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On Wednesday, H.C. Wainwright adjusted its stance on Leap Therapeutics (NASDAQ:LPTX), downgrading the biopharmaceutical company’s stock rating from Buy to Neutral. The downgrade has intensified pressure on LPTX shares, which have already declined 71.74% in the past week and are currently trading near their 52-week low of $0.62. According to InvestingPro, the stock’s RSI suggests it’s in oversold territory, with 14 additional real-time signals available to subscribers. The decision came after Leap Therapeutics presented clinical data updates from two ongoing Phase 2 studies on January 28. The studies, DeFianCe and DisTinGuish, are evaluating sirexatamab, Leap’s lead drug for colorectal cancer (CRC) and gastroesophageal/gastric (GEJ/G) cancer.
The data revealed that while sirexatamab shows promise as a therapy for a specific CRC population, it did not demonstrate benefits in treating GEJ/G cancer, thus lowering the drug’s overall market potential. Despite positive objective response data in the DeFianCe trial, H.C. Wainwright expressed concerns regarding the future progress of the drug.
Leap Therapeutics’ management is optimistic about the CRC data, considering it strong enough to initiate discussions with the FDA about a regulatory pathway. However, the development of a DKK-1 expression assay for use in clinical studies and the design of a Phase 3 clinical program are necessary steps ahead. These additional requirements contribute to the uncertainty surrounding the company’s next moves.
Given Leap Therapeutics’ current financial position, which is not sufficient to independently fund a Phase 3 clinical program, the company might seek a partnership to advance this stage of the drug’s development. InvestingPro data shows the company is quickly burning through cash, though it maintains a healthy current ratio of 3.97 and holds more cash than debt on its balance sheet. With limited insight into these potential activities and no significant clinical data updates expected for at least six months, H.C. Wainwright has opted to take a cautious approach by downgrading the stock and withholding a price target. With a market capitalization of just $24.91 million and three analysts having revised their earnings downward, investors seeking deeper insights into LPTX’s financial health can access comprehensive analysis through InvestingPro’s advanced metrics and tools. The firm will be waiting for further clarity before making additional recommendations.
In other recent news, Leap Therapeutics has experienced a series of significant developments. The company recently announced mixed results from its clinical trials, with Baird analyst Joel Beatty downgrading the stock from Outperform to Neutral and slashing the price target from $9.00 to $1.25. This decision was influenced by the company’s announcement of phase 2 trial results for its cancer drug, sirexatamab, which is being tested in colorectal and gastric cancer treatments.
The company reported disappointing results from its DisTinGuish study on advanced gastric cancer, leading to the discontinuation of the study and a halt in plans for Phase 3 trials in this area. Despite some activity in biomarker populations, the study did not meet the primary progression-free survival endpoints. Consequently, Leap Therapeutics is now redirecting its efforts towards the development of sirexatamab in colorectal cancer and seeking strategic partnerships for its development in gastric cancer and other DKK1-high indications.
On a more positive note, Leap Therapeutics shared promising initial data from its DeFianCe study for the treatment of advanced colorectal cancer. The study demonstrated a higher objective response rate with sirexatamab when used in combination with bevacizumab and chemotherapy. These findings have led the company to prepare for a registrational Phase 3 study in second-line colorectal cancer patients.
These developments are recent and indicate a shift in the company’s focus from gastric cancer to colorectal cancer. The company’s strategic shift and the pursuit of partnerships reflect a recalibration of its development priorities in light of the recent study outcomes. The new rating and price target from Baird are based on the latest available information and analysis of the company’s clinical trial outcomes and financial position.
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