On Monday, H.C. Wainwright adjusted its rating on shares of Carisma Therapeutics Inc (NASDAQ:CARM), downgrading the stock from Buy to Neutral. The change follows Carisma's decision to discontinue development of its lead program, CT-0525, a gene-modified HER2-targeted CAR-Monocyte therapy for advanced or metastatic solid tumors.
The firm cited enrollment challenges and high screen failure rates as reasons for the discontinuation. The news has contributed to CARM's significant decline, with InvestingPro data showing the stock down 48% in the past week and trading near its 52-week low of $0.40.
Carisma Therapeutics made the announcement earlier this month, marking the second time within a year that the company has ceased development on a lead program. The previous program, CT-0508, was de-prioritized in April 2024 in favor of CT-0525.
Despite these setbacks, Carisma plans to continue reporting monotherapy data and aims to shift focus to off-the-shelf products utilizing its in vivo macrophage engineering platform. This includes projects under its partnership with Moderna (NASDAQ:MRNA) as well as its fibrosis program.
As part of its strategic restructuring, Carisma will reduce its workforce by 34%, with the majority of restructuring-related payments expected to be completed by the end of the first quarter of 2025. The company has not provided an update to its cash runway guidance.
As of the third quarter of 2024, Carisma reported having $26.9 million in cash and cash equivalents, which was anticipated to fund operations into the third quarter of 2025. InvestingPro analysis indicates the company is quickly burning through cash, though it maintains a healthy current ratio of 3.23, suggesting adequate liquidity to meet near-term obligations.
H.C. Wainwright's downgrade reflects a cautious stance in the wake of Carisma's recent program discontinuation and workforce reduction. The firm is holding off on setting a new 12-month price target for Carisma, indicating that it awaits further strategic updates and clinical data before potentially reassessing its position on the stock.
With a market capitalization of just $16.9 million and an overall weak financial health score according to InvestingPro, investors seeking deeper insights can access 12 additional ProTips and comprehensive financial metrics through an InvestingPro subscription.
In other recent news, Carisma Therapeutics has experienced significant changes in its operations and strategic direction. The biopharmaceutical company has shifted its focus away from its lead HER2 ex vivo CAR-M program, CT-0525, to prioritize in vivo pipeline programs. This strategic restructuring led to a workforce reduction of 34% and a pivot towards developing in vivo CAR-M therapies for liver fibrosis.
Several analyst firms have responded to these developments. Baird downgraded Carisma from Outperform to Neutral and lowered the price target significantly. Evercore ISI also downgraded the company's stock from Outperform to In Line, while BTIG reduced its rating from Buy to Neutral. However, H.C. Wainwright maintained a Buy rating for Carisma's shares, despite lowering the price target.
Carisma's collaboration with Moderna has resulted in promising pre-clinical data for its in vivo CAR-M therapy targeting hepatocellular carcinoma. The company also plans to submit an Investigational New Drug application for its liver fibrosis program in the first half of 2026. These recent developments highlight Carisma's commitment to advancing its in vivo macrophage engineering platform, despite the challenges posed by its restructuring.
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