Editas Medicine (EDIT +7.84%) announced third-quarter 2017 results on Wednesday after the market closed, and shares of the CRISPR gene-editing specialist were down modestly on Thursday in pre-market trading as investors absorbed the news.
But that doesn't mean Editas didn't deliver as promised. This early-stage biopharma leader isn't expected to start its first clinical trials until the middle of next year, and management was rightly satisfied with their achievements over the past few months.
Let's put Editas' business under the microscope, then, to better understand how it kicked off the second half of 2017, as well as what investors can expect in the coming quarters.
Image source: Getty Images.
Editas Medicine results: The raw numbers
| Metric |
Q3 2017 |
Q3 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Collaboration and other research and development revenue |
$6.3 million |
$1 million |
553% |
|
GAAP net income |
($26.6 million) |
($21.0 million) |
N/A |
|
GAAP net income per share |
($0.64) |
($0.59) |
N/A |
Data source: Editas Medicine.
What happened with Editas Medicine this quarter?
- Collaboration and other R&D revenue growth was driven by a combination of a $3.2 million increase in revenue recognized through Editas' strategic alliance with Allergan, and a $2.5 million milestone related to its collaboration with Juno Therapeutics.
- R&D expenses climbed 89% to $20.4 million, driven by a combination of higher sublicensing payment expenses, process and platform costs, and employee-related expenses.
- General and administrative expenses increased 11.5% to $12.6 million, primarily driven by an increase in stock-based compensation.
- The company ended the quarter with cash, cash equivalents, and marketable securities of $295.7 million.
- Editas' EDIT-101 drug candidate, meant to treat Leber Congenital Amaurosis type 10 (LCA10) -- the world's leading cause of childhood blindness -- remains on track for a mid-2018 Investigational New Drug filing.
- Progress for EDIT-101 this quarter included:
- Demonstrating successful dose-dependent transduction and gene editing in retinal photoreceptor cells in a mouse model for LCA10. Editas presented the resulting data to the European Society of Gene and Cell Therapy congress, supporting the advancement of EDIT-101 toward clinical development.
- Editas also initiated a natural history study to evaluate prospective patients with LCA10 across a broad range of ages and disease severity. Editas plans to enroll roughly 40 patients, ages 3 and up, who will be evaluated and followed for at least one year, helping inform clinical trial design and enrollment for EDIT-101.
- EDIT-101 received Orphan Medicinal Product Designation -- a status that serves to support development of medicines for debilitating diseases with low prevalence and no satisfactory existing therapies -- from the European Medicines Agency.
- Progress in engineered cell therapy programs included:
- Established "compelling" pre-clinical data for two new gene targets -- CBLB and TGFBR2 -- to develop next-gen engineered T cells for fighting cancer under Editas' collaboration with Juno Therapeutics.
- Editas is in "advanced exploration of a potentially superior therapy" using CRISPR technology to treat both sickle cell disease and beta thalassemia. It will present its data at the 59th American Society of Hematology Annual Meeting in December.
What management had to say
CEO Katrine Bosley stated:
This was a quarter of continued steady progress in advancing our pipeline of CRISPR medicines toward the clinic. We were pleased to announce that we initiated our clinical natural history study for our lead program to treat LCA10, and we remain on track to file our IND for EDIT-101, our clinical candidate, in mid-2018. In addition, we look forward to data that will be presented at the upcoming meetings of the Society for Immunotherapy of Cancer and American Society of Hematology from a range of our wholly owned and partnered engineered cell therapy programs.
Looking forward
Given its early-stage business, Editas doesn't need to provide specific financial guidance each quarter. But it should suffice for long-term investors to know that it not only remains on track in working toward its first clinical trials for EDIT-101, but also continues to develop other promising engineered cell therapy programs. With that in mind, don't read too much into Editas Medicine stock's subsequent decline, which, more than anything, is indicative of skittish investors reacting to non-events.
