Jefferies cuts Foghorn Therapeutics stock target, keeps buy rating

Investing.com  |  Editor Natashya Angelica

Published Dec 16, 2024 15:04

Jefferies cuts Foghorn Therapeutics stock target, keeps buy rating

On Monday, Jefferies made adjustments to its financial outlook for shares of Foghorn Therapeutics (NASDAQ:FHTX), reducing the price target to $14 from the previous $18, while still retaining a Buy rating on the stock.

Currently trading at $5.30, the stock has declined nearly 16% over the past week. According to InvestingPro data, the stock's RSI indicates oversold territory. This change comes after the company announced the discontinuation of its development for the FHD-286 treatment in Acute Myeloid Leukemia (AML).

The decision to halt the development was based on the drug's inability to meet the efficacy threshold in Phase 1 trials that would justify further progress. Management at Foghorn Therapeutics has indicated that the resources allocated to FHD-286 will now be redirected to other drug candidates, with the company's cash runway expected to extend into 2027.

InvestingPro analysis shows the company maintains a strong current ratio of 4.77 and holds more cash than debt, though it's currently burning through cash rapidly. Get access to 12 more exclusive ProTips and comprehensive financial analysis with InvestingPro.

The analyst from Jefferies views this development as unsurprising, given the high efficacy standards set by the current standard of care, venetoclax. It is believed that FHD-909, another inhibitor being developed in partnership with Eli Lilly (NYSE:LLY) and specifically targeting SMARCA2 (BRM), remains the primary asset driving value for Foghorn Therapeutics.

The updated model reflects these recent changes and has set a new price target of $14 for Foghorn Therapeutics shares. The company's strategic shift in focus to other candidates is seen as a move to optimize its portfolio and resource allocation.

In other recent news, Foghorn Therapeutics has made significant shifts in its drug development focus. The biotech firm recently halted the solo development of its drug candidate FHD-286, which was being tested for acute myeloid leukemia (AML), due to response rates in the Phase 1 trial not meeting its efficacy threshold.

Instead, Foghorn is now prioritizing its proprietary pipeline and collaboration programs with Lilly, including the clinical-stage selective SMARCA2 inhibitor FHD-909 (LY4050784). The company is also considering partnerships or Investigator Sponsored Trials to further the development of FHD-286.

Foghorn has reported a strong financial position with $267.4 million in cash, equivalents, and marketable securities, ensuring a cash runway into 2027. Morgan Stanley (NYSE:MS) has revised its outlook on the company, raising the stock's price target to $9.00 from $6.00.

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In the realm of company news, Foghorn recently appointed Dr. Anna Rivkin as its new Chief Business Officer. With over 20 years of industry experience, Dr. Rivkin is anticipated to significantly contribute to the company's business development. These are the latest developments in Foghorn Therapeutics' trajectory.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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