Shares of Editas Medicine EDIT plunged 12.5% on Tuesday after announcing that it is seeking a global partner to advance its lead gene editing therapy, reni-cel, which is being developed for certain non-malignant hematologic diseases, or potentially out-license rights to the treatment entirely, amid a significant cash crunch.

Editas firmly believes that this decision is in the best interests of its patients and shareholders, as a potential partnership agreement would allow for further development and ultimately commercialization of reni-cel with or by another party, enabling the company to reduce spending in 2025 substantially. However, EDIT’s decision did not impress investors, resulting in the stock price drop.

Please note that reni-cel is currently being evaluated in a phase I/II/III RUBY study and a phase I/II EdiTHAL study for severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), respectively. In the RUBY study, Editas has completed enrolling SCD patients in the adolescent and adult cohorts. While dosing in the adult cohort is ongoing, having dosed 28 patients to date, it is yet to begin in the adolescent cohort. The company expects to report substantive data from the SCD study at a medical conference in early December.

In the EdiTHAL study, Editas has completed enrolling TDT patients in the adult cohort and dosing is ongoing. The company anticipates to report additional clinical data from the TDT study by the end of 2024.

If a collaboration deal is reached, it would compel the company to share profits from the sale of reni-cel, subject to approval and launch, with the partnering firm. A potential out-licensing deal will also rob the company of its only clinical-stage candidate, reverting it to the pre-clinical stage. Year to date, shares of Editas have plunged 67.5% compared with the industry’s 2.5% decline.

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EDIT’s Path Forward After Decision to Seek Partner for Reni-Cel

As part of its strategic reprioritization efforts, Editas announced that it is set to focus resources on in vivo (within the living organism) pipeline development.

In the same press release, the company reported that it has successfully demonstrated in vivo preclinical proof of concept for editing hematopoietic stem and progenitor cells and inducing fetal hemoglobin in humanized mice. These mice were engrafted with human hematopoietic stem cells and lacked their hematopoietic cells. The company achieved high levels of editing of the HBG1/2 promoter using its clinically validated upregulation strategy and a proprietary targeted lipid nanoparticle formulation designed for delivery to extrahepatic (outside the liver) tissues.

Based on such encouraging pre-clinical results, Editas believes that it has a clear path forward to develop a potentially first- and best-in-class in vivo gene-edited medicine for the treatment of sickle cell disease and beta thalassemia. An in vivo medicine could be more beneficial for SCD and TDT patients compared to the ex-vivo candidate, reni-cel, given administrative complexities. Approved ex vivo gene therapies include Vertex VRTX/CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel) and bluebird bio’s Lyfgenia (lovotibeglogene autotemcel).

However, an in vivo candidate for SCD and TDT is yet to enter Editas’ clinical-stage development, which means such a product is several years away from commercialization. The company is also expected to face new hurdles in the development challenges as the pharma industry is prone to setbacks which currently makes an approved in-vivo therapy a far-fetched dream.

Editas’ Short-Term Goal

Editas is currently focusing on strengthening its cash position. The company expects its strategic decision to look for a partner for reni-cel development and potential commercialization to substantially reduce spending in 2025.

Last year, Editas signed a licensing deal granting Vertex a non-exclusive license to utilize its Cas9 gene editing technology for ex vivo gene editing medicines targeting the BCL11A gene in the fields of SCD and TDT, including Casgevy. The upfront payment from Vertex in consideration of the agreement generated a much-needed influx of cash to support operating activities.

In early October 2024, Editas announced the sale of future license fees and payments from its Cas9 agreement with Vertex to a subsidiary of DRI Healthcare Trust for $57 million in upfront cash. The company plans to utilize this non-dilutive funding to support its pipeline development and related strategic priorities. As of the end of the third quarter of 2024, EDIT had around $265 million in cash, cash equivalents and marketable securities. Including the DRI payment, the company’s cash balance is pegged at approximately $320 million.

Editas Medicine, Inc. Price and Consensus

Editas Medicine, Inc. price-consensus-chart | Editas Medicine, Inc. Quote

EDIT’s Zacks Rank & Stocks to Consider

Editas currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the biotech sector are ANI Pharmaceuticals ANIP and Fate Therapeutics FATE, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for ANI Pharmaceuticals’ 2024 earnings per share (EPS) have moved up from $4.69 to $4.81. EPS estimates for 2025 have improved from $5.37 to $5.86, during the same period. Year to date, shares of ANIP have gained 9%.

ANI Pharmaceuticals’ earnings beat estimates in each of the trailing four quarters, with the average surprise being 31.32%.

In the past 60 days, estimates for Fate’s 2024 loss per share have narrowed from $1.74 to $1.73. Loss per share estimates for 2025 have narrowed from $1.71 to $1.69, during the same period. Year to date, shares of FATE have lost 14.7%.

Fate’s earnings beat estimates in three of the trailing four quarters and matched once, delivering an average surprise of 18.22%.

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