | $246,372 | $107,539 | - Upon the closing of the IPO on June 21, 2019, all outstanding convertible preferred stock was **automatically converted** into common stock[27](index=27&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The company reported no revenue and a net loss of $13.6 million for the first half of 2019, driven by increased operating expenses Statement of Operations Summary (in thousands) | Metric | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development | $10,156 | $3,140 | | General and administrative | $4,611 | $1,782 | | Loss from operations | ($14,767) | ($4,922) | | Net loss | ($13,561) | ($4,922) | | Net loss per share | ($4.57) | ($7.14) | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $12.8 million, while financing activities provided $150.6 million, primarily from the IPO Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,806) | ($4,408) | | Net cash used in investing activities | ($482) | ($326) | | Net cash provided by financing activities | $150,570 | $12,482 | - The primary source of financing cash flow in the first half of 2019 was **$151.9 million** in proceeds from the IPO[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's early-stage biopharmaceutical focus, IPO proceeds of $149.4 million, and license agreements for TANGO technology - The company is an early-stage biopharmaceutical company pioneering a new way to treat severe genetic diseases by upregulating protein expression using its **TANGO platform**[26](index=26&type=chunk) - Completed an IPO on June 21, 2019, issuing 9,074,776 shares at $18.00 per share, resulting in net proceeds of approximately **$149.4 million**[27](index=27&type=chunk) - The company expects its cash and cash equivalents as of June 30, 2019, will be sufficient to fund operating expenses and capital expenditure requirements into **2023**[31](index=31&type=chunk) - The company has **license agreements** with CSHL and the University of Southampton, which require potential milestone payments, royalties on net sales, and a percentage of any sublicense revenue[61](index=61&type=chunk)[62](index=62&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the TANGO platform, lead candidate STK-001 for Dravet syndrome, and the financial impact of the June 2019 IPO - The company is pioneering a new way to treat severe genetic diseases by precisely upregulating protein expression using its proprietary **TANGO (Targeted Augmentation of Nuclear Gene Output) platform**[81](index=81&type=chunk)[82](index=82&type=chunk) - Lead product candidate, **STK-001**, is designed to treat Dravet syndrome, with plans to submit an IND application by early 2020 and initiate a **Phase 1/2 clinical trial** in the first half of 2020[83](index=83&type=chunk) - In August 2019, the FDA granted **orphan drug designation** to STK-001 for the treatment of Dravet Syndrome[90](index=90&type=chunk) - Existing cash, cash equivalents, and restricted cash of **$242.9 million** as of June 30, 2019, are expected to fund operating expenses and capital expenditure requirements into **2023**[89](index=89&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20operations) Operating expenses significantly increased, with R&D rising to $10.2 million and G&A to $4.6 million for the six months ended June 30, 2019 Research and Development Expenses (in thousands) | Category | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | STK-001 | $4,337 | $392 | | Non-program specific and unallocated | $5,819 | $2,748 | | **Total R&D Expenses** | **$10,156** | **$3,140** | - The increase in R&D expenses for the six months ended June 30, 2019, was primarily due to a **$4.0 million** increase in the STK-001 program and a **$1.7 million** increase in personnel costs from higher headcount[107](index=107&type=chunk) - General and administrative expenses for the six months ended June 30, 2019, increased by **$2.8 million** year-over-year, mainly due to a **$0.8 million** increase in personnel costs and a **$1.3 million** increase in third-party services[108](index=108&type=chunk)[109](index=109&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20capital%20resources) Cash and equivalents totaled $242.9 million as of June 30, 2019, primarily from the IPO, expected to fund operations into 2023 - As of June 30, 2019, the company had **$242.9 million** in cash, cash equivalents and restricted cash[112](index=112&type=chunk) - The company believes its existing capital resources will fund operating expenses and capital expenditure requirements into **2023**[114](index=114&type=chunk) Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($12,806) | ($4,408) | | Net cash used in investing activities | ($482) | ($326) | | Net cash provided by financing activities | $150,570 | $12,482 | [Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate sensitivity on $242.9 million in cash and equivalents, with a 100 basis point change impacting value by $2.4 million - The company's primary market risk exposure is interest rate sensitivity on its cash, cash equivalents, and restricted cash of **$242.9 million** as of June 30, 2019[136](index=136&type=chunk) - A hypothetical **100 basis point** change in interest rates would affect the fair market value of cash equivalents by approximately **$2.4 million**[136](index=136&type=chunk) [Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2019, with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2019[137](index=137&type=chunk) - There were **no material changes** to the company's internal control over financial reporting during the quarter[138](index=138&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that would materially adversely affect its business - The company is **not presently a party** to any legal proceedings that would have a material adverse effect on its business[141](index=141&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) Key risks include early-stage development, reliance on STK-001, clinical trial uncertainties, commercialization challenges, financial losses, and intellectual property issues [Risks related to product development and regulatory approval](index=27&type=section&id=Risks%20related%20to%20product%20development%20and%20regulatory%20approval) Risks include STK-001 development failure, patient enrollment challenges for rare diseases, unforeseen side effects, and uncertainties in regulatory approval - The company is in early development and its business will be **materially harmed** if it is unable to develop, obtain regulatory approval for, and commercialize STK-001 and future product candidates[143](index=143&type=chunk) - Success in early preclinical studies may be **not indicative** of results in later clinical trials, and the company has not yet tested any product candidates in humans[147](index=147&type=chunk) - The low prevalence of diseases like Dravet syndrome may make it **difficult to identify patients and enroll** them in clinical trials, potentially causing significant delays[152](index=152&type=chunk) - The company's novel approach of upregulating protein expression with ASOs presents **uncertainty regarding the safety profile**, and undesirable side effects could delay or prevent regulatory approval[164](index=164&type=chunk) [Risks related to commercialization and manufacturing](index=36&type=section&id=Risks%20related%20to%20commercialization%20and%20manufacturing) Commercialization risks include market acceptance, reimbursement challenges, reliance on third-party manufacturers, and intense competition - Commercial success depends on market acceptance by providers, patients, and payors, which is **uncertain** for a novel genetic treatment[190](index=190&type=chunk) - Failure to obtain or maintain adequate insurance coverage and reimbursement for high-priced therapies for rare diseases could **severely limit marketability**[193](index=193&type=chunk) - The company relies on a **limited number of third-party manufacturers**, and any production difficulties, contaminations, or compliance failures could delay or stop supply for trials and commercialization[204](index=204&type=chunk)[205](index=205&type=chunk) - The company faces **significant competition** from large pharmaceutical companies and other biotechs with greater resources, who may develop more effective therapies or achieve regulatory approval faster[200](index=200&type=chunk)[202](index=202&type=chunk) [Risks related to our financial position](index=41&type=section&id=Risks%20related%20to%20our%20financial%20position) Financial risks include a history of operating losses, the need for substantial future funding, and potential limitations on NOL carryforwards - The company has a history of operating losses, with an accumulated deficit of **$39.3 million** as of June 30, 2019, and expects to incur losses for the foreseeable future[215](index=215&type=chunk)[216](index=216&type=chunk) - **Substantial additional funding** will be required to complete development and commercialization, and failure to obtain it could force the company to delay, reduce, or eliminate programs[217](index=217&type=chunk) - The company's ability to utilize its federal and state net operating loss (NOL) carryforwards of approximately **$24.4 million** and **$24.0 million**, respectively, may be **limited** due to 'ownership change' rules under the tax code[223](index=223&type=chunk) [Risks related to our intellectual property](index=43&type=section&id=Risks%20related%20to%20our%20intellectual%20property) Intellectual property risks include reliance on licensed patents, uncertainty of patent issuance, infringement claims, and trade secret protection challenges - The company **depends on intellectual property licensed from third parties**, and failure to comply with license obligations could lead to termination of these agreements and loss of rights to its core technology[229](index=229&type=chunk)[230](index=230&type=chunk) - There is **no guarantee** that pending patent applications will issue or that existing patents will be broad enough to prevent competitors from developing similar products[228](index=228&type=chunk)[236](index=236&type=chunk) - The company may face **costly litigation** if third parties claim its products infringe their intellectual property rights, which could block commercialization or require expensive licensing deals[249](index=249&type=chunk)[250](index=250&type=chunk) - The company relies on **trade secrets and confidentiality agreements**, which may be breached or may not provide adequate protection, potentially harming its competitive position[245](index=245&type=chunk)[246](index=246&type=chunk) [Risks related to ownership of our common stock](index=59&type=section&id=Risks%20related%20to%20ownership%20of%20our%20common%20stock) Risks include stock price volatility, significant control by principal stockholders, and reduced disclosure as an 'emerging growth' and 'smaller reporting' company - The trading price of the company's common stock may be **highly volatile** and subject to wide fluctuations[295](index=295&type=chunk) - As of June 30, 2019, executive officers, directors, and affiliates beneficially owned approximately **53.4%** of the stock, giving them **significant control** over matters subject to stockholder approval[298](index=298&type=chunk) - The company qualifies as a **'controlled company'** under Nasdaq rules due to majority ownership by an affiliate of Apple Tree Partners, exempting it from certain corporate governance requirements[299](index=299&type=chunk) - The company is an **'emerging growth company'** and a **'smaller reporting company'**, which permits reduced public reporting and disclosure obligations[306](index=306&type=chunk)[309](index=309&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued options and converted preferred stock upon IPO, generating $149.4 million in net proceeds with no material change in their planned use - Upon completion of the IPO, all outstanding convertible preferred stock automatically converted into **22,677,585 shares** of common stock[320](index=320&type=chunk) - The company received net proceeds from its IPO of approximately **$149.4 million** after deducting underwriting discounts, commissions, and offering expenses[322](index=322&type=chunk) - There has been **no material change** in the planned use of proceeds from the IPO as described in the prospectus[323](index=323&type=chunk) [Defaults Upon Senior Securities](index=61&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - **None**[324](index=324&type=chunk) [Mine Safety Disclosures](index=61&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - **Not Applicable**[325](index=325&type=chunk) [Other Information](index=61&type=section&id=Item%205.%20Other%20Information) No other material information to disclose - **None**[325](index=325&type=chunk) [Exhibits](index=62&type=section&id=Item%206.%20Exhibits) Key exhibits include corporate governance documents, equity plans, and CEO/CFO certifications filed with the Form 10-Q - **Exhibits filed** include the Restated Certificate of Incorporation, Restated Bylaws, 2019 Equity Incentive Plan, 2019 Employee Stock Purchase Plan, and CEO/CFO certifications[328](index=328&type=chunk)