On Monday, H.C. Wainwright adjusted its financial outlook for shares of Carisma Therapeutics Inc (NASDAQ: CARM), a clinical-stage biopharmaceutical company. The firm's analyst has lowered the price target on the company's shares to $5.00, down from the previous $8.00, while maintaining a Buy rating.
The revision follows Carisma's recent submission of a protocol amendment for its Phase 1 trial of CT-0525. The amendment outlines plans to include various dosing regimens, such as repeat dosing with Merck (NS:PROR)'s Keytruda (pembrolizumab) and bolus dosing of CT-0525 with Keytruda, in addition to monotherapy options. The focus will be on repeat dosing of CT-0525 in combination with Keytruda ahead of the other regimens.
The timeline for initial data from the CT-0525 monotherapy has been delayed to the first quarter of 2025, due to slower than expected enrollment rates needed to gather a comprehensive dataset. This delay is anticipated to also affect the timing for obtaining initial combination data with CT-0525 and Keytruda.
In light of these enrollment delays and the broader clinical challenges faced by the next generation of cell therapies, including CAR-NK and engineered CAR-Ts, H.C. Wainwright has increased its discount rate to 13% from the previous 12%. Additionally, the terminal growth rate assumption has been reduced from 3% to 2%.
The cumulative effect of these changes has led to a reduction in the 12-month price target for Carisma Therapeutics. Despite the lowered price target, the firm reiterates its Buy rating on the stock, signaling continued confidence in the company's long-term potential.
In other recent news, Carisma Therapeutics has made significant progress in its operations, with emphasis on its earnings and revenue results. The biopharmaceutical company's novel cellular therapy, CT-0525, has received Fast Track designation from the FDA, potentially expediting its development and review process.
This comes as Carisma Therapeutics and Moderna (NASDAQ:MRNA), Inc. continue their collaboration to develop new treatments for autoimmune diseases and liver cancer, leveraging both companies' proprietary technologies.
Carisma Therapeutics has also seen changes in its board and advisory team. Sohanya Cheng, an industry veteran with significant oncology experience, has joined the Board of Directors, while Michael Torok has resigned. The company has also expanded its Scientific Advisory Board with the appointment of liver fibrosis experts, Dr. Scott Friedman and Dr. Ira Tabas.
On the analyst front, Carisma received a Buy rating from D. Boral (OTC:BOALY) Capital, EF Hutton, and BTIG, while Evercore ISI maintained an Outperform rating. However, the company has been notified by the Nasdaq Stock Market of a potential delisting due to its market value falling below the required threshold, triggering a 180-day period to regain compliance. These are the recent developments for Carisma Therapeutics.
InvestingPro Insights
Recent InvestingPro data provides additional context to Carisma Therapeutics' current financial situation, aligning with H.C. Wainwright's revised outlook. The company's market capitalization stands at $34.34 million, reflecting the market's current valuation of the firm.
InvestingPro Tips highlight that Carisma is "quickly burning through cash" and "suffers from weak gross profit margins," which may explain the analyst's decision to increase the discount rate. This is further supported by the data showing a negative gross profit margin of -213.35% for the last twelve months as of Q3 2024.
Despite these challenges, InvestingPro Tips also note that Carisma "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations," suggesting some financial stability in the near term. This could be a factor in H.C. Wainwright maintaining its Buy rating, even with the reduced price target.
The stock's current price of $0.82 is significantly below both the analyst's fair value target of $8.00 and InvestingPro's fair value estimate of $1.25. This discrepancy, coupled with the tip that the stock is "trading near 52-week low," may indicate potential upside for investors willing to accept the risks associated with clinical-stage biopharmaceutical companies.
For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Carisma Therapeutics, providing a deeper understanding of the company's financial health and market position.
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