Eledon Pharmaceuticals (ELDN)

Eledon, a clinical stage biopharmaceutical company specializing in immune-modulating therapies for life-threatening conditions. Eledon is currently focusing its efforts on the development of tegoprubart, a new drug with significant implications in the field of organ transplantation. Specifically, tegoprubart has the potential to reduce organ rejection, increase transplant function, and enhance patient longevity post-transplant. That’s a tall order for one drug, but if achieved, it can prove to be a gold mine for Eledon.

So far, early testing has shown that tegoprubart has potential. The drug operates through several mechanisms of action, primarily by targeting the CD40 ligand, or CD40l. Blocking this pathway impacts the communication of key immune cells and increases a specialized population of T cells that suppress immune response. These actions, aimed at preventing immune response against foreign tissues, give tegoprubart its potential as a protective agent for transplanted organs.

On the clinical side, Eledon currently has tegoprubart undergoing two parallel studies: the Phase 2 BESTOW trial, which aims to enroll as many as 120 kidney transplant patients, and concurrently, a single-arm Phase 1b clinical trial aimed at preventing rejection in patients receiving kidney transplants. The company recently reported enrollment of the 12th patient in the BESTOW trial, and also recently amended its protocol for the Phase 1b trial to allow a second cohort and eventual enrollment of up to 24 patients in the study.

Looking forward, these trials should bring important milestones to Eledon this year. The company should report interim clinical data from the Phase 1b trial during 2Q24, while the BESTOW study should complete enrollment by the end of this year.

Against this backdrop, several members of the Street believe ELDN’s $1.60 share price looks like a steal.

Among the bulls is Leerink analyst Thomas Smith, a 5-star analyst rated in the top 1% of the Street’s stock pros. Smith recognizes tegoprubart’s promising potential, noting, “We remain encouraged by tegoprubart’s clinical profile to date and continue to see its best-in-class potential in kidney transplant based on potential advantages on both efficacy and safety/tolerability vs. current standard-of-care. We expect that ELDN’s two parallel studies in kidney transplantation will continue to build on these encouraging results, and we continue to view ELDN as an attractive pureplay option in the burgeoning CD40L/CD40 space… We remain optimistic on tegoprubart’s efficacy/safety profile ahead of additional data in kidney transplant expected in 2Q24.”

To this end, Smith rates ELDN shares an Outperform (i.e. Buy), and his $7 price target points toward a one-year upside potential of 332%

The Leerink view may prove to be the conservative perspective on ELDN. The stock’s Strong Buy consensus rating is supported by unanimous positive reviews from five analysts, with an average price target of $15.60 suggesting ~863% upside from the current share price.