Elevation Oncology, Inc. (NASDAQ: ELEV) is an innovative oncology company focused on the discovery and development of selective cancer therapies to treat patients across a range of solid tumors with significant unmet medical needs. The company is leveraging its antibody-drug conjugate (ADC) expertise to advance a novel pipeline, initially targeting two validated targets in oncology, Claudin 18.2 and HER3.

Business Overview

Elevation Oncology's lead product candidate, EO-3021, is an ADC designed to target Claudin 18.2 and is currently being evaluated in a Phase 1 clinical trial in patients with advanced, unresectable or metastatic solid tumors likely to express Claudin 18.2, including gastric, gastroesophageal junction, pancreatic or esophageal cancers. The company has an active Investigational New Drug application (IND) for EO-3021 with the U.S. Food and Drug Administration (FDA), and in August 2023, Elevation Oncology announced that the first patient had been dosed in the Phase 1 clinical trial of EO-3021. In February 2024, the company announced that the first patient had been dosed in Japan.

Elevation Oncology plans to announce initial safety and efficacy data from its ongoing Phase 1 trial of EO-3021 by mid-third quarter of 2024, with additional data expected in the first half of 2025. In addition to its monotherapy approach, the company plans to evaluate EO-3021 in combination with both immunotherapy and targeted agents, with further details on its planned Phase 1 combination study expected to be shared in the first half of 2024.

Orphan Drug Designation and Licensing Agreement

EO-3021 was granted orphan drug designation by the FDA for the treatment of gastric cancer (including cancer of gastroesophageal junction) in November 2020 and for the treatment of pancreatic cancer in May 2021. In July 2022, Elevation Oncology entered into a license agreement with a subsidiary of CSPC Pharmaceutical Group Limited (collectively with its affiliates, "CSPC") to develop and commercialize EO-3021 outside Greater China (the People's Republic of China, Hong Kong, Macau and Taiwan).

Clinical Data

In June 2023, Elevation Oncology and CSPC announced initial clinical data for SYSA1801 (EO-3021) from CSPC's ongoing Phase 1 clinical trial in China. These data were presented at the American Society of Clinical Oncology 2023 Annual Meeting (ASCO 2023). Key findings included an objective response rate (ORR) of 47.1% in gastric cancer patients and an overall ORR of 38.1%. The data also showed that treatment-related adverse events (TRAEs) of any grade occurred in 75.8% of patients, with 24.2% experiencing TRAEs of ≥Grade 3.

In April 2023, Elevation Oncology presented preclinical proof-of-concept data and a clinical case study for EO-3021 at the American Association for Cancer Research Annual Meeting 2023 (AACR 2023). The preclinical study demonstrated anti-tumor activity of EO-3021 in in vivo xenograft models of pancreatic and gastric cancers expressing varying levels of Claudin 18.2. The clinical case study involved a patient with metastatic gastric cancer who achieved a confirmed partial response on treatment with EO-3021.

HER3-ADC Program

Elevation Oncology's second program is an ADC designed to target HER3, which is overexpressed across solid tumors and often associated with poor outcomes. The company is currently evaluating its HER3-ADC program and plans to nominate a development candidate in the second half of 2024.

Financials

In the three months ended March 31, 2024, Elevation Oncology sold 8,666,416 shares of common stock pursuant to its at-the-market offering facility (the "ATM Facility") with Cowen and Company, LLC, with net proceeds of approximately $29.7 million after deducting issuance costs. In April 2024, the company sold an additional 2,958,879 shares of common stock under the ATM Facility, with net proceeds of approximately $14.5 million after deducting issuance costs.

In July 2022, Elevation Oncology entered into a loan and security agreement (as amended, the "Loan Agreement") with K2 HealthVentures LLC (together with its affiliates, "K2HV"), as administrative agent for the lenders, and Ankura Trust Company, LLC, as collateral agent for the lenders. The Loan Agreement provides up to $50.0 million principal in term loans, consisting of a first tranche of $30.0 million funded at closing and a subsequent second tranche of up to $20.0 million upon the company's request, subject to review by the lenders and discretionary approval. In March 2024, Elevation Oncology entered into an amendment to the Loan Agreement with K2HV, which, among other things, extended the amortization date of the term loan and provided for the issuance of an additional warrant to K2HV.

For the three months ended March 31, 2024, Elevation Oncology reported a net loss of $10.7 million, compared to a net loss of $17.1 million for the same period in 2023. The company's annual net income for the fiscal year ended December 31, 2023 was -$45,704,000, and its annual revenue was $0. Elevation Oncology's annual operating cash flow and annual free cash flow for the fiscal year ended December 31, 2023 were both -$56,180,000.

Liquidity

As of March 31, 2024, Elevation Oncology had cash, cash equivalents and marketable securities of $104.1 million, which, together with the approximately $14.5 million in net proceeds raised under its ATM Facility in April 2024, the company believes will enable it to meet its anticipated capital requirements into 2026.

Research and Development Expenses

Elevation Oncology's research and development expenses for the three months ended March 31, 2024 were $6.0 million, compared to $7.3 million for the same period in 2023. The decrease was primarily due to a $2.4 million decrease in manufacturing, preclinical and medical affairs expenses, and a $0.6 million decrease in personnel costs, including stock-based compensation. This was partially offset by an increase of $1.7 million in clinical costs due to the company's investment in the lead product candidate, EO-3021.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2024 were $3.9 million, compared to $4.3 million for the same period in 2023. The decrease was mainly due to a $0.2 million decrease in personnel costs, including stock-based compensation, and a $0.2 million decrease in administrative costs, including directors' and officers' insurance.

Financial Ratios

Elevation Oncology's debt ratio was 0.28, and its debt-to-equity ratio was 0.41, suggesting a relatively low level of leverage.

In terms of valuation, Elevation Oncology's price-to-book ratio as of March 31, 2024 was 1.72, and its price-to-sales ratio was 2,590.61, reflecting the company's early-stage status and lack of revenue. The company's price-to-earnings ratio was -3.31, given its net losses.

Outlook

Looking ahead, Elevation Oncology remains focused on advancing its lead product candidate, EO-3021, through clinical development and exploring combination therapy approaches. The company's ability to successfully develop and commercialize EO-3021 and its other product candidates will be a key driver of its future performance. Investors will closely monitor the progress of Elevation Oncology's clinical trials, regulatory approvals, and potential partnerships or collaborations as the company continues to execute on its strategic priorities.