Shares of the biotechnology company Equillium, with a market capitalization of $25.7 million, surged over 15% on Tuesday, August 6. The trigger was positive interim results from the trial of its drug for graft-versus-host disease (GvHD), a condition in which a donor’s immune cells attack a recipient’s body, recognizing it as foreign. Now, Japan’s Ono Pharmaceutical can exercise a call option to purchase the rights to the drug for approximately $35 million.
Details
On Tuesday, Equillium stock gained 15.2% to $0.73 per share on the Nasdaq, with the company’s market capitalization at the close of trading reaching $25.74 million.
Earlier in the day, Equillium reported that an independent data monitoring committee (IDMC) recommended proceeding with the clinical trial of its GvHD drug with the monoclonal antibody itolizumab. The IDMC, comprising specialists unaffiliated with the trials or regulators, periodically reviews trial progress and provides recommendations on whether to continue, modify, or stop the study.
The IDMC reviewed open data from over 100 patients on the 29th day during the (final) phase III trial and recommended continuing enrollment, Equillium announced. The results of the review were sent to Japan’s Ono, which holds an option to acquire Equillium’s rights to the drug. Progress during the trials will guide Ono’s decision, due by the end of October, about whether to execute the option for JPY5 billion (about $35 million as of August 5). If the deal goes through, Equillium could receive up to $101.4 million upon the achievement of certain clinical, regulatory, and commercialization milestones.
What Equillium does
Besides the GvHD drug, Equillium is developing a treatment for alopecia, an autoimmune disease where immune cells attack hair follicles, leading to hair loss. Approximately 250,000 people in the U.S. suffer from moderate alopecia, according to the company.
Another potential drug in Equillium’s pipeline targets gastrointestinal diseases, as the company disclosed at the LD Micro conference this spring.
In the first quarter of 2024, Equillium’s revenue was $10.7 million, up 20% year-over-year. The entire amount is attributable to the amortization of an upfront payment and development funding for the GvHD drug under the agreement with Ono Pharmaceutical.
Analyst insights
Equillium’s shares have gained 1.4% for the year to date but are down nearly 9.0% for the last 12 months. Nonetheless, all four analysts covering the company have a buy recommendation, according to MarketWatch. The average target price is $6.75 per share, indicating upside of almost 825% from the closing price on August 6.
