By:
Erik Olson, AIM Student at Marquette University
Disclosure:
The AIM Equity Fund currently holds this position. This article was written by
myself, and it expresses my own opinions. I am not receiving compensation for
it and I have no business relationship with any company whose stock is
mentioned in this article.
Summary
• Editas Medicine. (NASDAQ:EDIT) is a discovery-phase pharmaceutical
company that engages in the development of genome editing technology.
• Editas’ CEO and CFO are
both leaving on March 1st.
• The LCA10 program is
seeing progress and dosing is expected to occur in the second half of 2019.
• Management continues to
set optimistic long-term goals in hopes of maintaining and growing market
share.
• The EDIT-101 study is
likely to see progress and will be starting with older patients first.
Key
points:
Announced January 18, 2019, CEO and board member
Katrine Bosley is leaving the company on March 1. She will remain an advisor for
the company until the end of the year. This is very concerning considering the
fact that CFO Andrew Hack announced his departure late last year as well. JP
Morgan analysts have stated that they believe Katrine was forced out and not
leaving to pursue another opportunity.
Management shined more
light on the progress of the LCA10 program. It is expected that initial patient
screening will occur in mid-2019 and dosing sometime in the second half of
2019. Management updated on how enrollment for this will occur. Enrollment will
be structured in a way that adults that have problems with light perception
will be treated first. Followed by adults with broader vision issues and then
finally on to pediatric patients.
Editas continues to set optimistic
goals. By 2022, management hopes to have more than 3 medicines in early-stage
clinical trials. Additionally, they hope to have more than 2 in late-stage
clinical trials. In order to continue building on previous progress, the
company hopes to have on new product on from their Celgene collaboration and
more than one new product for ocular diseases.
Phase 1/2 for EDIT-101
study is coming along well. The plan is to enroll 10-20 patients starting with
older individuals. The trial will be a dose escalating trial starting with what
is believed to be the lowest dosage. It is widely believed that the benefits from
EDIT-101 are predicted to be seen in a matter of weeks or months.
What
has the stock done lately?
Since the beginning of
December, the stock price has dropped about 38%. This is quite significant as
the stock is currently trading around $19.70, down over 40% from a 6-month high
of $33.19. In addition to market turmoil, the announcement of two top level
executives departure battered the price. The stock started to make gains at the
beginning of this year, but was quickly wiped away with the news.
Past
Year Performance:
EDIT has decreased 41.38% over the past 1
year. The stock has been on a steady decline without many sharp falls. In any
instance the stock dropped significantly, it recovered slightly afterwards
before continuing down.
(1-year vs.
Russell 2000)
Source:
Bloomberg
My
Takeaway:
Editas stock price has
been beaten down numerous times over the past year. While the current trading price
is still above the initial purchase price for the AIM small cap fund, analysts
should have sold this a while ago. The current price it is trading at what seems
like a discount from the stock’s true intrinsic value. Once replacements are
found for the CEO and CFO are found, the stock price will likely increase. The
board has emphasized an interest in finding a CEO with operational experience
in order to execute on clinical trials. Additionally, product outlook appears
positive as long as management is able to follow through.
(1-month chart)
Source:
Bloomberg
