Promising Clinical Data and Strategic Partnerships Propel Oncology Co.

Elevation Oncology Inc.(ELEV:NASDAQ) reported its second-quarter 2024 financial results on August 6, highlighting significant progress in its clinical trials and ongoing business achievements. The company shared promising initial data from its Phase 1 clinical trial evaluating EO-3021, a targeted antibody-drug conjugate (ADC) for patients with gastric and gastroesophageal junction (GEJ) cancers. The trial, which focuses on the Claudin 18.2-enriched subset of these cancers, revealed a confirmed objective response rate (ORR) of 42.8%, coupled with a differentiated safety profile.

Joseph Ferra, President and CEO of Elevation Oncology, emphasized the importance of these findings, stating in the press release, "We are particularly excited to see encouraging anti-tumor activity in patients with Claudin 18.2-expressing gastric or GEJ cancer, as well as a differentiated safety profile, demonstrating the value of a targeted therapeutic approach."

The results strengthen the clinical proof-of-concept for EO-3021 and support its potential as a best-in-class therapy for these cancer types.

'One of the Most Promising Sectors in Life Sciences'

The oncology sector has emerged as one of the most dynamic and promising areas within the life sciences industry. As Investing News highlighted on June 25, "the wide-ranging oncology market covers every area of cancer care, from diagnosis to treatment." This comprehensive approach has positioned oncology as one of the biggest sectors in life sciences, with Fortune Business Insights projecting that the global oncology market would increase at a compound annual growth rate of 11.3% to reach US$518.25 billion by 2032.

H.C. Wainwright & Company expressed a positive outlook on Elevation Oncology's recent developments, reiterating their "Buy" rating and maintaining a price target of US$6.00 per share in their August 7 report.

In the first quarter of 2024, the oncology sector witnessed a significant uptick in merger and acquisition (M&A) activity.

Biospace reported in April that "oncology was the most active therapeutic area for M&As in the first quarter," with the cancer sector seeing notable interest in areas like antibody-drug conjugates (ADCs) and radiopharmaceuticals.

This resurgence in M&A activity marked a clear rebound from the post-pandemic slump, further underscoring the sector's resilience and attractiveness to big pharmaceutical companies.

Yahoo! Finance, writing on June 20, observed that the "oncology biotech sector was rapidly gaining momentum, attracting substantial investments and reshaping the landscape of cancer care." The advancements in diagnostics and treatments were not only creating significant investment opportunities but also positioning oncology as "one of the most promising sectors in life sciences." As the field continues to innovate, particularly in areas like immunotherapy and personalized medicine, it remains at the forefront of cutting-edge research and development.

With cancer being a critical area of focus in healthcare, affecting one in every two people at some point in their lives, the importance of this sector cannot be overstated. Yahoo! Finance noted that the oncology sector's expanding investment opportunities made it "an attractive segment within biotech," offering investors a unique chance to support transformative treatments while benefiting from the sector's rapid growth.

Elevating Elevation Oncology

As cited by the company, Elevation Oncology is poised to advance EO-3021 into the dose expansion phase of its ongoing Phase 1 trial, with further monotherapy data expected in the first half of 2025.

Wedbush, in their August 6 report, also maintained an optimistic stance, reiterating their "Outperform" rating and setting a 12-month price target of US$8.00 per share.

Additionally, the company has secured critical clinical supply agreements with Lilly and GSK to evaluate EO-3021 in combination with ramucirumab and dostarlimab, respectively. These combinations are expected to initiate dosing by the end of 2024.

The company is also on track to nominate a development candidate for its HER3-ADC program in the second half of 2024.

This year has been transformative for Elevation Oncology, marked by significant execution toward its goal of developing novel treatment options for patients with substantial unmet medical needs.

Financially, Elevation Oncology reported a net loss of US$10.5 million for the second quarter, an increase from the US$10.1 million reported in the same quarter of 2023. Despite this, the company's cash, cash equivalents, and marketable securities have grown to US$110.8 million, up from US$83.1 million as of December 31, 2023, bolstered by net proceeds of US$44.2 million raised through its at-the-market facility.

This financial foundation is expected to support the company's operations into 2026, providing a strong runway for its ongoing clinical and developmental efforts.

Expert Opinions on Elevation

H.C. Wainwright & Company expressed a positive outlook on Elevation Oncology's recent developments, reiterating their "Buy" rating and maintaining a price target of US$6.00 per share in their August 7 report.

Chen Lin of "What is Chen Buying? What is Chen Selling?" wrote on August 6, "ELEV crashed on the weak data this morning. This creates a good buying opportunity when we have a bigger data readout."

The analysts highlighted the promising interim data from the Phase 1 study of EO-3021, particularly its potential as a targeted therapy for patients with tumors expressing Claudin 18.2.

They emphasized that EO-3021 demonstrated an objective response rate (ORR) of 42.8% and a disease control rate (DCR) of 71.4% in patients with higher levels of Claudin 18.2 expression. Additionally, HC Wainwright noted the favorable safety profile of EO-3021, which they attributed to the drug's stable-site-specific conjugation strategy, minimizing off-target toxicity.

Wedbush, in their August 6 report, also maintained an optimistic stance, reiterating their "Outperform" rating and setting a 12-month price target of US$8.00 per share.

They were impressed by the initial data from the Phase 1 study of EO-3021, noting that the drug showed a confirmed ORR of 43% and a DCR of 71% in patients with moderate to strong Claudin 18.2 expression in 20% or more of tumor cells. Wedbush analysts emphasized that EO-3021's safety profile was favorable, with minimal toxicities associated with the MMAE payload, which they believe supports the potential for EO-3021 to become a standard of care in a significant portion of gastric and gastroesophageal junction (GEJ) cancer patients.

Both firms acknowledged the financial health of Elevation Oncology, noting that the company reported a net loss of US$10.5 million for the second quarter of 2024, slightly better than expected, and ended the quarter with US$110.8 million in cash and cash equivalents. Both HC Wainwright and Wedbush believed that this financial position would be sufficient to fund ongoing operations into 2026, including the continued development of EO-3021 and the nomination of a HER3-ADC candidate in the second half of 2024.

Chen Lin of "What is Chen Buying? What is Chen Selling?" wrote on August 6, "ELEV crashed on the weak data this morning. This creates a good buying opportunity when we have a bigger data readout."

He continued, "As I said in letter 2791, I already reduced my position. This will be a great drug as its Chinese partner has much more comprehensive data. The issue is you probably need to wait for the results, likely next year at ASCO. I will follow up with my contacts in China so we can time it just before the data comes out. I believe it is a great buying opportunity for us down the road, like tax loss selling." 

Ownership and Share Structure

According to Refinitiv, 88.98% of Elevation Oncology is owned by institutions.

Of those, Frazier Life Sciences Management owns 10.14%, Farallon Captial Management holds 6.58%, Point72 Asset Management owns 5.70%, Tang Capital Management has 5.18%, Balaysany Asset Management LP holds 4.81%, Empery Asset Management LP owns 4.81%, Aisling Capital Management has 4.80%, Braidewell LP holds 4.02%, Darwin Global Management holds 3.95%, and BVF Partners LP has 3.91%.

Management and insiders own 0.24%, and the rest is retail. 

Elevation Oncology has 50 million free float shares, a market cap of US$42.86 million, and a 52-week range of US$0.36 - US$5.83

Important Disclosures:

1) James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.

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