Why We’re Selling Editas Medicine Stock
When we first encountered the exciting world of synthetic biology, we couldn’t wait to invest in the leader at the time – Intrexon. Then, when the company’s fearless leader spent an earnings call talking about how much money they planned to make selling apple slices, we exited our position and realized that most synthetic biology stocks were failing miserably on the execution side. Today, we’re approaching the usual synbio suspects – Zymergen, Amyris, and Ginkgo Bioworks – with a great deal of trepidation. While we see signs of promise for Ginkgo’s business model, we’re sitting on the sidelines for now.
As we wait to see how Ginkgo progresses, we decided to vet our current selection of gene editing stocks to see what we own and why. Admittedly, the “why” was simply a spray-and-pray approach where we invested in the first three CRISPR stocks to go public – Intellia (NTLA), Crispr Therapeutics (CRSP), and Editas Medicine (EDIT) – and left it at that. Then, we revisited these three companies last year in a piece titled What Do The Three Biggest Gene Editing Stocks Do? which concluded that Editas wasn’t seeing the same success as the other two companies with their two flagship therapies.
We depend heavily on the success of EDIT-101 and EDIT-301. Except for EDIT-101 and EDIT-301, all of our product development programs are at the preclinical or research stage.Editas Medicine 10-K
This makes things easy. If either of these therapies fail, the likelihood investors will take a punt on additional products seems highly unlikely. It’s all or nothing for EDIT-101 and EDIT-301 which are referred to as the BRILLIANCE and RUBY trials respectively.
The only human dosing that’s taken place so far is for EDIT-101 which began in 2020. Says the company:
EDIT-101 for the treatment of LCA10 has a limited patient pool from which to draw for enrollment in a clinical trial, as the global incidence of LCA10 is estimated to be two to three per 100,000 live births worldwide.Editas Medicine
The availability of patients is even lower than what’s being stated above. Leber Congenital Amaurosis, or LCA, is a group of inherited retinal degenerative disorders caused by mutations in at least 18 different genes. The most common form of the disease, LCA10, is a monogenic disorder caused by mutations in the CEP290 gene and is the cause of disease in approximately 20‑30% of all LCA patients. The NIH estimates there to be 3,000 to 30,000 people with the disease, so the total addressable market for EDIT-101 is 10,000 patients using the most optimistic estimates (30% X 30,000).
After two years of work, the first results of the BRILLIANCE study were made available for the small sample of six patients who participated (2 low dose, 4 mid dose) and they’re surprisingly accessible to the average lay person, though not overly impressive according to pundits.
Since so few patients are enrolled, you can actually read the results for each in regard to safety (did it harm the patients?) and efficacy (did it help the patients). Spoiler alert: it’s safe but efficacy is showing mixed results. The trial is being conducted using escalating doses (low, mid, high), and some patients from the middle dosage cohort seem to be realizing noticeable benefits. The bigger question on everyone’s mind is why Editas Medicine’s pharmaceutical partner for EDIT-101, Allergan, backed out a month prior to these results being released. The root cause was a decision made by AbbVie (ABBV), the $257 billion pharma company that acquired Allergan (AbbVie has since sidled up to Caribou). In response to this setback, Editas tried to turn lemons into lemonade.
“We are pleased to regain full operating control of our ocular programs, including EDIT-101, the first in vivo CRISPR medicine to be administered to patients, and we look forward to developing and commercializing these transformative ocular medicines.Cynthia Collins, CEO of Editas Medicine at the time
Ah, the old “our pharma partner ditched us and we’re really stoked to go at it alone” statement. Ms. Collins is just one of many executives that Editas has seen come and go over the years, another red flag that can’t be ignored.
The Executive Turnover Problem
Internal turmoil indicates a company that’s more focused on infighting than actual results. Maybe they should consider putting their D&I goals aside and hiring based purely on competency? Then again, which competent person would look at this firestorm of turnover and think it’s a great environment for career progression? Executives coming and going can’t be helping stabilize any of the remaining pharma partnerships either.
- March 2019 – CEO Katrine Bosley departs following previously announced exits of the company’s chief medical and chief financial officers. Since then, almost all of Editas’ executive team has been replaced. Bosley was appointed CEO in mid-2014, roughly half a year after the company was founded.
- Feb 2021 – CEO Cynthia Collins departs after lasting 1.5 years handing over the reins to James Mullen
- Feb 2022 – CMO Lisa Michaels fired after 15 months on the job. Editas has had three different chief medical officers since late 2016.
- June 2022 – CEO Gilmore O’Neil takes over the reins from James Mullen and is said to be looking for new CMO
If you’re a large pharma company looking for a gene-editing partner, you’d have to go through some serious mental gymnastics to overlook all the dirty laundry that’s been aired as Editas changes C-level positions more often than Kim Kardashian changes outfits.
Just last month, the FDA granted Orphan Drug Designation to EDIT-301 for the treatment of beta thalassemia and sickle cell disease. Check out this excellent visual depiction which helps explain diseases that result from mutations in a gene that encodes a key component of hemoglobin, the oxygen-carrying molecule in blood.
The company that produced the above graphic, CRISPR Therapeutics, has their own gene-editing treatment for patients with either beta thalassemia or sickle cell disease which is currently being investigated in multiple ongoing clinical trials as a potential one-time therapy for patients. The below excerpt from a November 2019 BioPharma Dive article shows just how far ahead of Editas CRISPR Therapeutics is:
Nine months after receiving an infusion of gene-edited stem cells, a patient in a closely followed clinical study is free from the blood transfusions necessary for those who live with severe beta-thalassemia, an inherited disease caused by defective red blood cells.Credit: BioPharma Dive, First look at CRISPR, Vertex gene-editing therapy hints at treatment potential
Three years later, and Editas is on track to dose their first transfusion-dependent beta thalassemia patient with EDIT-301 by the end of 2022. Since we’re already holding shares of CRISPR Therapeutics, exposure to EDIT-301 seems pointless.
Following the Founders
What attracted us to Editas in the first place was the high-profile founders who are considered to be pioneers in the gene-editing space – David Liu, J. Keith Joung, Feng Zhang, and George Church. With the exception of George Church, all of these founders went on to found another company called Beam Therapeutics (BEAM) which wields a gene-editing technology called “base editing” that is said to be superior to all other methods. While George Church wasn’t involved in this discovery, here’s what he had to say about it when the invention was revealed back in 2016:
Because of “the cell’s desperate attempts” to mend its genome, said Harvard University biologist George Church, “what often passes as ‘genome editing’ would more appropriately be called ‘genome vandalism,’” as the cell inserts and deletes random bits of DNA where CRISPR cuts it. Because the new version of CRISPR avoids that mess, it “offers a huge step forward,” said Church, who was not involved in the discovery, and whose 2013 paper helped launch the CRISPR frenzy. “It is arguably the most clever CRISPR gadget to date.”Credit: STAT, Scientists unveil the ‘most clever CRISPR gadget’ so far
A year later, Beam Therapeutics was founded, but that’s a story we’ll save for another day.
After compiling A Complete List of 27 Gene Editing Stocks, we reduced the list to five stocks that provide pure-play ways for investors to get exposure to gene editing. Editas was one of those names, but today’s findings mean we’ll be changing it from a “love” to an “avoid” as we exit our position and move to invest in a gene-editing company that shows greater promise. In future articles, we’ll look at the promise of the remaining four gene-editing stocks we shortlisted.
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Great read. Thanks. Because of George Church and the market crash of March 2020, I aquired a position in EDIT. When I realized the superority, and potential, of base editing technology, I closed my EDIT position and started a position in BEAM. Fortuneately, because I sold off in 2021, I had a good return on EDIT.
George Church is an amazing scientist.
You’re welcome Eric! Glad you had a good return on EDIT. If you do a comparative analysis of EDIT and BEAM, it seems obvious that BEAM is the better of the two – at least based on the research we’ve published. And yes, why the hell is George Church not a household name?
Interesting article, although I am not in agreement with your conclusion. All the points you raise about EDIT are true. However, you miss a vital fact. EDIT has an exclusive license on the foundational CRISPR Cas9 patents from the Broad/MIT. This means that EDIT will generate licensing income once these therapies (from CRSP and INTL) once their pipelines reach market stage. This alone is a significant source of revenue for EDIT. On the Brilliance study, I think the non-spectacular results were positive and indicative of a more positive data readout once the higher-dose cohorts are released. On the Ruby study, yes they are behind, but they are testing a different spot on the DNA. I end with the particularly attractive price-point of EDIT now. I would welcome your thoughts on the matter. Thank you.
Very much appreciate you taking the time to comment. From what we’ve seen, the whole licensing thing is one big incestuous can of worms. When you peruse the SEC filings for each of these gene editing firms you’ll see where they disclose who is licensing what from whom. We have not seen anything that leads us to believe Editas is bound to receive royalties from CRSP/INTL and it’s much more complex than we originally thought. Just like you’re saying, we had thought that as well – Editas has the one IP ring to rule them all. We’re not sure that’s the case. If there are agreements in place, then that’s one thing. Battling out in the courts is an entirely different scenario. Long story short, we’re not sure Editas has the IP wrapped up so that they automatically receive licensing fees from every CRISPR drug that gets developed. Of course, we need some successful drugs first 😉 Regarding the study progress, can agree that there are multiple ways to interpret the data. As for the “attractive price point,” that’s really tricky. Obviously the literal price of shares means absolutely nothing, so what would that lower valuation be based on? Good comment, thank you!