On Thursday, Piper Sandler adjusted its stance on Kronos Bio Inc. (NASDAQ:KRON), shifting the stock rating from Overweight to Neutral and slashing the price target significantly to $1.00 from the previous $6.00.
The downgrade comes as a direct consequence of Kronos Bio's decision to halt the development of its drug candidate istiosiciclib (KB-0742) after adverse central nervous system effects were observed in a majority of the ovarian cancer patients participating in the trial.
According to the firm, Kronos Bio is now seeking strategic alternatives following the discontinuation of istiosiciclib. The company's pipeline still includes preclinical inhibitors, notably KB-9558 aimed at treating multiple myeloma and HPV+ cancers, and KB-7898 for Sjögren's disease and other autoimmune diseases. Notably, Kronos Bio is scheduled to present preclinical data on KB-7898 at the American College of Rheumatology meeting on November 18th.
The financial position of Kronos Bio was also a subject of the firm's commentary. It was noted that Kronos Bio concluded the third quarter of 2024 with a cash reserve of $124.9 million. In light of the recent drug development halt, it is anticipated that the company will initiate cost reduction measures to conserve its cash resources.
The analyst's statement highlighted the removal of all projected value from istiosiciclib as the reason for the revised price target. The firm's updated outlook reflects the new circumstances surrounding Kronos Bio's drug development and strategic direction.
In other recent news, Kronos Bio has faced several significant developments. The biotechnology company's stock was downgraded from Buy to Hold by TD Cowen, following the decision to halt the development of its primary drug candidate, CDK9i KB-0742, due to safety concerns. Kronos Bio is now exploring strategic alternatives, including potential deals involving its preclinical assets, KB-9558 and KB-9798.
The company has also been notified by The Nasdaq Stock Market of non-compliance with the minimum bid price requirement, risking delisting if uncorrected. However, Kronos Bio has been granted a 180-day period to regain compliance.
On a positive note, Piper Sandler has maintained its Overweight rating on Kronos Bio, acknowledging the company's ongoing efforts. The company's cash reserve stands at $136.6 million, projected to support operations until the second half of 2026.
Kronos Bio continues to make strides in its drug development pipeline, with progress on its KB-7898 compound for Sjögren's disease. The company has also initiated patient enrollment for an ovarian cancer expansion cohort to test istisociclib, with detailed results expected in the first half of 2025. These are the recent developments surrounding Kronos Bio.
InvestingPro Insights
In light of Kronos Bio's recent setback with istiosiciclib, InvestingPro data provides additional context to the company's financial situation. As of the last twelve months ending Q2 2024, Kronos Bio reported revenue of $8.41 million, with a remarkable year-over-year growth of 172.76%. However, this growth comes with significant challenges, as evidenced by an adjusted operating income of -$96.12 million for the same period.
InvestingPro Tips highlight that Kronos Bio is "quickly burning through cash" and "not profitable over the last twelve months," which aligns with the analyst's concerns about the company's financial position. The company's stock price movements are described as "quite volatile," which is unsurprising given the recent drug development halt and subsequent downgrade.
On a positive note, InvestingPro Tips indicate that Kronos Bio "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors may provide some financial flexibility as the company explores strategic alternatives and focuses on its remaining pipeline candidates.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Kronos Bio, providing a deeper understanding of the company's financial health and market position.
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