Trillium Therapeutics: Recent Weakness Presents a Buying Opportunity, Says 5-Star Analyst
Explosive seems like the only word that adequately describes Trillium Therapeutics’ (TRIL) gains in 2020. The immuno-oncology company has taken off on an upward trajectory, and is up by a whopping 833% year-to-date. However, over the last few days, shares have experienced a pullback. Does the sell-off indicate the tides are turning?
No, says JonesTrading’s Soumit Roy. In fact, the five-star analyst argues any weakness presents investors with a chance to get in on the action.
What exactly is behind his bullish thesis? Part of Roy’s excitement is related to I-Mab's recently announced partnership with AbbVie. The agreement, which will see AbbVie pay I-Mab an upfront payment of $180 million as well as $1.74 billion in milestones in exchange for the rights to develop and commercialize lemzoparlimab outside of China, demonstrates the continued interest in the CD47 space, in the analyst’s opinion.
Looking more closely at lemzoparlimab, it is an anti-CD47 mAb, designed to minimize inherent binding to normal RBCs while preserving its strong anti-tumor activity. CD47 is a molecule that tumors frequently use to evade the immune system. It should be mentioned that anemia has been a concern with anti-CD47 assets in the past, but this might not be the case anymore.
According to Roy, “lemzoparlimab has a differential binding domain to CD47 when compared to Forty Seven/Gilead’s magrolimab. Hence, lemzoparlimab is showing much better anemia related safety profile when compared to magrolimab. Although we haven’t seen the data yet, at 30 mg/kg dose, lemzoparlimab is not showing anemia issues without priming.” Roy notes that this demonstrates anemia is less of a concern with anti-CD47 candidates now, with Trillium showing 0% Grade≥3 anemia with TTI-622 (IgG4 Fc).
Therefore, Roy doesn’t think TTI-621 and TTI622, TRIL’s decoy receptors designed to block CD47, face any competitive pressure as both are clinically advanced. He adds that the “winner in the CD47 space would likely come from the right indication, setting and the combination regimen.”
Adding to the good news, Roy points out that lemzoparlimab has an inactive IgG4 Fc that’s similar to magrolimab, and thus, it doesn’t make sense to escalate lemzoparlimab beyond a 30 mg/Kg dose. “Lemzoparlimab only advantage would be the lack of priming dose when compared to magrolimab, so ease of adoption. But with Trillium’s candidates’ safety profile, we believe ease of dosing isn’t as big an advantage anymore,” the analyst stated.
Reflecting another positive, the next data readout for TRIL’s candidates will be related to their efficacy in a higher dose cohort, which will most likely cause receptor engagement to reach saturating levels. Roy believes this could result in “better and consistent clinical efficacy.”
Summing it all up, Roy said, “With increased investor interest in SIRPα-CD47 pathway, differentiated assets, cash runway into 2022 and biotech focused investors in the stock, we believe Trillium is well positioned with multiple stock inflection points in the next six to nine months.”
Everything TRIL has going for it keeps Roy with the bulls. In addition to maintaining a Buy rating, he left a $15 price target on the stock. This target suggests shares could surge 58.5% in the next year. (To watch Roy’s track record, click here)
Getting the broader analyst community’s take, 2 Buys and 1 Hold have been assigned in the last three months. As a result, TRIL gets a Moderate Buy consensus rating. The $15 average price target matches Roy’s. (See TRIL stock analysis on TipRanks)
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