Down 88%, is Editas Medicine a good investment now?

It’s been several years since the average investor acted as if any challenge was too difficult for the American biopharmaceutical industry.Next, gene editing startup stocks editas medicine (edit -0.98%) It has fallen about 88% over the past three years, despite recent positive news regarding experimental treatments and intellectual property.

Editas is moving its first CRISPR-based therapy toward commercialization. After similar treatments were approved, CRISPR Therapeutics and partner vertex pharmaceuticals Commercialization seems more likely than ever to be achieved in December.

With the approval of the first CRISPR-based drug, is Editas Medicine a good investment? Let’s weigh up its strengths and the challenges it faces to find out.

Why buy Editas Medicine now?

Editas does not have any approved products for sale, but that could change in the next few years. The company is currently enrolling sickle cell disease (SCD) patients in studies using its lead candidate, Renicel, a CRISPR-based gene therapy made from each patient’s own stem cells.

A single infusion of Renicel produces stable fetal hemoglobin in SCD patients and prevents red blood cell deformation. Sickle cell can cause debilitating pain, but not after treatment with Renicel. So far, no vaso-occlusive events have occurred in all 10 patients treated with Renicel in the Ruby trial, including the first two treated more than a year ago.

If Editas Medicine releases further results from Ruby’s study and patients remain asymptomatic, Editas Medicine’s stock price could rise significantly. Management expects to announce these results around mid-2024 and again near the end of the year.

Treatment with Renicel involves removing each patient’s stem cells before they are genetically modified using CRISPR-based technology. Later this year, Editas plans to show investors that it can develop a candidate that can edit the genome of stem cells while they are still in the body.

In December, the FDA approved CRISPR Therapeutics and Vertex Pharmaceuticals’ SCD treatment Casgevy. There are many details about CRISPR and intellectual property rights. In short, Editas is the only company with a license allowing it to sell products that use CRISPR technology to edit human genes.

Shortly after receiving approval for Kasgeby, Vertex Pharmaceuticals paid Editas Medicine $50 million upfront for a non-exclusive license to use the gene editing process on which the therapy relies. An additional $50 million could be paid up front along the way, and up to $40 million more annually until 2034, depending on the success of Kasgeby’s launch.

With no product to sell, Editas is running out of cash. However, with the payments from Vertex, the company does not expect it to run out of cash until 2026.

Image source: Getty Images.

Reasons to remain cautious

CRISPR Therapeutics and Vertex Pharmaceuticals’ Casgevy also help avoid vaso-occlusive events in SCD patients with significant results. This means that if just one of the 40 patients enrolled in the Ruby trial reports a vaso-occlusive event, Renicel’s sales expectations could plummet along with Editas Medicine’s stock price.

New candidates for editing genes in the body can’t come fast enough for Editas Medicine. Investors should temper expectations for future Renicel sales, as two gene therapies have already been approved to treat a limited number of SCD patients.

When should I buy?

At recent prices, Editas Medicine has a market cap of $741 million. This is lower than normal, but probably still too much for a company that has only one clinical-stage program and won’t submit an application to the FDA for at least a year.

It’s probably best to avoid this stock until Renicel is fairly close to commercialization.