FHTX Stock Extends Sell-Off After Lilly Collaboration Ends — Wedbush Slashes Target By 80%

Wedbush downgraded Foghorn to ‘Neutral’ from ‘Outperform,’ stating that its bullish thesis no longer applies after the partnership with Lilly ended.

• On Thursday, Foghorn said it would stop developing FHD-909, its experimental cancer drug, after its trial did not produce enough clinical efficacy.
• Guggenheim kept a ‘Buy’ rating, saying Foghorn still has several potential opportunities in its wholly owned pipeline.
• Foghorn cut about 40% of its workforce.

Shares of Foghorn Therapeutics (FHTX) crashed more than 28% on Friday, adding to its 18% slump in the previous session, as Wall Street sounded caution after the biotech firm ended its cancer-drug collaboration with Eli Lilly (LLY).

On Thursday, Foghorn said it would stop developing FHD-909, an experimental oral drug designed to block SMARCA2, a protein that certain cancers depend on to grow. The Phase 1 data showed the drug had a favorable safety profile but did not produce enough clinical efficacy to justify further development.

Foghorn and Lilly began working together in 2021 under a deal that included $300 million upfront and an $80 million Lilly equity investment. FHD-909 was the partnership’s first program.

Wedbush Says Bullish Thesis No Longer Applies

Wedbush downgraded Foghorn to ‘Neutral’ from ‘Outperform’ and cut its price target to $2 from $10, according to The Fly. The firm said the Lilly partnership had been a major part of its bullish thesis, which no longer applies.

Guggenheim cut its target to $5 from $12 but kept a ‘Buy’ rating, saying Foghorn still has several potential opportunities in its wholly owned pipeline. H.C. Wainwright also maintained ‘Buy’ while lowering its target to $5 from $13, highlighting potential in Foghorn’s EP300 degrader program for blood cancers.

Foghorn cut about 40% of its workforce, adding that it would focus on EP300 and CBP degraders, an oral immunology program. The restructuring is expected to extend its cash runway into the second half of 2029.

Retail’s Take On FHTX

Retail sentiment for FHTX on Stocktwits flipped to ‘neutral’ from ‘extremely bullish’ over the past 24 hours.

The stock has slumped nearly 60% so far this year.

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