BML Capital Management, an activist investor that owns 9.9% of Elevation’s shares, is urging the company to wind down operations given “the current state of the public equity market.”
Elevation Oncology is considering all possible options for its business, including closing down, amid a difficult funding environment, a series of strategic missteps and mounting pressure from an activist investor.
The biotech has discussed matters with investors but “is not ready to commit to a specific direction regarding strategic alternatives,” Leerink Partners analysts, who spoke to Elevation’s management, wrote in a Thursday note. For now, operations continue as usual. “Management continues to operate the company as they consider options and conduct diligence,”Leerink said.
This strategic review comes after activist investor BML Capital Management wrote a letter to Elevation on Tuesday, urging it to close shop. BML owns 9.9% of Elevation’s shares.
“Given the current state of the public equity market and the biopharma sector specifically, along with the abysmal performance of several recent reverse mergers, I believe that the best course of action is a winddown of operations and a return of all remaining cash to shareholders,” read the letter, which was signed by BML Managing Member Braden Leonard.
According to the Leerink note, some investors “appear supportive” of BML’s proposal, “given the market conditions.” In particular, the analysts pointed to the recent closure of Third Harmonic Bio, which on Monday announced that it would dissolve the company and distribute remaining cash to stockholders.
BML is encouraging Elevate to take similar action, which it estimates could still mean $0.60 per share for the biotech’s shareholders. BML is “not in favor of a reverse merger unless it included a full return of cash . . . at the close,” Tuesday’s letter said.
For the past few years, Elevation had been focused on developing its investigational antibody-drug conjugate EO-3021, designed to target Claudin 18.2 for the treatment of advanced, unresectable or metastatic gastric and gastroesophageal junction cancers.
However, last month, the asset delivered an underwhelming early-stage performance, forcing Elevation to shelve development. Phase I data showed that EO-3021 hit an objective response rate of 22.2% and a disease control rate of 72.2%—findings that Elevation CEO Joseph Ferra claimed do “not meet our bar for success and is insufficient to provide patients a competitive benefit-risk profile.”
At the time, Elevation also laid off around 70% of staff in an effort to staunch cash burn. By the end of 2024, the biotech still had $93.2 million in cash, cash equivalents and marketable securities, which it estimated could keep the company afloat into the back half of 2026.
