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Eloxx (ELOX) Down After Cystic Fibrosis Study Fails to Meet Goal

Shares of Eloxx Pharmaceuticals ELOX slumped 41% on Sep 15 after management announced that a mid-stage clinical study evaluating its investigational pipeline candidate ELX-02 in Class 1 cystic fibrosis (CF) patients failed to achieve the study goal.

The phase II study assessed the safety and biological activity of ELX-02 in G542X nonsense mutation Class 1 CF patients as monotherapy and in combination with Vertex Pharmaceuticals’ VRTX ivacaftor. Though the drug was well-tolerated in study participants, the study failed to achieve statistical significance for efficacy endpoints, including changes from baseline in sweat chloride concentration (SCC) and percent forced expiratory volume (FEV1) in class 1 CF patients.

Management plans to work closely with the CF Foundation to determine the next steps to be taken for developing ELX-02 in CF. The CF Foundation was also responsible for funding the phase II study.

Shares of Eloxx were mostly likely down as ELX-02 is also the Eloxx’s most advanced pipeline candidate. As a result of this study’s failure, other than ELX-02, the company has no other pipeline candidate in clinical development.

In the year so far, shares of Eloxx have plunged 68.2% compared with the industry’s 23.1% fall.

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Based on study results, including the safety profile of ELX-02, Eloxx Pharmaceuticals plans to start a proof-of-concept study later this year to evaluate the drug in Alport syndrome, a rare kidney disease.

The CF space is currently dominated by Vertex Pharmaceuticals, which has multiple drugs targeting CF indications. VRTX also enjoys a strong position in this market, being the first company to successfully develop a drug (Kalydeco) that treats the underlying cause of CF. With its four CF medicines, Vertex is treating most of the 83,000 patients living with CF in the United States, Europe, Canada and Australia.

Vertex records all its revenues from its CF product sales, the majority of which is generated from Kalydeco/Trikafta product sales. This drug is also VRTX’s driver for revenue growth. During the second quarter, Trikafta generated sales worth $1.89 billion, up 50.7% year over year.

Zacks Rank & Stocks to Consider

Eloxx Pharmaceuticals currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stock in the overall healthcare sector includes Kamada KMDA and Morphic MORF, each of which has a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Kamada’s 2022 earnings per share have risen from 1 cent to 26 cents. Shares of Kamada have lost 26.2% in the year-to-date period.

The earnings of Kamada missed estimates in three of the last four quarters and beat the mark just once, witnessing a negative surprise of 212.50%, on average. In the last reported quarter, KMDA’s earnings beat estimates by 450%.

In the past 60 days, estimates for Morphic’s 2022 loss per share have narrowed from $3.47 to $1.80. Loss estimates for 2023 have narrowed from $3.96 to $3.62 during the same period. Shares of Morphic have lost 37.7% in the year-to-date period.

Earnings of Morphic beat estimates in three of the last four quarters and missed the mark just once, witnessing a surprise of 48.29%, on average. In the last reported quarter, MORF delivered an earnings surprise of 183.95%.


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