CRISPR gene editing became a big story around 2012, and in the few years that followed, the promise of the technology spurred the founding of several biotechs focused on using it to treat diseases. Editas Medicine (EDIT -1.51%) was one of them.
Since its IPO in 2016, though, Editas' shares have basically kept pace with the S&P 500 index. That was actually a disappointing result for the CRISPR gene-editing pioneer -- but it's still early. Could Editas Medicine be a millionaire-maker stock over the next 10 to 20 years?
Editas definitely has tremendous opportunities before it. The most immediate one relates to the biotech's lead candidate, EDIT-101 (also known as AGN-151587).
EDIT-101 uses CRISPR gene editing to target the treatment of Leber congenital amaurosis 10 (LCA10), a rare genetic disease that causes blindness. Editas and partner AbbVie (ABBV 0.76%) are currently evaluating the experimental CRISPR therapy in a phase 1/2 clinical study.
How big is the potential market for EDIT-101? We can use Luxturna, which Roche picked up with its 2019 acquisition of Spark Therapeutics, as a guide. Luxturna is a gene therapy that treats LCA2, and analysts expect it to generate peak annual sales of around $500 million.
LCA2 makes up between 5% and 10% of all LCA cases, while LCA10 accounts for between 15% and 20%. Based on Luxturna's potential and the larger market size for LCA10, EDIT-101 should be able to generate peak sales of $1 billion or more if it earns regulatory approval.
Other pipeline candidates
But EDIT-101 is just the tip of the iceberg for Editas. The biotech awaits a decision from AbbVie on licensing EDIT-102, an experimental CRISPR gene-editing therapy that targets another rare genetic disease, Usher syndrome 2A, that's more prevalent than LCA10.
Editas could have an even greater opportunity with EDIT-301, which targets genetic blood disorders beta-thalassemia and sickle cell disease. The company expects to file an investigational new drug application for EDIT-301 with the FDA by the end of 2020 so that it can begin a phase 1 clinical study.
The biotech isn't just focused on rare genetic diseases, though. It's evaluating EDIT-201 in preclinical testing in treating solid tumors. EDIT-201 is an experimental cell therapy that uses natural killer cells from healthy individuals to attack cancer cells in sick patients. These experimental treatments are called allogeneic cell therapies.
Editas is also working with Bristol Myers Squibb to develop allogeneic T cell therapies. These efforts, though, are not yet at a point where the partners are ready to file for approval to begin a clinical study.
Editas' market cap currently stands below $2 billion. To turn an initial investment of $10,000 in the biotech stock into $1 million, its market cap will need to mushroom to nearly $200 billion.
To put this kind of growth into perspective, its partner AbbVie is worth around $171 billion right now. AbbVie's history dates back to 1888, when its parent, Abbott Labs, was founded. Could Editas pull off such remarkable growth in 10 to 20 years? It's possible but not probable.
Editas' first pipeline candidate is still in early-stage testing. There's no guarantee that it will be successful. Even if it is, the company would still have a long way to go with its other programs.
The reality is that unless an individual investor buys a fairly massive quantity of Editas stock, this company isn't likely to become a millionaire-maker in their portfolio. However, there is a real possibility that it could still be a big winner for investors who buy now. You'll just need several other winners to make your $1 million.