On Wednesday, investment firm Jefferies adjusted its stance on Rallybio Corp. (NASDAQ:RLYB), downgrading the biopharmaceutical company's stock from Buy to Hold. Accompanying this downgrade, Jefferies also significantly reduced the price target to $1.50 from the previous $7.00.
The revision follows Rallybio's strategic measures to extend its cash runway into mid-2026, which is a shift from the previous forecast of the third quarter of 2025. This extension is partly due to the company's decision to reduce its workforce by 45%. Rallybio is also exploring strategic options for its non-lead programs.
Despite these cost-saving measures, concerns were raised by Jefferies regarding the pace at which Rallybio's lead program is progressing. The first Phase 2 data for this program is not expected until around mid-2025 at the earliest. The lack of clarity on the development and regulatory pathway to approval for the lead program was noted as a point of uncertainty.
Additionally, the absence of immediate pipeline catalysts and the recent drop in share price has increased the risk of potentially dilutive financing, as per the firm's analysis. This has prompted the reassessment of the company's stock rating and price target.
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