Cellectis Shares Plunge After Barclays Double-Downgrade to Underweight

Shares of Cellectis SA (NASDAQ:CLLS), a clinical-stage gene editing company, plunged 14.6% in Wednesday's trading session following a significant double-downgrade from Barclays. The bank lowered its rating on the stock to 'Underweight' from a previous 'Overweight' and drastically cut its price target.

Analyst's Rationale

In a research note, Barclays analyst Lukas Shumway explained the downgrade was driven by a lack of conviction in Cellectis' new clinical programs. The firm expressed skepticism about the potential of .HEAL-101, intended for severe hypertriglyceridemia, and .HEAL-201 for hypercholesterolemia.

Barclays assigned negative per-share net present values (NPVs) to these new assets, valuing .HEAL-101 at -$4 per share and .HEAL-201 at -$2 per share. This negative valuation indicates the bank's belief that the costs and risks associated with these programs currently outweigh their potential future returns.

Revised Valuation Model

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The analyst's new model reflects a substantial reassessment of the company's pipeline and financial position, slashing the price target to $1.30 from a previous $9.00. Key changes to the valuation include:

• The removal of previous values for `eti-cel` and other pipeline assets, which were formerly valued at $4 and $1, respectively.
• A reduction in the valuation for `lasme-cel` to -$1 from $0.
• The new model now primarily consists of $5 for cash, $2 each for royalties and milestones, and -$1 for debt.

Barclays' model also assumes Cellectis will need to conduct a capital raise in late 2027. According to the note, Cellectis aims to begin clinical trials for .HEAL-101 in China in the first quarter of 2027.