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Investors are turning positive again on clinical-stage cancer-treatment company Trillium Therapeutics Inc. (TRIL-Q; TRIL-T), a stock that lost ground following a huge run-up last year.

Trillium shares were trading up 6 per cent to around $12.42 on the Toronto Stock Exchange on Wednesday afternoon and US$10.30 on the Nasdaq. The stock is up about 25 per cent since Monday. Analysts say investors are buoyed by recent news the company will be added to the Russell 3000 Index of small-cap stocks, as well as a positive outlook for the immuno-oncology company’s innovative therapies for the treatment of cancer.

Trillium is working on two clinical programs, TTI-622 and TTI-621, that it says target CD47, a “don’t eat me” signal that cancer cells frequently use to evade the immune system. The Cambridge, Mass. and Mississauga, Ont.-based company also owns and controls several patent rights for key products and therapeutic uses.

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“We still like the name a lot and are hopeful that shares will ultimately recover as multiple combination studies are initiated and report results in 2022,” Reni Benjamin, an analyst with JMP Securities, said in an email to the Globe. He has a “market outperform” rating (similar to buy) on the stock and US$14 price target.

Among nine analysts that cover the stock, the average target is US$21.37. Trillium shares hit a five-year high of US$20.96 on the Nasdaq and $27.12 on the TSX in late November.

Trillium was also the best-performing stock on the TSX in 2020, rising more than 1,308 per cent to close the year at $18.73 driven largely by positive clinical trial results as well as positive sector news.

On May 7, Trillium reported a net loss for the first quarter ended March 31 of US$10.9-million or 11 US cents per share, an improvement from a loss of US$16.3-million or 25 US cents for the same quarter a year earlier. Analysts were expecting a loss of 17 US cents.

Its research and development costs came in at US$5.9-million, below analyst estimates of US$8.2-million. The R&D costs up from US$5-million for the same quarter the year before, which the company said was due mainly to higher manufacturing costs to support its expanded clinical operations and higher clinical trial costs related to increased patient enrollment. The company didn’t have any revenue in the quarter.

Mr. Benjamin of JMP Securities, has a “market outperform (similar to buy) on the stock and US$14 price target.

In a May 11 note, when the stock was trading around US$9.26, Mr. Benjamin said the company’s financial position is expected to fund it “well past the completion of the proposed combination studies.

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“With both the company’s wholly-owned assets advancing into combination studies, impressive clinical activity observed in the monotherapy [use of a single drug] setting and a solid cash position of US$276-million, we believe Trillium shares are attractively priced with 46-per-cent potential downside (bear case is US$5) and 94 per cent potential upside (bull case is US$18).”

David Martin, an analyst with Bloom Burton & Co., has a US$20 target on the stock and “buy (speculative risk)” recommendation. In an April 29 note, following an investor day presentation, he said Trillium’s clinical results to date are promising.

“While Trillium has not yet reported a ‘knock out’ combination result which we believe will be needed to take TRIL stock to the next level, the monotherapy results reported to date remain class-leading, and we believe it is likely just a matter of time before validation in combinations is established,” Mr. Martin wrote. The shares were trading at US$8.52 at that time.

Wangzhi Li, an analyst with Ladenburg Thalmann & Co. Inc., has a “buy” rating and US$24 target.

In a recent email to the Globe, the analyst said Trillium is “currently undervalued” with a current market cap of about US$995-million. The analyst referenced Trillium’s peer competitor company ALX Oncology Holdings Inc., with a market cap of about US$2.4-billion and noted Gilead Sciences Inc. recently acquired cancer immunotherapy company Forty Seven Inc. in March for US$4.9-billion.

“Trillium’s lead programs TTI-622 and TTI-621 are among the most advanced anti-CD47 agents in clinical development and have showed differentiated mono efficacy, which we see support good probability for them to show better combination efficacy as well, which will be key for commercial competitiveness of the drugs,” the analyst wrote in the email.

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