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Topline Summary
Enliven Therapeutics (NASDAQ:ELVN) is a biotech specializing in development of targeted therapies for different forms of cancer. Their two main pipeline projects build on decades of research in targeted therapy to attempt to move the bar in a few key areas. While these are interesting and trying to address key unmet needs, they’re still in early days. At this point, I don’t feel their valuation adequately reflects the risks that early-stage agents face. I think you’re sitting on significant gains after most recent runup, you should consider taking some gains off the table. I think they’re worth watching, but the risk of falling is quite high at this time.
Pipeline Overview
ELVN-001
ELVN-001 is an inhibitor of BCR-ABL, the main kinase involved in the development and progression of chronic myeloid leukemia [CML]. This agent in particular is designed to selectively target a mutation called T315I, which is arguably the most important driver of resistance to agents like imatinib, nilotinib, and other first and second-generation inhibitors.
In preclinical study, ELVN-001 was shown to inhibit the T315I variant more than either nilotinib or asciminib, with resultant antitumor activity in mouse models of CML. In addition, ELVN-001 was less active against a host of tyrosine kinases known to be associated with toxicity that can face the approved agents. Old hands will remember the ponatinib story, where cardiac toxicity ended up halting its journey to take over the whole CML field. Even today, ponatinib remains used mostly in later lines of therapy, limiting its penetration into the market.
ELVN-001 has the potential to be an effective T315I inhibitor that spares the patient of serious toxicity risk. An ongoing phase 1 trial is going to be illustrative for giving an early signal of the safety profile of this agent, and whether it’s going to be better for patients. To date, no human data have been divulged.
ELVN-002
ELVN is also working on a small molecule, irreversible inhibitor of HER2, with notable activity against HER2 mutations that are known to be important in lung cancer.
For those of you who hear “irreversible HER2 inhibitor” and immediately think of Puma’s neratinib (and all the related challenges they’ve faced over the years), stay your hand. Unlike neratinib, ELVN-002 is not active against the whole EGFR family, for starters. In addition, they’re a bit more interested in filling an unmet need in lung, rather than breast cancer.
ELVN presented preclinical data on this agent at AACR 2023, highlighting potent activity against HER2 while sparing EGFR. Notably, ELVN-002 was active against a subset of mutations called “exon 20 insertions,” which is one of the more common ways that HER2 can become dysregulated in non-small cell lung cancer.
In mouse models, ELVN-002 was shown to have antitumor activity in an exon 20 insertion-positive cancer context. It was a particularly potent penetrator of the blood-brain barrier, suggesting possible activity in patients with brain metastases.
Like with ELVN-001, we do not yet have human data for this agent, but it is the subject of an ongoing phase 1 study to evaluate initial safety and efficacy.
Financial Overview
As of their most recent quarterly filing, ELVN held $268.6 million in total current assets, including $73.8 million in cash and equivalents and another $189.6 million in marketable securities. Meanwhile, they recognized an operating loss of $24.2 million, which was a net of $20.8 million after interest income.
Given this burn rate, ELVN had between 10 and 11 quarters of cash and assets on hand to fund operations.
Strengths and Risks
Strength – Multipronged pipeline building on established targets
ELVN has an interesting opportunity with their 2 drugs, since both BCR-ABL and HER2 are firmly established targets that nonetheless continue to have unmet needs. Their preclinical data suggest that there is something to see here via addressing issues like resistance mutations, brain metastases, and so on. All of these challenges represent important market opportunities, despite the proliferation of approved therapies in these spaces.
HER2 mutations in NSCLC remain a pretty young field, though. Right now, only one drug is approved there: trastuzumab deruxtecan. So more options on the kinase inhibitor side would be valuable for patients.
Risk – No human data
Unfortunately, at this time every last bit of potential opportunity that these drugs have is theoretical. Mouse models fail to capture many, many aspects of cancer in humans, and I don’t put much stock into poster presentations touting “potential best in class” inhibitors before they’ve gone to human studies.
ELVN is still basically on the ground floor with their pipeline. I look forward to seeing the first human readouts later this year. We don’t have an exact idea of when those are coming, but that is certainly a top priority for ELVN.
Strength – Cash needed to fund operations to the next milestones
Thankfully, ELVN doesn’t have an imminent cash concern. I don’t think they’ll have an emergency cash issue before we see human data, giving them opportunities to fund raise from a position of strength. The 10 to 11 quarters I highlighted is almost certainly not enough to get them to a drug approval, but it would get them to critical readouts.
Bottom-Line Summary
With a barely-clinical pipeline, ELVN to me would be logically worth something closer to its assets on hand since they do not really have data yet to stand on and build out a multiplier. Therefore, for this particular moment in time, I would think a market cap of $200-$300 million to be more reasonable.
At the time of writing, ELVN is sitting north of $600 million, which to me is more reflective of being in late phase 2 or even phase 3 study, with pretty strong signals of activity. That suggests that ELVN is inflated in value for now, which is not a prophecy or a prediction, but as these companies regress to the mean, I think the risk of near-term loss is too high for me to consider a purchase at this time. I would want to see some data before that, and if I had gains sitting on the table, I think right now is a good opportunity to take some of those off the table.
