Mixed trial results for transplant rejection drug send Equillium plunging 36%

Shares of Equillium, a biotech company with a market capitalization of $17.3 million, plummeted over 36% yesterday, March 27, hitting their lowest level in about a year and a half. The trigger was clinical trial results for its transplant rejection drug that showed no advantage over placebo in the first month of treatment but more promising long-term performance.  

Equillium tumbled more than 36% on the Nasdaq yesterday to close at $0.49 per share, its lowest finishing mark since November 9, 2023 ($0.48 per share).  

In premarket trading today, March 28, shares have fallen another 13% to $0.42 per share.  

Yesterday, Equillium made two key announcements. First, the company reported that the final, phase III trial of its anti-rejection drug, itolizumab — developed to treat graft-versus-host disease (GVHD) — showed no advantage over placebo after 29 days of treatment. However, by day 99, “Statistically significant and clinically meaningful benefit in longer-term outcomes were achieved, including complete response,” the company reported.  

Based on these findings, Equillium has filed for U.S. FDA breakthrough therapy designation for itolizumab. This status is granted to innovative treatments for serious conditions with no adequate existing therapies and can expedite the FDA approval process. Currently, no approved therapies exist for GVHD, and no candidate has demonstrated sustained efficacy beyond four weeks, said Dr. John Koreth, a professor at the Dana-Farber Cancer Institute at Harvard Medical School, as cited by Equillium. The one-year survival rate for affected patients is just 40%, added Equillium CEO Bruce Steel. The company expects an FDA response in May.  

The second announcement was the company’s 2024 full-year financial results. The top line rose nearly 14% to $41.1 million. As in 2023, most of this revenue came from an upfront payment by Japan’s Ono Pharmaceutical, which partnered with Equillium on the itolizumab trials for GVHD and held an option to acquire rights to the drug.  

However, on October 31, Equillium announced that Ono had opted not to exercise this option. It was stated that the Ono decision was unrelated to the study’s progress, but Equillium stock still nosedived the day after.  

Beyond transplant rejection, Equillium is also studying itolizumab for ulcerative colitis, an autoimmune disease affecting the colon, as well as lupus and lupus nephritis, the latter affecting roughly half of all lupus patients.  

Of note, the company narrowed its net loss per share in 2024 to $0.23, down from $0.38 in 2023.  

Coverage analysts remain split on Equillium as an investment, according to MarketWatch, with one “buy” and one “hold.” Their average target price of $3 per share implies upside of over 500% versus the last closing price.