Elevation Oncology has become the second biotech this week to face calls from an activist investor to wind down the company.
The antibody-drug-conjugate-focused biotech has come under fire from BML Capital Management, which owns 9.9% of Elevation’s stock. In a letter to the biotech’s board of directors yesterday, BML’s managing member and founder Braden Leonard said he “applauded” the company’s decision last month to drop its sole clinical-stage asset.
The biotech had been investigating the Claudin 18.2 ADC, dubbed EO-3021, as a potential treatment for advanced, unresectable or metastatic gastric and gastroesophageal junction cancers. But data from a phase 1 trial of 36 evaluable patients with these cancers showed an objective response rate of just 22.2%.
Those uninspiring data were enough to convince the biotech to drop EO-3021, switch its focus to an HER3-targeted ADC called EO-1022 and lay off 70% of its staff.
Leonard said he appreciated these “swift actions taken to preserve cash while exploring strategic alternatives.” However, these measures clearly weren’t enough to satisfy the investor.
“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 wind-down of operations and a return of all remaining cash to shareholders,” Leonard wrote in the April 16 letter.
Elevation had been expecting the $93.2 million it entered the new year with to fund its operations into the second half of 2026.
The biotech’s stock has dropped 38% over the past month, closing trading Wednesday at just 33 cents. In his letter, Leonard said he estimated that “swift action” could ensure stockholders received a cash return of 60 cents per share, excluding any proceeds from selling EO-1022.
Elevation already said last month that it was considering its strategic options, but Leonard warned that if one of the options being considered was a reverse merger with another company—a common escape route for struggling biotechs—BML would likely vote against it.
“BML would not be in favor of a reverse merger unless it included a full return of cash as a special dividend at the close, and, as such, will vote against any reverse merger or other deal that doesn’t’ include a large return of cash to shareholders,” he added.
Elevation had not responded to Fierce Biotech’s request for comment at time of publication.
The cancer-focused company finds itself in a similar position to Essa Pharma, which earlier this week faced calls from its investor Soleus Capital Management to wind down and return cash to shareholders.