On Friday, Chardan Capital Markets adjusted its rating on shares of Editas Medicine (NASDAQ:EDIT), shifting from Buy to Neutral, adding pressure to a stock that has already declined over 81% in the past year. According to InvestingPro data, the company's shares are trading near their 52-week low of $1.86, though analysis suggests the stock may be undervalued at current levels.
The rating change follows Editas Medicine's announcement on December 12 that it will shift its focus entirely to the development of in vivo therapies. This strategic pivot comes after the company was unable to secure a partner for its ex vivo-edited sickle cell and beta thalassemia therapy, reni-cel.
Editas Medicine has decided to halt the development of reni-cel and reduce its workforce by approximately 65%, including the departure of its Chief Medical (TASE:PMCN) Officer. The restructuring process is anticipated to be completed by the end of June 2025. Management expects this will extend the company's cash runway into the second quarter of 2027, which is an improvement from the previous guidance extending to the second quarter of 2026.
InvestingPro data shows the company maintains a healthy current ratio of 3.75 and holds more cash than debt on its balance sheet, though it's currently burning through cash rapidly. InvestingPro subscribers can access 15+ additional financial health indicators and detailed analysis of the company's cash position.
The decision to discontinue reni-cel was not entirely unexpected, given the company's October announcement to concentrate on in vivo therapies and to seek a partner for reni-cel. At that time, Chardan Capital Markets had already lowered the probability of success for reni-cel to 40%, citing concerns over the program's commercial prospects and increasing competition, particularly from Beam's base editing sickle cell therapy, BEAM-101, which is currently unrated.
With the potential upside from a reni-cel deal now off the table and limited information about the in vivo pipeline, Chardan Capital Markets has chosen to withdraw its price target and adopt a wait-and-see approach regarding Editas Medicine's near-term value inflection points. The remaining Editas staff will concentrate on advancing in vivo efforts, with the goal of achieving human proof-of-concept for a program within approximately two years.
Editas Medicine has recently reported progress in its in vivo hematopoietic stem cell (HSC) editing efforts. The company has achieved 40% editing at the HBG1/2 promoter in mice engrafted with human HSCs after a single dose of its targeted LNP technology.
This resulted in the induction of fetal hemoglobin in about 20% of human red blood cells in the animals one month after dosing. This builds upon the 29% editing in hematopoietic stem and progenitor cells reported in October.
However, Editas is expected to encounter competition from other companies working on in vivo HSC editing/engineering, such as Beam, CRISPR Therapeutics, Intellia, and private entities like Orna and Tessera, which are exploring various editing and delivery technologies.
With a market capitalization of just $157 million and analyst price targets ranging from $1 to $13, investors seeking deeper insights can access comprehensive valuation metrics and a detailed Pro Research Report through InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.
In other recent news, Editas Medicine has experienced significant developments and strategic shifts. The company announced the termination of its reni-cel program and a workforce reduction of 65%, extending its financial runway into the second quarter of 2027. Editas is now focusing on in vivo gene editing, specifically targeting liver and hematopoietic stem cells.
Analyst firms, including RBC Capital Markets and Baird, have adjusted their price targets, maintaining Sector Perform and Outperform ratings respectively. Truist Securities and Stifel downgraded the company's stock from Buy to Hold, citing the termination of reni-cel's development and the extended timeline for the company's in vivo therapies.
Despite these adjustments, Editas Medicine reported preclinical success in hematopoietic stem cells gene editing, which could potentially treat sickle cell disease and beta thalassemia. This success, along with the company's strong liquidity position, led to analyst upgrades from BofA Securities and Evercore ISI to Buy and Outperform respectively. These are the recent developments shaping the future direction of Editas Medicine.
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