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Investing.com -- Shares of CARGO Therapeutics , Inc. (NASDAQ:CRGX) plummeted 75% following the company’s decision to discontinue its Phase 2 clinical trial for firicabtagene autoleucel, citing insufficient benefit-risk profile. The company’s stock faced a slew of downgrades from analysts in response to the announcement.
CARGO Therapeutics, which specializes in developing cell therapies for cancer, elected to halt the FIRCE-1 study of firi-cel for patients with large B-cell lymphoma after an ad hoc analysis indicated the treatment did not present a competitive benefit-risk profile. The decision came after safety concerns arose, with 18% of patients developing severe immune effector cell-associated hemophagocytic lymphohistiocytosis-like syndrome (IEC-HS).
In light of these results, the company plans to reduce its workforce by approximately 50% to conserve cash and shift focus towards advancing CRG-023, a tri-specific CAR T therapy, into a Phase 1 study, and further developing its allogeneic platform. Despite the setback, CARGO reported a preliminary cash reserve of $368.1 million as of December 31, 2024, which it believes will extend its operational runway into mid-2028.
The news prompted several analysts to downgrade the stock. Jefferies analyst Michael Yee changed the rating from Buy to Hold with a significantly reduced price target of $3.00, down from $32.00, stating, "CRGX announced surprising and disappointing news and will discontinue the lead Phase II Firi-cel (CD22 CART) due to safety and durability. This is a reset that will trade below cash but is now very early stage as the next-gen tri-specific CAR-T CRG-023 will move to Phase I in Q2 but data would be in 2026. Cash is ~$325M in Q1 or $7/sh but we estimate <$200M by YE26 or $3-4 as they cut opex by 50% or more + runway to 2028 per mgmt. Downgrade to Hold."
Other analysts, including William Blair’s Sami Corwin and JPMorgan’s Brian Cheng, also downgraded the stock to Market Perform and Underweight, respectively, highlighting concerns over the trial’s failure and its implications for the company’s future prospects. Truist Securities analyst Asthika Goonewardene shifted from Buy to Hold with a new price target of $7.00, noting the disappointment in the Phase 2 trial’s outcome compared to previous data and suggesting the stock will likely trade sideways in the near term. H.C. Wainwright analyst Robert Burns also downgraded the stock to Neutral.
CARGO Therapeutics intends to present a full analysis of the FIRCE-1 Phase 2 study at a future medical conference, as it navigates the next steps for its clinical programs and overall strategy.
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