Schrodinger downgraded at Citi after clinical program exit

Citi downgraded Schrodinger (NASDAQ:SDGR) to Neutral from Buy after the AI-focused biotech announced its decision to discontinue a clinical program for a leukemia candidate following the emergence of unexpected adverse events.

Schrodinger (NASDAQ:SDGR), based in New York, announced Thursday it would halt the clinical development of SGR-2921, targeted at relapsed/refractory acute myeloid leukemia or high-risk myelodysplastic syndromes.

The decision followed two AML patient deaths, attributed to the experimental therapy in a Phase 1 trial.

“Given recent developments in the company’s internally developed drug pipeline as well as continued headwinds facing the biotech/pharma industries, we are downgrading Schrödinger,” Bloomberg News reported, quoting Citi analyst David Lebowitz.

With a $20 per share target on SDGR, the analyst added that the company’s recent pipeline updates have “fallen short, raising concerns on the potential of Schrödinger’s proprietary drug portfolio efforts.”

Lebowitz also argued that ongoing macro headwinds have impacted the company’s software segment, weighing on Schrodinger’s (NASDAQ:SDGR) topline growth.