Is Editas Medicine Stock a Sell?

Editas Medicine Inc (NASDAQ:EDIT) is one of a handful of large gene-editing companies with a robust treatment pipeline.

Its genetic therapies include EDIT-101, a gene-edited medicine in clinical trials to treat inherited retinal diseases, like genetic blindness. It also has clinical trial candidates for sickle cell anemia using CRISPR-Cas9 technology.

That has analysts and investors alike pondering, is Editas Medicine stock a Sell?

The company lost its chief scientific officer Charles Albright in January 2021. Albright was with Editas for four years, making him one of the most tenured members of the c-suite. Not only that, but it’s still a clinical-stage company burning through cash undergoing clinical trials for approval from the U.S. Food and Drug Administration.

However, it’s not out for the count yet – it’s accelerating enrollment in its clinical trials hoping to prove efficacy by the end of 2021.

Will investors slice Editas Medicine open to determine if this truly is the future of healthcare or will it leave investors with the taste of Theranos in their mouths?

Editas Medicine Has A Robust Pipeline

Editas Medicine focuses on a robust pipeline of genetic therapies using CRISPR-Cas9 technology.

If you’re not a genetic engineer, CRISPRs are specialized segments of DNA strands. The protein Cas9 is an enzyme used to cut these strands of DNA like molecular scissors.

The technology was only a theory until the late 2010s, when technology finally advanced enough to witness it happening on a sub-atomic scale.

It’s important, because our DNA is responsible for how long we’ll live and certain diseases, genetic or not. Bacteria and viruses often act in the spaces of the CRISPR for both DNA and RNA, which allows the microorganism to replicate and create problems.

Editas Medicine is a Cambridge, Massachusetts-based biotechnology company founded in 2013. It licensed these CRISPR patents to research and develop gene-editing medicines and therapeutics.

It quickly received $120 million in Series B funding from investors like Bill Gates 2015 and went public the next year. The company raised $94 million in its initial public offering (IPO) and more than tripled in price since.

Of course, the bulk of that growth occurred in December 2020. From there, investors took a rocky ride that has bearish investors ringing the sell alarms.

Is Editas Medicine Stock A Sell?

Biotechnology stocks are notoriously sensitive to market conditions. One single whisper of positive data can stir a 500-percent bull run, and negative news of any kind can destroy it all. This is because the entire industry hinges on government approval from the FDA.

No matter how buzzy a company’s treatments are, it needs to prove efficacy for specific use cases. If the FDA determines a company can’t sell your products, it simply can’t. And Editas is still in the clinical stage.

According to Johns Hopkins Bloomberg School of Public Health, the median cost for FDA approval is $19 million.

The company is up well over 150 percent since December 1, 2020, and both its EDIT-101 and EDIT-301 treatments are in phase 1/2 clinical trials. While it hopes to have results by the end of the year, it’s not guaranteed.

Even less assured is the trial data coming back positively. In the meantime, it’s playing backseat to coronavirus-related treatments. Investors jumping in now need to buckle in to play the long game in a volatile market.

Editas Medicine Efficacy Is A Concern

The biggest risk in Editas Medicine is lack of efficacy for its treatments. The company has a robust pipeline, but it needs at least one home run before it can really gain any real traction.

The biotechnology company is a risky one, and it’s not uncommon for a company to fly high during clinical trials only to crash later. Look at Gilead Sciences, Inc. (NASDAQ:GILD).

When the pandemic began, Gilead’s name was highly touted as a potential COVID-19 cure. Its broad-spectrum antiviral Veklury proved efficacy on HIV, and it seemed like a homerun.

Although it did eventually prove efficacy with COVID-19 in conjunction with other treatments, it lost investor attention to Pfizer Inc. (NYSE:PFE) and Moderna Inc (NASDAQ:MRNA). These types of issues could plague Editas Medicine.

It’s especially vulnerable because it’s licensing its technology and the owner of the patent is disputed. Crispr Therapeutics AG (NASDAQ:CRSP) and others claim the invention too.

Can Editas Medicine Competitors Win?

A handful of companies spun off from CRISPR technology and ownership of the patent is under contention.

Jennifer Doudna and Emmanuelle Charpentier co-authored a 2012 paper about the concept. Carabou Biosciences and Intellia Therapeutics spun off Doudna, while CRISPR Therapeutics, ERS Genomics, and Casebia Therapeutics back Charpentier.

Feng Zhang and the Broad Instituted of MIT and Harvard published a subsequent paper that was pivotal in the creation. Doudna and Zhang co-founded Editas before having a falling out.

This means each of these companies has a personal stake in the technology. Each is racing to prove efficacy through clinical trials, and it could certainly use that to stunt the growth of the others. At this point, it’s anyone’s game.

Is Editas Medicine Stock a Sell? The Bottom Line

Editas Medicine is a cutting-edge gene-editing company using CRISPR technology to create DNA treatments. These therapies are meant to help with genetic diseases, like genetic blindness and sickle cell anemia. It’s in clinical trials for candidates for each of these diseases.

The company gained big in recent years and got upgraded by JPMorgan in December, causing the stock to spike. It’s losing steam in 2021, but that doesn’t mean it’s over.

Investors should prepare for a volatile market that rises and falls double digits on a single day’s announcements. Even the smallest thing can make a difference, but it also just lost its chief science officer. Be wary of rocky waters ahead.

---

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.