Guggenheim Reiterates Buy Rating on Adagene Inc (ADAG)

Guggenheim analyst Paul Jeng reiterated a Buy rating and $10.00 price target on Adagene Inc (NASDAQ: ADAG).

The analyst commented: "AGEN’s strategic pivot for BOT/BAL is positive for ADAG’s development strategy for muzastotug (anti-CTLA-4), removing a late-stage competitor in 3L+ MSS CRC NLM while simultaneously providing incremental validation of a potential future label expansion opportunity in neoadjuvant CRC. $3.94 66.1 $260 244 Price (USD) 6 5 4 3 2 1 Today’s announcement from AGEN included a discontinuation of the ongoing Ph 3 BATTMAN study of BOT/BAL (anti-CTLA-4/anti-PD-1) in late-line MSS mCRC NLM in order to prioritize development in neoadjuvant CRC, where the company is planning to leverage its concurrent private placement to fund a Phase 3 study in high-risk Stage II / III patients. With the update, muza + pembro is now the most clinically advanced I-O combo in development for refractory NLM patients (~30% of CRC; ~$1.2Bn US TAM), where the unmet need remains high following the recent negative final NLM OS results from EXEL’s STELLAR-303 (here ). In addition, we are encouraged by AGEN’s announcement of plans to advance BOT/BAL in the neoadjuvant setting (>$7Bn TAM per AGEN), supported by data from two Ph 2 studies in MSS patients (N=22/N=14) and FDA alignment on a Ph 3 study (ROBBIN) including details on enrollment criteria, primary endpoint statistical design, and timelines to data readouts. Based on our recent conversations with ADAG management, neoadjuvant CRC represents a high interest potential label expansion opportunity for muza, which is currently being explored in this setting via an IST that will report initial data later this year. Of note, prior cross-trial comparisons of the clinical profile of muza/PD-1 vs. BOT/BAL suggests muza has differentiated safety, including lower rates of grade 3/4 events and AE discons. at dose levels associated with similar efficacy in 3L/4L+ mCRC. We expect that potential positive updates from the ROBBIN study (expected interim data in 2H27) could have positive read-through to ADAG."

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Shares of Adagene Inc closed at $3.82 yesterday.

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