Editas Medicine (EDIT +1.15%) announced second-quarter 2018 results and a business update earlier this week. The company highlighted continued advances both in its broader product pipeline, and toward commercializing its key EDIT 101 drug candidate for the treatment of Leber Congenital Amaurosis type 10 (LCA10), the leading cause of childhood blindness.
Though shares initially fell almost 8% after the report hit the wires, Editas stock has all but recovered as investors absorbed the news. Now that the dust has settled, let's take a closer at what Editas accomplished over the past few months, and what investors should be watching in the coming quarters.
IMAGE SOURCE: GETTY IMAGES.
Editas Medicine results: The raw numbers
| Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Growth |
|---|---|---|---|
|
Collaboration and other R&D revenue |
$7.4 million |
$3.1 million |
138.7% |
|
GAAP net income (loss) |
($38.7 million) |
($26.4 million) |
N/A |
|
GAAP net income (loss) per share |
($0.82) |
($0.65) |
N/A |
DATA SOURCE: EDITAS MEDICINE. R&D = research and development; GAAP = generally accepted accounting principles.
What happened with Editas Medicine this quarter?
- Editas' top-line growth was driven by $3.9 million in revenue recognized under a license agreement with Beam Therapeutics, as well as a $2.8 million increase in revenue recognized per its collaboration with Celgene. These sums more than offset a $2.4 million decline in revenue as recognized under Editas' strategic alliance with Allergan (AGN +0.00%) in last year's second quarter.
- R&D expenses nearly doubled from the same year-ago period to $32.7 million, primarily driven by a combination of higher sublicensing, and success-payment expenses related to a sponsored research agreement with the Broad Institute.
- Editas ended the quarter with cash, cash equivalents, and marketable securities of $344.1 million, down from $359 million last quarter. That's still good for at least 24 months of funding, without assuming future cash received from milestones or new financing.
- Allergan exercised its option to develop and commercialize EDIT-101 globally, while Editas exercised its option to co-develop and share equal profits (and losses) in the United States.
- As such, Allergan paid an option-to-exercise fee of $15 million, which will be recorded next quarter. Editas is also eligible to receive a $25 million milestone payment from Allergan upon clearance of an IND (investigational new drug) application for the drug candidate.
- Editas now plans to file an IND application for EDIT-101 with the U.S. Food and Drug Administration in October 2018.
- Regarding its ocular pipeline, Editas is now pursuing product candidates for Usher Syndrome type 2A (USH2A) and recurrent ocular herpes simplex virus type 1 (HSV-1). The company presented data supporting its early progress toward both at this year's American Society of Gene & Cell Therapy (ASGCT) Meeting.
- Also at the ASGCT meeting, the company reported data supporting the potential for a best-in-class medicine for sickle-cell disease and beta thalassemia.
- In May, Editas expanded its collaboration with Juno Therapeutics (JUNO +0.00%) to develop and commercialize engineered T-cell medicines for cancer. The alliance now includes four programs to explore checkpoint inhibitors, tumor microenvironments, and T-cell receptor locus editing, along with an undisclosed program.
What management had to say
Editas CEO Katrine Bosley stated:
During the second quarter, we continued to drive toward our first IND and to advance our broader pipeline of transformative CRISPR [clustered regularly interspaced palindromic repeats] medicines. Our lead candidate EDIT-101, to treat the genetic disease LCA10, is poised to be the first in vivo CRISPR medicine in human trials, with an anticipated IND filing in October. Our broader pipeline of ocular and engineered-cell medicines is advancing as well.
Looking forward
Editas doesn't provide specific quarterly financial guidance. But EDIT-101 is closer to commercialization than ever, with its IND filing poised for October; the company has a healthy broader pipeline to potentially create novel treatments for a number of other pervasive diseases; and key strategic alliances with other leaders in the field are continuously expanding and advancing. So this report supplied everything long-term investors should need to hear, to maintain their confidence that Editas is moving in the right direction on multiple fronts.
