Analyst Downgrades LAVA Therapeutics, Sees Pipeline Overhang

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LAVA Therapeutics is reviewing strategic options, cutting costs, and reducing workforce while continuing its Phase 1 trial for LAVA-1266.
HC Wainwright downgraded LAVA to Neutral with a $1.50 target, citing uncertainties over its only clinical asset.
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On Tuesday, LAVA Therapeutics N.V. LVTX initiated a process to review strategic options.

The company implemented cost curtailment, including a workforce reduction, and has retained a financial advisor to support the strategic evaluation process.

LAVA Therapeutics will continue to enroll in Phase 1 clinical study evaluating the safety and pharmacokinetics of LAVA-1266 in hematologic malignancies, including acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS), and support its partnerships with Pfizer Inc and Johnson and Johnson.

In 2020, Lava Therapeutics announced a research and license agreement with Janssen Biotech, Inc. to discover and develop novel bispecific antibodies to gamma-delta T cells for cancer.

In March 2024, LAVA Therapeutics announced that Pfizer achieved a development milestone for PF-08046052 (formerly SGN-EGFRd2 /LAVA-1223), prompting the first milestone payment of $7 million to LAVA.

LAVA granted Seagen (acquired by Pfizer in December 2023) a worldwide exclusive license to PF-08046052 in September 2022.

As of December 31, 2024, the company’s cash balance was $76.6 million.

In December, the company’s said cash runway extended into 2027, based on a cash balance of $78.9 million as of September 30, 2024.

On Thursday, HC Wainwright downgraded LAVA Therapeutics to Neutral from Buy with a price target of $1.50, citing pipeline overhang despite substantial cash reserve.

Analyst Arthur He writes, “While we are not surprised by management’s decision given the challenging market conditions, it does generate uncertainties regarding the company’s only clinical asset, LAVA-1266 for hematological malignancies, as it depends on the outcome of the strategic review.”

HC Wainwright expects three possible outcomes for LAVA Therapeutics in the next year:

Acquiring one or more proven drug candidates
Merging with another company through a reverse merger
Continuing its current operations while waiting for initial clinical results from LAVA-1266

LAVA-1266 could be sidelined in favor of new projects in the first two scenarios. Given this uncertainty, HC Wainwright believes it is best to wait for more clarity.

Price Action: LVTX stock is down 0.78% at $1.28 at the last check Friday.

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