Eledon Shares Plummet 55% on Mixed Kidney Transplant Trial Results
The biotech's lead drug, tegoprubart, missed its primary goal in a mid-stage study, erasing over $250 million in market value despite the company's plan to advance.
Shares of Eledon Pharmaceuticals (NASDAQ: ELDN) collapsed by more than 55% in Friday trading after the company announced its lead drug candidate, tegoprubart, failed to meet the primary endpoint in a critical mid-stage study for kidney transplant patients.
The Irvine, California-based biotech saw its stock fall to approximately $1.86, wiping out more than $250 million in market capitalization. The sell-off was swift and severe, coming after Eledon disclosed that its Phase 2 BESTOW trial did not achieve its main efficacy goal, which was designed to show superiority over the standard-of-care treatment, tacrolimus, in preserving kidney function.
The study evaluated tegoprubart's ability to prevent organ rejection in patients receiving a kidney transplant. While the drug missed its primary measure—a biopsy-proven acute rejection rate at 12 months—Eledon executives focused on what they described as encouraging secondary data. In a press release issued Friday, the company highlighted the drug's favorable safety and tolerability profile, noting it was associated with better-preserved kidney function and lower toxicity compared to the control group.
"While the BESTOW study did not meet its primary endpoint, the totality of data from the study, particularly the outstanding results on safety and tolerability... gives us confidence to move forward with a pivotal study," said David-Alexandre C. Santos, Ph.D., President and CEO of Eledon. The company intends to engage with regulatory authorities to design a Phase 3 trial.
However, investors delivered a harsh verdict on the mixed results. For a clinical-stage biotech company like Eledon, a failure to meet a primary endpoint in a lead asset trial is a significant setback, raising the risk profile and pushing potential revenue further into the future. The market's reaction underscores the high-stakes nature of pharmaceutical development, where a drug's entire commercial prospect can hinge on specific, pre-defined clinical outcomes.
Tegoprubart is an antibody designed to block the CD40 Ligand, a key pathway in the immune response that can lead to organ rejection and autoimmune disease. The goal is to offer a safer alternative to current anti-rejection drugs like tacrolimus, which can have severe side effects, including kidney toxicity, metabolic issues, and an increased risk of infection.
Despite the clinical setback, some Wall Street analysts had maintained a positive outlook on the company prior to the announcement, with an average price target of $9.50. The current share price now trades at a steep discount to those prior expectations, reflecting a fundamental reassessment of the drug's likelihood of reaching the market.
The heavy trading volume accompanying the price drop suggests a broad-based exit by investors, who now face a longer and more uncertain path forward. Eledon's decision to advance tegoprubart into a more expensive and lengthy pivotal trial based on secondary findings represents a significant gamble. The company will need to convince both regulators and the market that the drug's safety benefits are compelling enough to overlook the miss on its primary efficacy goal.
With its future heavily dependent on the success of tegoprubart, Eledon Pharmaceuticals is now tasked with navigating a challenging period of rebuilding investor confidence while funding its ambitious late-stage clinical plans.