U.S. stocks rise on Fed cut bets; earnings continue to flow
On Thursday, Chardan Capital Markets revised its rating on Cargo Therapeutics (NASDAQ:CRGX) stock from Buy to Neutral, following the company’s announcement to halt its phase II FIRCE-1 clinical trial. The news has contributed to the stock’s significant decline, with InvestingPro data showing a 42.43% drop over the past year. Cargo Therapeutics made the decision after an ad hoc analysis, prompted by recent safety concerns, revealed an unfavorable benefit/risk profile for its lead autologous CD22 CAR-T candidate, firi-cel.
The analysis, which included data from 51 patients with at least one post-baseline scan, indicated an overall response rate (ORR) of 77% and a complete response rate (CR) of 43%. However, the durability of the CR at three months was only 18%. Moreover, 18% of the patients experienced severe immune effector cell-associated hemophagocytic lymphohistiocytosis-like syndrome (IEC-HS), including Grades 4 and 5 serious adverse events (SAEs).
These findings represent a significant shift from previous experiences with this construct in academic studies and have led to the company’s decision to discontinue the trial. In response to the termination of FIRCE-1, Cargo Therapeutics is reducing its workforce by approximately 50% as a means to conserve cash.
As of December 31, 2024, Cargo Therapeutics reported having preliminary cash and equivalents of $368.1 million. The company anticipates that these funds will sustain its operations into mid-2028. InvestingPro analysis reveals a strong liquidity position with a current ratio of 18.95 and minimal debt of $28.58 million, though the company is quickly burning through its cash reserves. For deeper insights into Cargo’s financial health and 8 additional ProTips, consider an InvestingPro subscription. With the discontinuation of the FIRCE-1 trial, anticipated late-stage development catalysts have been removed, prompting Chardan Capital Markets to withdraw its price target for Cargo Therapeutics stock and adopt a wait-and-see approach until more information on CRG-023 data timelines and details on the company’s allogeneic strategy/candidate become available. According to InvestingPro’s Fair Value analysis, the stock appears undervalued despite these challenges, with analyst targets ranging from $28 to $34 per share.
In other recent news, Cargo Therapeutics has announced the discontinuation of its Phase 2 study, FIRCE-1, for the treatment of large B-cell lymphoma due to an uncompetitive benefit-risk profile. The company also plans to reduce its workforce by approximately 50% to extend its cash runway and concentrate on its other product candidate, CRG-023. Despite the setback, Cargo Therapeutics intends to present an analysis of the FIRCE-1 study at a future medical conference.
In response to these developments, Clear Street has initiated coverage on Cargo Therapeutics, assigning a Buy rating with a $28 target, largely due to the company’s leading drug candidate, Firi-cel. Clear Street estimates Firi-cel’s peak sales to reach around $2.1 billion, highlighting its potential.
Cargo Therapeutics has also secured approximately $110 million from a private investment for further development of its CRG-023 therapy. Additionally, the company has entered a sublease agreement with Vaxcyte, Inc. and announced the appointment of Dr. Kapil Dhingra to its Board of Directors. TD Cowen and Piper Sandler have maintained their positive ratings on the company’s stock, with Piper Sandler reaffirming its Overweight rating based on research supporting the safety profile of CAR-T therapies.
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