Caribou Biosciences (NASDAQ:CRBU), a clinical-stage biopharmaceutical company that has been making waves in the genome-editing field, has recently faced challenges that have sent the stock down by about 26%. While the share price has been volatile, several potential catalysts in 2024 could positively impact investor sentiment and drive the share price significantly higher, making the current dip an intriguing entry point. The company’s strong financial position and promising pipeline present an interesting opportunity for long-term investors.
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On the Cutting Edge
Caribou Biosciences uses innovative CRISPR technology to develop treatments for patients with severe diseases. With a robust pipeline, the company is progressing toward making a range of clinical-stage, off-the-shelf cell therapies accessible.
The company has made significant strides in advancing its three clinical programs, bolstering its balance sheet through a public offering and an investment by Pfizer (NYSE:PFE). Additionally, it has fortified confidence in its strategic direction by adding executive leadership to the team while expanding the Scientific Advisory Board (SAB) with experts in lymphoma and multiple myeloma.
Adding to these achievements, the U.S. Food and Drug Administration (FDA) gave Caribou’s experimental CAR-T-cell therapy for multiple myeloma a significant nod in the form of an orphan drug designation. This confirms the potential therapeutic value of the company’s product and sets it on a promising trajectory.
Recent Results and Financial Outlook
Caribou released its Q4 and full 2023 financial results, revealing a somewhat rocky fiscal period. The biotech company reported a Q4 EPS of -$0.39, missing the consensus of -$0.37. In addition, Q4 revenue of $3.56 million fell short of the consensus of $3.95 million.
The company experienced an increase in net loss in 2023, with losses going from $99.4 million in 2022 to $102.1 million. Similarly, the Q4 net loss rose from $27 million in 2022 to $34.5 million in 2023.
However, Caribou’s cash, cash equivalents, and marketable securities saw a healthy boost, totaling $372.4 million at the end of 2023, up from $317.0 million at the end of 2022. This increase is primarily attributed to successful public offerings and a sizable equity investment from Pfizer in 2023. It’s projected that these funds will be enough to sustain Caribou’s operations through the first quarter of 2026.
Where the Stock Stands Now
CRBU shares have been relatively volatile. The stock has been up over 7% in the past year but down by 65% over three years. That volatility has spiked recently, with the shares dropping over 25% in the past week.
The recent trading price of $5.60 sits toward the middle of the 52-week range of $3.44-$8.59 and demonstrates negative price momentum. The share price is below the 20-day and 50-day moving averages of $6.88 and $6.54, respectively.
Valuation is muddled; the P/S (11.97x) multiple is higher than the broader Healthcare sector (1.99x) and the Biotechnology Industry (10.19x), while the P/B (1.37x) ratio is significantly below the sector and industry averages of 4.08x and 5.67x, respectively. However, with several potential catalysts expected in 2024, which could drive the stock higher, the current level could mark a reasonable entry point for longer-term investors.
What is the Price Target for CRBU in 2024?
Analysts covering CRBU stock remain bullish. For example, in response to the recent drop in share price, Citi analyst Yigal Nochomovitz reiterated a Buy recommendation and a $30 price target. He believes that the market has overreacted to the news of a delayed start of a Phase 3 trial for a leading pipeline prospect. Nochomovitz suggested that these delays are common and the company has responded with revised plans that enhance the chance for a Phase 3 win.
CRBU stock scores a Strong Buy based on six Buy ratings in the past three months. The average Caribou Biosciences price target of $23.60, with a range of $19-$30, represents an upside potential of 321.43% from current levels.
The Big Picture
Caribou is well-positioned to continue pursuing its innovative treatments for severe diseases. The company’s healthy financial standing, boosted by successful public offerings and equity investment from Pfizer, is projected to sustain operations into 2026.
While the market has reacted negatively to recent news, the results of various Phase trials could act as potential catalysts in 2024. This could help spark a revival in the stock’s performance in the near term and put it on the path of significant upside in time. Paying close attention to the company’s progress and the dynamic conditions within the biotech industry will be critical for long-term investors, who use the stock’s recent dips and volatility as an entry point.
