On Wednesday, Evercore ISI issued a downgrade for shares of Carisma Therapeutics Inc (NASDAQ: CARM), shifting the rating from Outperform to In Line and significantly reducing the price target to $0.70 from the previous $4.00.
The stock has fallen over 76% year-to-date, according to InvestingPro data, with the current market capitalization standing at approximately $28 million. The biotechnology company, known for its work in cellular therapies, has made a strategic pivot in its research and development focus, leading to the reassessment by the investment firm.
Carisma Therapeutics has recently altered its pipeline for the second time this year, moving away from its macrophage and monocyte ex-vivo anti-HER2 programs. While the company maintains a strong liquidity position with a current ratio of 3.23, InvestingPro analysis indicates the company is quickly burning through cash.
The company is now concentrating on developing in vivo CAR-M therapies for liver fibrosis, while also working alongside Moderna (NASDAQ:MRNA) on projects pertaining to oncology and autoimmune diseases. This transition places Carisma back into the preclinical stage for its wholly owned pipeline, which is now centered on liver fibrosis treatment.
The anticipation around FGF21 analogs for the treatment of liver fibrosis is growing within the biotech industry, with companies like Akero Therapeutics (NASDAQ:AKRO), Eiger BioPharmaceuticals, Boston Pharmaceuticals, and Novo Nordisk (NYSE:NVO) actively involved in this research area. Akero Therapeutics is expected to release data in February, which could impact the landscape for Carisma's technology.
The analyst noted that Carisma's approach could be complementary to these FGF21 analogs, but emphasized the need for Carisma to demonstrate strong efficacy, as the target product profile includes bi-weekly or monthly intravenous infusions.
Evercore ISI acknowledged that while Carisma's strategic refocusing appears to be a prudent move, it comes with its challenges. The firm's in-vivo strategy allows for repeat dosing and the potential to transduce a higher number of cells compared to ex-vivo cell therapy.
As part of its restructuring, Carisma Therapeutics also announced a workforce reduction of 34%, though this does not alter its cash runway guidance, which extends into the third quarter of 2025.
The investment firm's adjustment in Carisma's price target and rating reflects a tempered outlook, considering that significant data catalysts are likely a few years away due to the company's preclinical status and the projected timeline for an Investigational New Drug (IND) application in 2026.
Despite the recent decline, InvestingPro analysis suggests the stock may be undervalued at current levels, with 10 additional ProTips available to subscribers providing deeper insights into the company's financial health and market position.
In other recent news, Carisma Therapeutics has undergone significant restructuring, including a workforce reduction of 34% and halting its CT-0525 program. The company is now concentrating on its collaborative efforts, particularly with Moderna, with the first GPC3-targeted program scheduled to enter clinical trials in 2025.
Analysts at BTIG have downgraded Carisma Therapeutics to Neutral from Buy due to the absence of near-term catalysts and a need for the company to reset its pipeline.
Meanwhile, H.C. Wainwright has lowered the price target for Carisma's shares to $5.00 but maintains a Buy rating. D. Boral (OTC:BOALY) Capital, and EF Hutton have also given Carisma a Buy or Outperform rating.
The company is developing a liver-fibrosis program, with an Investigational New Drug application projected for the first half of 2026. In collaboration with Moderna, Carisma has achieved encouraging pre-clinical data for its in vivo CAR-M therapy targeting hepatocellular carcinoma.
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