CARGO Therapeutics halts development, cuts 90% of staff

SAN CARLOS, Calif. - CARGO Therapeutics, Inc. (Nasdaq: CRGX) announced today a significant shift in its operational strategy, including the suspension of its CRG-023 development and its allogeneic platform. In a move to preserve cash and maximize shareholder value, the biotechnology company also revealed a workforce reduction of approximately 90%. The announcement comes as the company’s stock has fallen over 84% in the past year, currently trading near its 52-week low of $3.00. InvestingPro data shows the stock is currently in oversold territory, with 11 additional real-time signals available to subscribers.

The decision follows the discontinuation of the FIRCE-1, a Phase 2 study of firicabtagene autoleucel (firi-cel). John Orwin, Chairman of the Board, expressed gratitude to the departing employees for their contributions and emphasized the company’s focus on shareholder value and finding a new avenue for its remaining assets.

Anup Radhakrishnan has been appointed as interim CEO to steer CARGO through a reverse merger or other business combination, with TD Cowen serving as the exclusive strategic financial advisor for the process.

As of December 31, 2024, CARGO reported having $368.1 million in cash, cash equivalents, and marketable securities. While InvestingPro analysis shows the company maintains a strong current ratio of 13.79 and holds more cash than debt, it’s rapidly burning through its reserves. The latest measures are part of a broader review of strategic options aimed at optimizing outcomes for shareholders and patients.

CARGO Therapeutics has been known for its focus on developing advanced cell therapies for cancer, with its CRG-023 candidate and allogeneic platform being central to its pipeline. These therapies were intended to overcome the limitations of current cell therapies by improving durability, safety, and availability.

The press release statement emphasized the company’s commitment to an expeditious search for strategic alternatives, although it has ceased the development of its pipeline assets. The statement also included cautionary notes on forward-looking statements, highlighting the risks and uncertainties that could affect the company’s future results and plans.

This announcement marks a significant transition for CARGO Therapeutics, as it seeks to navigate its financial and operational challenges while considering the interests of its stakeholders. With a market capitalization of approximately $189 million and trading below its Fair Value according to InvestingPro analysis, the company faces uncertain times ahead. Analysts have recently revised their earnings expectations downward, though detailed financial forecasts and additional insights are available to InvestingPro subscribers.

In other recent news, Cargo Therapeutics has announced the discontinuation of its Phase 2 clinical trial for firicabtagene autoleucel due to an insufficient benefit-risk profile. This decision has led to a series of stock downgrades from various analysts, including Jefferies, Piper Sandler, Truist Securities, and JPMorgan, all of whom have expressed concerns over the trial’s failure and its implications for the company’s future. Jefferies downgraded the stock to Hold with a new price target of $3.00, while Piper Sandler reduced its target to $4.00. Truist Securities adjusted its rating to Hold with a price target of $7.00, and JPMorgan downgraded the stock to Underweight, citing the company’s challenging outlook.

Cargo Therapeutics plans to cut its workforce by approximately 50% as it redirects focus toward its tri-specific CAR T therapy, CRG-023, which is anticipated to enter Phase 1 trials. Despite the setback, the company reported a preliminary cash reserve of $368.1 million as of December 31, 2024, which is expected to support operations into mid-2028. Analysts from William Blair and H.C. Wainwright also downgraded the stock, highlighting the disappointment in the trial’s outcome compared to previous data. Cargo Therapeutics intends to present a full analysis of the FIRCE-1 Phase 2 study at a future medical conference as it navigates its clinical programs and overall strategy.

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