On Thursday, Baird downgraded Carisma Therapeutics Inc (NASDAQ: CARM) stock from Outperform to Neutral and dramatically reduced the price target to $1.00 from the previous $10.00. The stock, currently trading at $0.56, has experienced significant pressure, falling nearly 30% in the past week and 81% year-to-date, according to InvestingPro data.
The decision follows Carisma's recent announcement of a strategic restructuring plan, which involves shifting focus away from its lead HER2 ex vivo CAR-M program, CT-0525, to prioritize in vivo pipeline programs.
The firm's rationale for the downgrade is tied to the anticipated delay before Carisma's internal in vivo programs can begin clinical trials. According to Baird, it is likely to be over a year before the first in vivo program is ready to enter the clinic. InvestingPro analysis reveals the company is quickly burning through cash, with a negative free cash flow yield and weak financial health metrics.
Get access to 12 more exclusive ProTips and detailed financial analysis with InvestingPro. This forecasted delay in progress has led to the conclusion that there are insufficient near-term catalysts to support a higher rating at this time.
Carisma Therapeutics earlier in the week made public its plans to restructure and realign its research and development efforts. This strategic shift is a significant change in direction for the company, which was previously focused on advancing its lead program, CT-0525.
The downgrade and price target adjustment reflect the altered trajectory and expected timeline for Carisma's research programs. The new price target of $1.00 represents a significant decrease from the prior target, aligning with the firm's revised expectations for the company's stock performance in the absence of imminent clinical developments.
Investors and market watchers will likely monitor Carisma Therapeutics closely as the company navigates its restructuring and advances its in vivo pipeline programs toward clinical testing. While the company maintains a current ratio of 3.23, indicating sufficient liquid assets to meet short-term obligations, its overall financial health score remains weak according to InvestingPro metrics.
In other recent news, Carisma Therapeutics has undergone considerable restructuring, including a 34% workforce reduction and a shift in research focus. The company, recently downgraded by Evercore ISI from Outperform to In Line, has also seen its stock target significantly reduced.
Carisma Therapeutics is now focusing on developing in vivo CAR-M therapies for liver fibrosis, working alongside Moderna (NASDAQ:MRNA) on projects related to oncology and autoimmune diseases.
BTIG, another analyst firm, has also downgraded Carisma Therapeutics to Neutral from Buy, citing the absence of near-term catalysts and the need for the company to reset its pipeline. However, H.C. Wainwright has maintained a Buy rating for Carisma's shares, even as it lowered the price target.
Carisma Therapeutics is also undergoing significant operational changes, halting its CT-0525 program and shifting its focus to its in vivo macrophage engineering platform. The company's collaboration with Moderna has led to encouraging pre-clinical data for its in vivo CAR-M therapy targeting hepatocellular carcinoma.
Lastly, Carisma Therapeutics has seen changes in its board and advisory team with new appointments, while also facing a potential delisting from the Nasdaq Stock Market due to its market value falling below the required threshold. These are some of the recent developments for Carisma Therapeutics.
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