Cargo Therapeutics Halts Operations, Explores Strategic Options Amid Biotech Challenges

Massive Layoffs and Development Suspension

Cargo Therapeutics, a biotech company focused on next-generation CAR T therapies for cancer, announced a significant restructuring that includes laying off 90% of its staff and halting all development operations. This drastic measure comes as the company aims to preserve cash and explore strategic alternatives, including potential reverse mergers or other business combinations.

The decision follows a series of setbacks for the company, including the discontinuation of its lead candidate, firicabtagene autoleucel (firi-cel), in January due to an unfavorable benefit-risk profile. This earlier move had already resulted in a 50% workforce reduction.

Financial Implications and Market Response

Following the announcement, Cargo's stock experienced volatility, initially falling 7.5% at the close of trading on Tuesday but rebounding with a nearly 19% increase in pre-market trading on Wednesday. The company reported $368.1 million in cash, cash equivalents, and marketable securities at the end of 2024, which it aims to preserve through these cost-cutting measures.

William Blair, an investment firm, suspended coverage of Cargo in response to the news, citing the need for more clarity on ongoing operations. Prior to this announcement, analysts had projected losses of $101.6 million for Cargo through 2025 and had anticipated a relatively flat stock performance until the company provided a more detailed development plan or engaged in business development opportunities.

Corporate Restructuring and Leadership Changes

As part of the restructuring, CFO Anup Radhakrishnan will assume the role of interim CEO. Radhakrishnan will be tasked with leading negotiations for potential reverse mergers or other strategic alternatives. The company has suspended all development operations, including work on its trispecific CAR T candidate CRG-023 and its allogeneic platform.

This move marks a significant shift for Cargo, which was founded in 2019 and had raised $200 million in an oversubscribed Series A funding round in March 2023. The company's focus on developing novel CAR T therapies for cancer had initially garnered substantial investor interest, but recent setbacks have forced a reevaluation of its business strategy.