Shares in clinical-stage biotechnology company Cargo Therapeutics (CRGX) have plunged after it scrapped trials of a cancer drug and shed around half of its staff.
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Toxic Trial Data Forces Move
The company said that it was discontinuing its phase 2 study of Firi-cel for patients with large B-cell lymphoma – a cancer of the lymphatic system. It made the move after data analysis from the study showed that the treatment did not “support a competitive benefit-risk profile.” It also noted a higher than expected toxic reaction to the treatment amongst patients.
“We believe it is in the best interest of both patients and shareholders to discontinue the study,” said Gina Chapman, President and Chief Executive Officer of Cargo Therapeutics.
Cargo Therapeutics said it would focus on other cancer fighting treatments but at the same time would “evaluate its strategic options.” One quick move it made was to slash its workforce by about half – reportedly 58 jobs – to preserve cash for drug developments.
Its shares plunged by just over 74% in pre-market trading with investor sentiment also being battered by a negative reaction from analysts.
Analysts React Negatively
Robert Burns, analyst at H.C. Wainwright, downgraded Cargo Therapeutics to Neutral from Buy without a price target. He said the trial was discontinued due to a “low durability of complete responses and occurrence of safety events.” He added that it was a prudent move to “step to the sidelines as the company evaluates its future.”
Asthika Goonewardene, analyst at Truist, downgraded Cargo Therapeutics to Hold from Buy with a price target of $7, down from $32. He called Cargo’s update “very unfortunate and disappointing.” He thinks CRGX will trade sideways in the near term.
Is CGRX a Good Stock to Buy?
On TipRanks, CRGX has a Strong Buy consensus based on 4 Buy and 1 Hold rating. Its highest target price is $34. CRGX stock’s consensus price target is $33.50 implying a 153.98% upside.
