William Blair initiated coverage on Elevation Oncology, Inc. (ELEV), a firm focused on cancer drug development with expertise in antibody-drug conjugates, targeting Claudin 18.2 and HER3. Analyst Andy Hsieh noted the investment offers a favorable risk-to-reward ratio, especially at its current valuation, and initiated coverage with an Outperform rating.
Elevation Oncology is positioned in the fast-growing antibody-drug conjugates market, focusing on scientifically and regulatory-validated targets. Claudin 18.2, a protein typically hidden in healthy tissues but overexpressed in many cancers, has emerged as a promising therapeutic target. Elevation’s lead program, EO-3021, aligns with these trends and has shown promising results in early Phase I trials. The recent approval of Astellas Pharma Inc’s Vyloy, a CLDN18.2-targeted antibody, reduces clinical and regulatory risks for Elevation’s program, indicating high potential rewards for a modest initial investment.
In August, Elevation Oncology reported initial data from the dose escalation portion of the ongoing Phase 1 trial of EO-3021. As of June 10, 32 patients had been treated, with EO-3021 being generally well-tolerated. No Grade 4 or 5 treatment-related adverse events were reported, and less than 10% of patients discontinued EO-3021 due to adverse events.
Hsieh estimates the total addressable market for frontline CLDN18.2-positive gastric and GEJ cancer in five major regions at about $6.6 billion, with $1.8 billion in the U.S. alone. For second-line pancreatic cancer, which has limited treatment options, the TAM is projected at $1.8 billion across the U.S. and Europe, including $1.3 billion in the U.S. The analysts believe even a small market share in these areas could significantly boost the company’s current valuation.
Recently, Elevation Oncology nominated EO-1022 as its HER3 ADC development candidate. EO-1022 is progressing through preclinical development, with Elevation Oncology expecting to file an investigational new drug application in 2026.
