Health and Healthcare

Janney Remains Bullish on Editas Medicine

Jon C. Ogg

Published: May 16, 2016 12:15 pm

Last Updated: January 13, 2020 7:59 am

Editas Medicine Inc. (NASDAQ: EDIT) has become a rather interesting stock for many speculative biotech and biohealth investors. It has also been quite volatile. Its shares were trading higher on Monday after the release of its quarterly results and after news that it inked a $5 million deal to get into cystic fibrosis with the Cystic Fibrosis Foundation.

Many analysts have had very positive view on Editas. After all, it has ties to Bill Gates. This speculative company operates as a genome editing outfit, focusing on treatments of genetically defined diseases by correcting the genes that caused the disease.

One of the first analyst reports issued on Monday was by Janney Montgomery Scott. The firm has a Buy rating and a $48 fair value estimate.

Janney noted in the call that patience is a virtue. With quarter-end cash of $229 million, Editas guided that it has funds for at least the next 24 months. Still, Janney noted that research and development expenses and general and administrative costs were higher than the company had modeled. No new updates on the preclinical/clinical front were noted, and Janney said its suspects that IP developments may be the main share drivers through the year.

Janney’s report said:

Editas announced a $2.5M milestone from Juno for technical progress in the edited TCR/CAR-T program earlier this month. Today it announced a 3-year partnership with the Cystic Fibrosis Foundation Therapeutics (CFFT) that should provide Editas with access to CF-focused physicians and up-to $5M in research support. The deal should help Editas go toe-to-toe with Vertex-partnered CRISPR Therapeutics (private) in CF. We wouldn’t be surprised to see additional similar incremental but important progress updates through 2016 into 2017 as Editas makes its way to the clinic. Recall the first program expected to reach the clinic is for the ultra-orphan ophthalmological indication LCA10, and Editas reiterated guidance to IND-enabling studies this year.

Janney is now modeling in an equity financing in the second quarter of 2018, and that is in addition to the one it has expected to come in the first quarter of 2019. Higher development costs, stock-based compensation costs and legal expenses were major contributors to the cost structure. Janney noted:

Developing a novel biologic that combines both protein and RNA components and that requires advanced delivery technologies is not going to be cheap.

Editas shares were seen trading up 13% at $33.73 midday Monday. Its post-IPO range is $12.57 to $43.99 and its market cap is $1.2 billion. For whatever it is worth, Janney is listed as having the highest analyst target price among other research reports with stated price targets.