H.C. Wainwright & Co. analyst Dr. Swayampakula Ramakanth, in a research report published on August 7, 2024, provided an update on Elevation Oncology Inc. (ELEV:NASDAQ) following the company's announcement of initial data from the dose escalation portion of its ongoing Phase 1 study evaluating EO-3021, a Claudin 18.2-targeting antibody-drug conjugate (ADC). The analyst reiterated a Buy rating and a price target of US$6.00 on the stock.
According to the report, Elevation Oncology reported promising results for EO-3021 in patients with advanced unresectable gastric, gastroesophageal junction (GEJ), esophageal, and pancreatic cancers that likely express Claudin 18.2.
Dr. Ramakanth highlighted the study's key findings, stating, "Of the seven evaluated patients that expressed Claudin 18.2 in ≥20% of tumor cells (IHC 2+/3+), three patients displayed confirmed partial responses, and two patients experienced stable disease for an objective response rate (ORR) of 42.8%, and a disease control rate (DCR) of 71.4%."
The analyst emphasized the favorable safety profile of EO-3021, noting, "EO-3021 exhibited a favorable tolerability, with no grade 4 or 5 treatment-emergent adverse events (TEAEs). Dose reductions due to AEs occurred in 28% (9/32) of patients, and 6% (2/32) of patients discontinued treatment due to AEs."
Dr. Ramakanth compared EO-3021's performance to competing therapies, stating, "We believe the interim efficacy data reported for EO-3021 as a monotherapy is competitive and potentially could be superior as a combination therapy. Additionally, the favorable safety profile could be a differentiating characteristic and could allow the drug to be evaluated as a combination therapy for patients with 20% or higher levels of Claudin 18.2 expression."
Elevation Oncology's strategic plans include advancing EO-3021 into monotherapy expansion and dose optimization, as well as initiating combination therapy studies with dostarlimab in a 1L setting and with ramucirumab in a 2L setting by the end of 2024.
The company reported no revenues and a net loss of US$0.18 per diluted share for Q2 2024, compared to the consensus estimate of a US$0.22 per share loss. Elevation Oncology ended the quarter with US$110.8 million in cash and cash equivalents, which Dr. Ramakanth believes "is sufficient to fund operations until 4Q26."
H.C. Wainwright's valuation methodology for Elevation Oncology is based on a risk-adjusted net present value (rNPV) analysis. "We derive our price target based on a risk-adjusted net present value (rNPV) analysis of projected future revenues from ELEV's product candidates, assuming a 20% probability of launch, a 12% discount rate, and a 0% terminal growth rate," Dr. Ramakanth explained.
With a Buy rating and a price target of US$6.00, representing a potential return of approximately 669% from the price at the time of the report of US$0.78, H.C. Wainwright sees significant upside potential for Elevation Oncology.
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Disclosures for H.C. Wainwright & Co., Elevation Oncology Inc., August 7, 2024
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H.C. Wainwright & Co, LLC (the “Firm”) is a member of FINRA and SIPC and a registered U.S. Broker-Dealer. I, Swayampakula Ramakanth, Ph.D., Li Chen, Ph.D., Arthur He, Ph.D., Sean Lee and Douglas MacPherson, Ph.D. , certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies. None of the research analysts or the research analyst’s household has a financial interest in the securities of Elevation Oncology, Inc. (including, without limitation, any option, right, warrant, future, long or short position). As of July 31, 2024 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Elevation Oncology, Inc..
Neither the research analyst nor the Firm knows or has reason to know of any other material conflict of interest at the time of publication of this research report. The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services. The firm or its affiliates received compensation from Elevation Oncology, Inc. for non-investment banking services in the previous 12 months. The Firm or its affiliates did not receive compensation from Elevation Oncology, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report. The Firm does not make a market in Elevation Oncology, Inc. as of the date of this research report.
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