Gene editing could be a game-changer for humanity. Using this technology, scientists can correct faulty cells and potentially cure diseases like cancer, blood disorders, and even diabetes. Needless to say, if a gene-editing penny stock went on to have commercial success, the rewards for early investors could be life-changing.
Trading for $1.78 and with a small $147m market cap, Editas Medicine (NASDAQ: EDIT) is a penny stock. It’s also an early pioneer in CRISPR-based gene editing, having gone public in 2016, along with rivals Crispr Therapeutics (NASDAQ: CRSP) and Intellia Therapeutics.
Could this biotech stock be my road to riches? Let’s take a look.
Disappointing developments
As the above chart shows, the share price has fallen off a cliff. It’s down 80% over the past year!
What’s gone wrong? Well, in December the firm discontinued its reni-cel programme for sickle cell disease (SCD) and beta-thalassemia after failing to find a commercial partner.
This means the firm has shifted its focus from ex vivo (outside the body) gene editing to in vivo (inside the body). This led to a 65% workforce reduction — including its chief medical officer! — and cost-cutting measures.
Restructuring charges were $12.2m in Q4, bringing the overall net loss to $45.4m. This compared to a loss of $18.9m for the same period in 2023. For the full year, the net loss was $237m.
The company ended December with $270m in cash, which it says is enough to fund operations until Q2 2027.
In vivo
Now, in vivo therapies eliminate the need for cell extraction and reinfusion, making treatment less invasive. So perhaps this is the best move long term.
However, it also means that Editas has become a preclinical company again. In other words, no current active clinical trials.
Reading through the Q4 results, I see plenty of words like “preclinical” and “proof of concept“. But Editas has been a public company for nearly a decade now, so this is obviously very disappointing. And it explains why it has fallen firmly into penny stock territory.
A red flag
Another thing worth noting here is that Editas just said it is “no longer hosting quarterly earnings conference calls“. It doesn’t explain why, but some investors are speculating that a mergers and acquisitions announcement might be in the works.
If so, perhaps that could salvage some shareholder value. But it’s not guaranteed and merely adds to the uncertainty for me.
Weighing things up, I see no convincing evidence that the stock can create blockbuster returns. So I won’t be taking a punt.
My pick
Returning to Editas’ rivals, Crispr Therapeutics is the only biotech of the three that has a product on the market. Along with partner Vertex Pharmaceuticals, it has won regulatory approval for Casgevy, a revolutionary treatment for SCD and beta-thalassemia.
Meanwhile, Intellia is partnered with Regeneron Pharmaceuticals on a phase 3 trial for ATTR cardiomyopathy (a heart disease). And it’s independently running another phase 3 trial for hereditary angioedema (a swelling disorder).
The different stages of development are reflected in the gene-editing trio’s market values.
| Share price performance since IPO | Market cap | |
|---|---|---|
| Crispr Therapeutics | +213% | $3.7bn |
| Intellia Therapeutics | -55% | $1bn |
| Editas Medicine | -90% | $147m |
I recently started a position in Crispr Therapeutics stock. It faces the risk of failed clinical trials, but it already has a treatment approved and appears to have far better prospects than Editas. This is my pick in the space.
