Leerink Partners analyst Thomas Smith downgraded the rating on Equillium (EQ – Research Report) to a Hold today, setting a price target of $1.00.
Thomas Smith has given his Hold rating due to a combination of factors surrounding Equillium’s recent clinical trial results and financial outlook. The Phase 3 EQUATOR study for their lead drug, itolizumab, did not meet its primary or key secondary endpoints, which raises concerns about the drug’s efficacy in treating acute Graft-versus-Host Disease. Although there were some positive trends in longer-term follow-up data, the immediate results were not sufficient to provide a clear path forward for regulatory approval.
Additionally, Equillium faces significant uncertainty regarding the FDA’s acceptance of these results for an accelerated approval pathway, especially given the FDA’s stringent criteria for such approvals. The company’s current financial position, with limited cash reserves expected to last only until the third quarter of 2025, further complicates its prospects. This financial overhang, combined with the regulatory uncertainties, contributes to the Hold rating as the company navigates these challenges.