Lyell Immunopharma Inc Share Price Drop

Shares of Lyell Immunopharma Inc (NASDAQ:LYEL) fell approximately 4% on Wednesday after Bank of America analysts downgraded the stock from Buy to Underperform and reduced the price target from $6 to $1.

The downgrade follows the company's reorganization of its pipeline, specifically the discontinuation of its LYL797 solid tumor-directed CAR-T therapy, due to safety issues.

Analysts expressed concerns regarding Lyell's recent acquisition of ImmPACT Bio for its CD19/CD20 CAR-T therapy, IMPT-314, believing it may complicate the company's trajectory.

> “We recognize '314’s value proposition, but beyond a lack of clinical/commercial synergies, we think the program risks becoming a distraction with resources limited and competition growing,” analysts Jason Zemansky and Cameron Bozdog noted.

They mentioned that Lyell faces the challenge of restarting its solid tumor program while expanding into hematology, making it difficult to remain optimistic without evidence of progress.

The firm identifies more attractive opportunities elsewhere under such circumstances. Though BofA acknowledges IMPT-314's potential, the competitive landscape poses a challenge given that established entities like Gilead (NASDAQ:GILD), Bristol-Myers Squibb (NYSE:BMY), and Novartis (SIX:NOVN) are heavily involved in the field.

Their analysis indicates IMPT-314 adds only marginally to the company's net present value (NPV), contributing just $0.06 to the price target.

Additionally, BofA noted the termination of Lyell’s Tumor Infiltrating Lymphocytes (TIL) program, which includes the discontinuation of LYL845 following phase 1 results and halting of pre-clinical projects.

The bank does not foresee negative consequences for Lyell’s solid tumor CAR-T therapies resulting from this, given the differences in action mechanisms. Despite positive efficacy signals from LYL797, developmental overlaps between the discontinued TIL and CAR-T programs are seen as a strategic concern.