Evercore ISI cuts Foghorn Therapeutics stock rating on trial failure

Evercore ISI reduced Foghorn Therapeutics' stock rating to "In Line" from "Outperform" and lowered its price target to $3.00 from $14.00 due to the discontinuation of the company's lead clinical program. The stock is currently trading at $1.95 with a market cap of $115.8 million, a 64% decline year-to-date. Foghorn Therapeutics and Eli Lilly decided not to advance the program following the failure of FHD-909 to meet efficacy goals, despite positive safety profiles.

Both FHD-909 and a separate SMARCA2 degrader are being discontinued. Evercore ISI expects challenges for ARID, another BAF complex subunit. The firm updated its model, removing FHD-909, reducing operating expenses, and retaining $150 million as remaining pipeline value. The company is projected to have approximately $131 million in net cash by year-end 2026.

With the lead clinical opportunity gone and future programs in early stages, Evercore ISI believes pipeline optionality remains, but will necessitate a revised investment strategy.