Investing in clinical-stage biopharma companies is not for the faint of heart. Drug candidate failure rates are high, and speculators are quick to rush in and out of shares on breaking news, typically making the stock somewhat volatile. Further, animal spirits can prolong up-and-down runs, often illogically pushing stock prices to stratospheric highs and subterranean lows. Caribou Biosciences (NASDAQ:CRBU) appears to be a poster child for such price behavior.
The stock has dropped over 50% since the biopharma delayed the start of a Phase 3 study for its lead candidate in March. However, the company has received IND approval from the FDA for a Phase 1 trial for the same drug on another application. Expectations of promising data being presented on the drug’s safety and efficacy at an upcoming ASCO Annual Meeting are likely to further enhance the stock reputation.
This might help the stock regain some positive momentum in the short run. However, the potential for significant upside in the long run is what makes Caribou Biosciences an intriguing investment opportunity.
Caribou’s Pipeline
Caribou Biosciences is a biopharmaceutical company working on CRISPR genome-editing technology to develop transformative treatments for severe diseases. The company’s genome-editing platform, including its Cas12a chRDNA technology, possesses the potential to improve antitumor activity through its superior precision and creation of armored cell therapies.
Caribou is developing several prominent clinical-stage product candidates. Its lead candidate, CB-010, is the first allogeneic CAR-T cell therapy with a PD-1 knockout. It aims to enhance activity against diseases by preventing premature CAR-T cell exhaustion. Caribou recently received clearance for an Investigational New Drug (IND) application from the U.S. Food and Drug Administration (FDA) to evaluate CB-010 in the treatment of patients with lupus nephritis (LN) and extrarenal lupus (ERL).
The company has other promising candidates in the pipeline, all of which are in Phase 1 clinical trials.
Analysis of Caribous’ Financial Outlook
Caribou recently reported Q1 2024 financial results. Revenue was less than expected at $2.43 million versus the estimated $2.90 million. This downturn was primarily due to a decrease in revenue generated from Caribou’s licensing and partnership agreements following the termination of the AbbVie (NYSE:ABBV) Collaboration and License Agreement. Caribou recorded a net loss of $41.2 million for Q1 2024, an increase from the $28.0 million recorded in Q1 2023. Earnings per share of -$0.46 also fell short of consensus expectations of -$0.40.
As of March 31, 2024, the company reported having $345.9 million in cash, cash equivalents, and marketable securities. This figure includes approximately $11.3 million in net proceeds from the sale of Caribou’s common stock under the company’s ATM Sales Agreement. The company is confident its current funds will sustain operations into Q1 2026.
What Is the Price Target for CRBU Stock?
Despite the recent turbulence, analysts following the company have remained bullish on the stock. For instance, Leerink Partners analyst Mani Foroohar recently reiterated a Buy rating on the stock while setting a $10.00 price target, citing the company’s promising pipeline developments and financial standing.
Caribou Biosciences is rated a Strong Buy based on the cumulative recommendations and price targets issued by six Wall Street analysts over the past three months. The average price target for CRBU stock is $20, representing a healthy 543.09% upside from current levels.
The stock has been highly volatile, and that is likely to persist into the foreseeable future. It trades at the low end of its 52-week price range of $2.98-$8.59 and continues to demonstrate negative price momentum, trading below its 20-day (3.65) and 50-day (4.29) moving averages.
CRBU in Summary
Uncertainty is the name of the game when it concerns biopharma companies, and Caribou Biosciences is no different. The company has battled negative investor sentiment on Phase 3 trial delays, and despite recent positive developments, the stock has been pushed to all-time lows. The company’s outlook is still promising, so long-term investors may find the shares quite attractive at these levels.
