NLTX - Neoleukin draws double downgrade at BofA on limited near-term upside

Bank of America downgraded immunotherapy-focused Neoleukin Therapeutics, Inc. ( NASDAQ: NLTX ) to Underperform from Buy, arguing that the company offers limited upside potential in the near term as its lead candidate, NL-201 lacks enough catalysts.

NL-201, designed to mimic the therapeutic effects of cytokines interleukin ( IL )-2/IL-15, is undergoing an early-stage trial in patients with advanced solid tumors.

With its Q2 2022 results, NLTX said that the interim data from the trial, designed to find the recommended Phase 2 dose and schedule, is expected to yield early data in 2023, marking a delay from the previous timeline of H2 2022.

With the initial readout pushed back to 2023, “we see limited near-term potential for the company’s lead program,” the analysts led by Greg Harrison wrote, slashing the NLTX price target to $1 from $3 per share.

In addition, the analysts note the need for clinical data to add value to the program after a trial setback for IL-2 pathway agonist bempegaldesleukin developed by Nektar Therapeutics ( NKTR ) and Bristol Myers Squibb ( BMY ) hurt confidence in the drug class.

“….while we believe that NL-201 could be differentiated from bempeg, clinical data including tumor response rates are needed for investors to add credit to the program,” the analysts wrote.

With multiple tumor indications enrolled, the analysts added that even the initial data expected in 2023 might not completely de-risk the NL-201 program due to the potential impact on response rate data.

Read more about how BofA responded to bempeg failure in March.

For further details see: