Executive Summary / Key Takeaways

• Eledon Pharmaceuticals is strategically focused on developing its lead asset, tegoprubart, an anti-CD40 Ligand antibody, to potentially replace the current standard of care calcineurin inhibitors (CNIs) in kidney transplantation, aiming to improve graft function and reduce toxicities.
• The company reported a net loss of $6.5 million for Q1 2025, significantly lower than $23.6 million in Q1 2024, primarily due to a favorable change in the fair value of warrant liabilities, although operating expenses increased due to advancing clinical trials.
• As of March 31, 2025, Eledon held $124.9 million in cash, cash equivalents, and short-term investments, providing a cash runway expected to fund planned operations for at least the next 12 months from the May 14, 2025 filing date, following recent significant financings.
• Key upcoming catalysts include topline results from the Phase 2 BESTOW trial in kidney transplantation expected in Q4 2025, along with updated data from the Phase 1b and long-term extension studies in kidney transplant and longer-term follow-up from an investigator-led islet cell transplant trial later in 2025.
• While the kidney transplant program is well-funded for current plans, the ALS program requires additional specific financing for further clinical development, and the company faces significant competition from larger, more established players in its target markets.

A Strategic Pivot Towards Transplant Innovation

Eledon Pharmaceuticals is a clinical-stage biotechnology company centered on the CD40 Ligand (CD40L) pathway, a critical regulator of immune responses. The company's journey has been one of strategic evolution, marked by a significant pivot from its origins in ENT disorders as Novus Therapeutics. Following the discontinuation of its initial lead program in 2020, Eledon acquired Anelixis Therapeutics, gaining control of tegoprubart, a next-generation anti-CD40L antibody. This acquisition fundamentally reshaped the company's focus, directing its resources towards the broad therapeutic potential of CD40L inhibition in transplantation, autoimmune diseases, and neurodegenerative conditions.

This strategic shift culminated in January 2023 with a clear prioritization: Eledon is now laser-focused on advancing tegoprubart in kidney transplantation, recognizing the profound unmet need and market opportunity in this space. While other programs like ALS, IgA Nephropathy (IgAN), and Islet Cell Transplantation (ICT) have yielded valuable data, the company has streamlined its pipeline to concentrate financial and operational resources on the most promising path forward, seeking external financing for non-prioritized indications like ALS.

Tegoprubart: A Differentiated Approach to Immune Modulation

At the heart of Eledon's strategy is tegoprubart, an IgG1 antibody designed to target and block the CD40 Ligand. The CD40L-CD40 pathway plays a central role in both adaptive and innate immunity, making it an attractive target for immunomodulation. Unlike approaches that target the CD40 receptor, tegoprubart blocks the ligand, which is primarily expressed on activated T cells, platelets, and endothelial cells. This mechanism allows tegoprubart to potentially inhibit multiple costimulatory pathways, including both CD40 and CD11 signaling, offering a broader immunomodulatory effect.

A key differentiator highlighted by the company is tegoprubart's design, which aims to overcome the thromboembolic risks associated with first-generation anti-CD40L antibodies. Preclinical models suggest that tegoprubart eliminates binding to Fcγ receptors associated with platelet activation while maintaining high affinity for CD40L. This engineering is intended to provide a potentially improved safety profile compared to earlier attempts to target this pathway. Furthermore, blocking CD40L has been shown in preclinical models to increase the polarization of CD4 lymphocytes towards regulatory T cells (Tregs), fostering a more tolerogenic environment.

The "so what" for investors is that tegoprubart represents a potentially safer and more effective way to target a well-validated immune pathway. If successful, its differentiated mechanism and safety profile could provide a competitive edge over existing therapies and other pipeline candidates by offering superior efficacy, reduced side effects, and potentially better long-term outcomes for patients. Early clinical data, such as the dose-dependent target engagement and reduction in pro-inflammatory biomarkers observed in the Phase 2a ALS study, and the promising early eGFR trends in the Phase 1b kidney transplant study, lend support to the biological activity and potential benefits of this approach.

The Kidney Transplant Thesis: Addressing a Critical Unmet Need

Eledon's primary investment thesis is now firmly rooted in the potential of tegoprubart to transform kidney transplantation. Kidney transplant is the most common solid organ transplant procedure in the U.S., with over 27,000 transplants performed annually and a large and growing waiting list. Despite the increasing number of procedures, the standard of care for chronic immunosuppression has seen little innovation since the approval of tacrolimus (a CNI) in 1994.

While CNIs are effective at preventing acute rejection, their chronic use is associated with significant toxicities, including nephrotoxicity (harm to the transplanted kidney itself), new-onset diabetes, hypertension, and neurological side effects like tremor. These adverse events can negatively impact patient quality of life, adherence to therapy, and, crucially, the long-term survival of the transplanted kidney, which currently averages only 10-15 years. This often necessitates repeat transplants, adding to the burden on patients and the organ supply.

Eledon believes tegoprubart can address these limitations by providing effective immunosuppression without the need for CNIs. The company's clinical strategy in kidney transplantation involves two key studies:

• Phase 1b Open-Label Study: An ongoing trial in up to 36 subjects in the U.S., Canada, UK, and Australia, evaluating tegoprubart as a replacement for tacrolimus in a triple immunosuppression regimen (tegoprubart, mycophenolate mofetil, corticosteroids). Early data from this study has shown promising graft function, with mean eGFRs above 60 mL/min/1.73m² at time points after day 30, and an overall mean eGFR of 70.5 mL/min/1.73m² for all reported time points after day 30 post-transplant (as of April 3, 2024 data). This compares favorably to historical studies using CNI-based regimens, which typically report mean eGFRs around 53 mL/min/1.73m² during the first year. The interim results also indicated a generally safe and well-tolerated profile, with no cases of hyperglycemia, new onset diabetes, or tremor reported as of that data cut. Updated interim data from this study and the long-term extension are expected in summer 2025.
• Phase 2 BESTOW Study: A larger, multi-center, randomized, active-comparator, head-to-head superiority trial in approximately 120 participants in the U.S. and other countries, comparing tegoprubart to tacrolimus. The primary endpoint is mean eGFR at 12 months post-transplant. Enrollment in this pivotal study was completed on September 4, 2024, ahead of schedule. Topline results are anticipated in the fourth quarter of 2025.
• Phase 2 Open-Label Extension: Initiated in October 2023, this study evaluates the long-term safety, PK, and efficacy of tegoprubart in participants who complete one year in either the Phase 1b or BESTOW studies.

The successful execution of the BESTOW trial and positive topline data in Q4 2025 are the central catalysts for the ELDN investment thesis. Demonstrating superiority in graft function (eGFR) and a favorable safety profile compared to tacrolimus could position tegoprubart as a significant improvement over the current standard of care, with the potential to improve long-term graft survival and reduce the burden of CNI-associated toxicities.

Broader Pipeline and Strategic Resource Allocation

Beyond kidney transplantation, Eledon's pipeline includes other potential applications for tegoprubart, though their advancement is subject to strategic resource allocation and external financing.

• Amyotrophic Lateral Sclerosis (ALS): A Phase 2a study completed in May 2022 demonstrated tegoprubart's safety, tolerability, dose-dependent target engagement, and reduction in pro-inflammatory biomarkers, with a trend towards slowing disease progression. While these results were encouraging, the company requires additional financing specifically for the ALS program to fund future clinical trials.
• Islet Cell Transplantation (ICT): Tegoprubart received Orphan Drug designation for prevention of allograft rejection in pancreatic islet cell transplantation. While company-funded development was discontinued, tegoprubart is being used in an investigator-initiated trial at UChicago Medicine. Initial positive data reported in October 2024 suggested potential for achieving insulin independence without tacrolimus, a significant outcome given CNI toxicity to islet cells. Longer-term follow-up data from this trial is expected later in 2025.
• IgA Nephropathy (IgAN): The company deprioritized and discontinued clinical development activities for IgAN in 2023 to focus resources on kidney transplantation.
• Xenotransplantation: Eledon has a collaborative research agreement with eGenesis, providing tegoprubart for preclinical and clinical xenotransplant studies. Tegoprubart was used as a key component in the second transplant of a genetically modified pig kidney into a human at MGH in January 2025, and in a pig heart transplant at the University of Maryland in September 2023. This collaboration highlights the potential broader applicability of CD40L inhibition in novel transplant settings.

This focused pipeline strategy allows Eledon to concentrate its capital and expertise on the most advanced and commercially promising program, kidney transplantation, while keeping the door open for other indications if non-dilutive or specific program financing becomes available.

Competitive Landscape: Battling Giants and Innovators

The markets Eledon is targeting are highly competitive, populated by large pharmaceutical companies, established biotech firms, and other innovative players. In kidney transplantation, Eledon competes with companies offering existing standard-of-care immunosuppressants like calcineurin inhibitors (e.g., tacrolimus, cyclosporine) and other agents (e.g., mycophenolate mofetil, corticosteroids, induction agents like basiliximab or anti-thymocyte globulin). Key players with approved transplant drugs include Novartis (NVS) with Zortress and Bristol-Myers Squibb (BMY) with Nulojix (an anti-CD40 antibody). These companies possess vast financial resources, established sales and distribution networks, and extensive experience in clinical development and regulatory affairs.

Beyond existing therapies, Eledon faces competition from companies developing novel immunosuppressive agents or alternative strategies for transplantation, including other anti-CD40 or anti-CD40L antibodies (e.g., Sanofi (SNY), UCB, Amgen (AMGN), Kiniksa Pharmaceuticals (KNSA)), as well as companies working on approaches that could potentially induce immune tolerance or utilize gene/cell therapies. In ALS, competitors include companies marketing approved drugs like RADICAVA (edaravone) and riluzole, and numerous others developing novel therapies, including Biogen (BIIB) with Tofersen and various companies pursuing gene and cell therapies.

Eledon's competitive positioning hinges on the potential for tegoprubart to offer a superior combination of efficacy and safety compared to existing options, particularly by avoiding the toxicities associated with CNIs. While larger competitors like BMY and NVS have established market share and financial strength (BMY 2024 revenue growth ~5%, net margin 14%; NVS 2024 revenue growth 8%, net margin 23%), Eledon's focused innovation on the CD40L pathway represents a potential technological edge. Preclinical data suggesting tegoprubart's higher affinity and engineered safety profile could translate into tangible benefits like potentially lower dosing or reduced side effects, which could be critical differentiators in clinical practice. However, Eledon's early-stage status and reliance on third-party manufacturing (which could increase operating costs by an estimated 15-20% compared to large-scale internal production) are significant disadvantages against the scale and operational efficiency of its larger rivals. The success of the BESTOW trial is crucial to validate tegoprubart's potential advantages and establish a competitive foothold.

Financial Performance and Liquidity

Eledon's financial performance reflects its status as a clinical-stage biotechnology company with no product revenue. For the three months ended March 31, 2025, the company reported a net loss of $6.5 million, a significant improvement from the $23.6 million net loss in the same period of 2024. This reduction in net loss was primarily driven by a $10.1 million gain from the change in the fair value of warrant liabilities and financial instruments issued in excess of proceeds in Q1 2025, compared to a $13.3 million loss from the same line item in Q1 2024.

Operating expenses, however, increased year-over-year, reflecting the advancement of the clinical pipeline. Total operating expenses rose to $18.0 million in Q1 2025 from $10.9 million in Q1 2024. This increase was primarily attributable to a $6.1 million rise in research and development (R&D) expenses, driven by increased external CRO costs for the ongoing Phase 1b, Phase 2 BESTOW, and Phase 2 open-label extension kidney transplant trials, as well as higher manufacturing expenses for clinical supply and increased personnel costs. General and administrative (G&A) expenses also increased by $1.0 million due to higher professional services and personnel costs. Other income, net, increased by $0.8 million due to higher interest income from increased cash and investment balances.

As of March 31, 2025, Eledon's liquidity position was strong, with $124.9 million in cash, cash equivalents, and short-term investments. This compares to $140.2 million as of December 31, 2024. The company's working capital stood at $118.5 million. The cash used in operating activities for the three months ended March 31, 2025, was $16.1 million, an increase from $8.7 million in the prior-year period, consistent with the higher R&D spend.

The company's cash position has been significantly bolstered by recent financing activities. These include the 2023 Private Placement (initial $35 million gross), subsequent closings of the 2023 placement ($2.1 million and $4.0 million gross), the 2024 Private Placement ($50 million gross), and the 2024 Underwritten Offering ($85 million gross). These capital raises, while diluting existing stockholders (as evidenced by the increase in shares outstanding and the presence of numerous outstanding warrants), have provided the necessary funding to advance the prioritized kidney transplant program.

Based on its current operating plans and existing resources, Eledon expects its cash, cash equivalents, and marketable securities to be sufficient to fund operations for at least the next 12 months from the May 14, 2025 filing date. However, the company explicitly states that additional financing will be required to fund operations beyond that point and to pursue non-prioritized programs like ALS.

Outlook and Key Risks

The outlook for Eledon is largely tied to the success of its kidney transplantation program and its ability to manage its cash resources effectively. The most significant near-term catalyst is the anticipated topline data from the Phase 2 BESTOW trial in the fourth quarter of 2025. Positive results demonstrating superiority in eGFR and a favorable safety profile compared to tacrolimus would be transformative for the company and could significantly validate the investment thesis. Updated data from the Phase 1b and long-term extension studies in kidney transplant, expected in summer 2025, will provide further insights into tegoprubart's performance over time. Longer-term follow-up from the investigator-led islet cell transplant trial later in 2025 could also offer additional upside potential if the promising early signals of insulin independence are sustained.

Despite the promising outlook for the kidney transplant program, investors must consider several key risks.

• Clinical Trial Risk: The success of the BESTOW trial is not guaranteed. The trial could fail to meet its primary endpoint, show unexpected safety signals, or experience delays. The results of early-stage trials may not be predictive of later-stage outcomes.
• Financing Risk: While currently funded for planned operations for at least 12 months, Eledon will require substantial additional capital to complete clinical development, seek regulatory approval, and potentially commercialize tegoprubart. The ability to raise this capital on favorable terms, or at all, is uncertain and depends on market conditions and clinical trial success. The ALS program is particularly dependent on securing specific external financing.
• Regulatory Risk: Even with positive clinical data, there is no guarantee that regulatory authorities will approve tegoprubart for marketing. The approval process is lengthy, expensive, and subject to evolving requirements and interpretations.
• Commercialization Risk: If approved, Eledon would need to build or partner with a sales and marketing infrastructure. Achieving market acceptance and obtaining adequate insurance coverage and reimbursement in a competitive landscape will be challenging.
• Competition: Eledon faces significant competition from larger, well-established companies with greater resources and approved products. Competitors may develop more effective, safer, or less expensive therapies.
• Manufacturing and Third-Party Reliance: The company relies on third parties for manufacturing and clinical trial execution, which introduces risks related to cost, quality, timeliness, and regulatory compliance.
• Intellectual Property Risk: The ability to obtain and maintain patent protection is critical, but the patent landscape in biotechnology is complex and subject to litigation.
• Macroeconomic and Market Risks: Unfavorable global economic conditions, inflation, rising interest rates, and volatility in financial markets could adversely affect the company's ability to raise capital and its overall business.

Conclusion

Eledon Pharmaceuticals has strategically sharpened its focus on developing tegoprubart as a potential game-changer in kidney transplantation, aiming to address the significant limitations of current standard-of-care CNIs. The company's differentiated anti-CD40L antibody, engineered for improved safety, holds promise for enhancing graft function and reducing toxicities, potentially improving long-term outcomes for transplant recipients. Recent financings have provided a runway to advance the pivotal Phase 2 BESTOW trial, with topline data expected in Q4 2025 representing a critical inflection point. While the path forward is subject to the inherent risks of clinical development, regulatory approval, and intense competition from larger players, the potential to disrupt a market with a long-standing unmet need provides a compelling investment narrative. Investors will be closely watching the upcoming data readouts as key indicators of whether Eledon's focused strategy and technological approach can translate into clinical and commercial success.