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On Wednesday, JMP Securities initiated coverage on Foghorn Therapeutics (NASDAQ:FHTX), currently trading at $4.24 and showing strong momentum with a 22% gain over the past week, assigning the stock a Market Outperform rating alongside a price target of $9.00. The firm’s analyst highlighted Foghorn’s specialization in platform technology that targets proteins on pairs leading to synthetic lethality, which is a novel approach in cancer treatment. According to InvestingPro, analysts’ price targets for FHTX range from $4 to $18, suggesting significant potential upside.
Foghorn Therapeutics has developed its proprietary Gene Traffic Control platform, which is designed to identify and validate genetic dependencies. This technology is particularly relevant as chromatin remodeling machinery, which Foghorn targets, is altered in approximately 25% of cancers. The analyst noted that this represents a significant opportunity for the company. InvestingPro data reveals that while the company maintains strong liquidity with a current ratio of 3.73, it faces typical biotech development challenges with significant cash burn.
The company’s lead asset, FHD-909, is already in clinical trials, with initial data expected around year-end 2025 or early 2026. The analyst anticipates that this data could provide substantial validation across Foghorn’s entire pipeline and potentially drive the company’s value higher.
Further bolstering the company’s prospects is a $380 million upfront partnership with pharmaceutical giant Eli Lilly (NYSE:LLY) on FHD-909 and a degrader targeting the same molecule. The deal includes significant milestone payments and is seen as a testament to the strength of Foghorn’s preclinical data.
The JMP Securities analyst also pointed out that FHD-909 is considered a leading attempt to address selective SMARCA2 inhibition in SMARCA4-deficient cancers. The asset’s superior inhibition kinetics and better selectivity were cited as reasons for its best-in-class potential.
In other recent news, Foghorn Therapeutics has amended its common stock sales agreement with TD Securities, reducing the potential sale of shares in its at-the-market offering from $200 million to $100 million. This adjustment reflects a shift in the company’s financing strategy, although specific reasons for this change were not disclosed. In the realm of analyst evaluations, H.C. Wainwright has maintained a Buy rating on Foghorn shares with a price target of $13, citing the upcoming presentation of results from Foghorn’s Phase 1a/b study of FHD-909 as a significant event for the company. B.Riley also initiated coverage with a Buy rating and a $10 price target, highlighting the company’s focus on SMARCA2 in SMARCA-mutated cancers as a notable market opportunity.
Additionally, Foghorn Therapeutics received a compliance notice from Nasdaq due to a shortfall in the number of independent audit committee members following a board member’s resignation. The company has been given a grace period to address this issue and plans to appoint a new or current independent member to the Audit Committee within the specified timeframe. Investors are closely monitoring these developments, particularly the company’s financial strategies and compliance efforts.
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