Ladenburg Thalmann launched coverage of Leap Therapeutics (NASDAQ: LPTX) with a “buy” rating and $18 price target. The stock closed at $7.85 on March 6.
Leap is a clinical stage immuno-oncology (IO)-focused company with two lead programs, DKN-01 and TRX518, in multiple Phase 1/2 trials in solid tumors.
DKN-01 is monoclonal antibody (mAb) neutralizing DKK1, which is a negative modulator of canonical WNT signalling, and also shown to mediate an immunosuppressive tumor microenvironment.
Analyst Wangzhi Li writes that DKN-01 has reported good tolerability and promising activity, outperforming historical control data as a single agent in 32 advanced relapsed/refractory non small cell lung cancer patients, and as a combo with chemotherapy in 41 recurrent/metastatic esophageal cancer patients and in 27 advanced biliary cancer patients.
TRX518 is among the most advanced agonist mAbs activating the attractive IO target, GITR, which serves to both reduce Tregs and enhance anti-tumor Teff cells, he added.
TRX518 was well tolerated in a single ascending dose study of 41 solid tumor patients, with no related Grade 3+ adverse events. A single TRX518 dose significantly reduced both intra-tumoral and peripheral blood Tregs in patients for weeks.
TRX518 was also well-tolerated in the initial 9 patients dosed in an ongoing repeat-dose study, including 2 patients with tumor reduction and 4 patients with stable disease.
Mr. Li said Leap expects to start a combo study for DKN-01 and TRX518 in the second half this year, and sign a partnership deal for TRX518 and/or DKN-01 in 2017/2018.
“We believe Leap is currently under-recognized and undervalued by the market, and presents an attractive investment opportunity in the IO space with substantial upside potential,” he added.