Investing.com -- Wall Street cut rating on Elevation Oncology Inc (NASDAQ:ELEV) after the company announced it will discontinue development of its lead asset, EO-3021, due to disappointing efficacy in a Phase 1 trial.
Analysts now see limited near-term catalysts, with Elevation pivoting to its HER3-targeted ADC, EO-1022, which is still in preclinical development.
Piper Sandler downgraded Elevation to “Neutral” from “Overweight” and slashed its price target to $0.70 from prior levels, citing the company’s decision to halt EO-3021’s development and focus on EO-1022.
While EO-3021 demonstrated differentiated safety, its 22% ORR in monotherapy dose escalation was not enough to justify further development, according to Piper .
The firm’s new price target reflects projected cash on hand at year-end 2025, with limited upside potential until EO-1022 progresses further.
Citizens also moved its rating to “Market Perform” from “Market Outperform,” citing the lack of near-term clinical data for EO-1022 and uncertainty around potential strategic transactions.
The timeline to clinical data for EO-1022 and the unpredictable nature of potential partnerships or mergers make it difficult to assign near-term upside.
The firm highlighted that Elevation shares are trading at around 25% of their 4Q24 cash balance, which it views as a fair discount given the current uncertainties.
With EO-3021 discontinued, Elevation is shifting focus to EO-1022, a HER3-targeted ADC expected to file for an Investigational New Drug (IND) application in 2026.
Piper noted that preclinical data is expected at the American Association for Cancer Research (AACR) in April, but emphasized that meaningful clinical data remains at least two years away.
Elevation is also exploring strategic alternatives, including in-licensing new programs or pursuing a merger.
Citizens commented that “if ELEV deploys cash, it plans to remain ADC focused,” but the outcome of these efforts is difficult to predict.
Piper and Citizens both noted that Elevation’s current valuation reflects its depressed outlook and uncertain strategic future.
With $93.2 million in cash and equivalents and around $31 million in debt as of year-end 2024, the company has a cash runway into the second half of 2026, but Piper cautioned that execution and financing risks remain.
Citizens concluded, “It is unfortunate that EO-3021 efficacy deteriorated in the larger patient population to a level that is no longer competitive,” but it views management’s decision to halt the program as prudent given the data.
Both brokerages expect Elevation shares to remain range-bound until meaningful clinical updates emerge for EO-1022 or a strategic transaction materializes.