Shares of Caribou Biosciences (CRBU -1.33%) were crashing 19.7% lower as of 11:13 a.m. ET on Tuesday. The big sell-off came after the biotech provided its fourth-quarter update on Monday.
Caribou reported fourth-quarter licensing revenue of $3.6 million and a net loss of $34.5 million. However, the big story with the clinical-stage biotech's quarterly update was the pause in developing allogeneic cell therapy CB-020.
How worrisome is Caribou Biosciences' development pause?
It's not surprising that Caribou's shares fell on the news about pausing the development of CB-020. But just how worrisome is this for investors?
To be sure, any winnowing of Caribou's pipeline isn't great. The company has just three programs in clinical development right now, all of which are in early-stage clinical studies. Investors prefer more shots on goal rather than fewer opportunities.
On the other hand, CB-020 was only in preclinical testing. Importantly, Caribou didn't say it was completely throwing in the towel on the program. The company chose its words carefully in the announcement, stating that it had "paused the development" rather than halted all future development. Caribou also said that it will continue to develop its CAR-NK (chimeric antigen receptor-natural killer) cell therapy platform "as these therapies may have potential for the treatment of multiple diseases."
Is Caribou Biosciences a buy on the pullback?
Today's sell-off presents a good buying opportunity, in my view, for aggressive investors who are willing to bet on Caribou's success over the long term. I don't think that the pausing of the development of CB-020 affects the prospects for the biotech stock as much as the decline seems to reflect.
Caribou Biosciences isn't a good fit for risk-averse investors, though. There's no guarantee that the company's pipeline candidates will make it to market. Other stocks offer better risk-reward profiles.
