Editas Medicine (EDIT -1.07%) and Bluebird Bio (BLUE -1.07%) are both beaten-down gene-editing stocks. Editas' shares are down by 65% in the last 12 months, whereas Bluebird's have fallen by 40%.
The question of which company is the better gene-editing stock for long-term investment is largely a question of which of these two biotechs has a higher chance of surviving over the next three years. Let's start by looking at Editas.
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Will Editas run out of money first?
At the moment, Editas's only programs are in early-stage clinical trials, and it has nothing commercialized, so it doesn't have any recurring revenue. That means it'll be years before it can bring anything to the market, so it needs to make its cash stretch as much as possible.
Right now, it has $437.4 million in cash and equivalents. In 2022, it had total expenses of $245.6 million, $174.9 million of which were marked as being for research and development (R&D).
Management expects that cash will last it into 2025, but the company announced earlier this year that it would be selling off some of its gene-editing technology to raise more money. And in January, it announced layoffs for 20% of its staff to refocus its efforts on its EDIT-301 program, which is a gene therapy that aims to treat sickle cell disease and beta thalassemia.
So it's selling off parts and making deep cuts to increase the chances of being able to get a product out the door eventually, which doesn't look great for the stock at the moment, even if it ends up working out in the end.
Bluebird Bio's runway looks incredibly short
Whereas Editas looks like a long shot because of how immature the lead programs in its pipeline are, Bluebird has a different problem entirely. It might not have enough cash on hand to reach profitability despite recently commercializing a pair of gene therapies in the U.S.
Its two medicines on the market right now, Skysona and Zynteglo, treat cerebral adrenoleukodystrophy (CALD) and beta thalassemia, respectively. Both medicines were previously commercialized in the E.U., but their high price tags caused public insurers to balk, which required the company to quit the entire market before it could turn a profit with either.
What's more, if it can get regulators to give its lovo-cel program for sickle cell disease the thumbs-up later this year, it could commercialize it sometime in early 2024.
But Bluebird is also selling off its assets because it might not have enough money to stay in operation between now and then. It recently sold one of its priority-review vouchers for $93 million, forgoing the future rights to faster turnaround times with regulators. And in January, it made a new share offering to raise $131 million, at the expense of shareholders who were diluted.
Management says that between those two actions and its cash holdings of $227 million at the end of 2022, it should be able to survive through perhaps the end of 2024. The catch is that $45 million of its cash is currently restricted, and management is banking on it becoming unrestricted to pay for the biotech's expenses in the latter half of 2024.
If that doesn't happen, it'll spell trouble -- and just before it's liable to have rising manufacturing expenses from a potential launch of lovo-cel.
It might be better to avoid buying either stock
At face value, Editas has a slightly longer cash runway than Bluebird. But it's looking to enter two of the same markets (beta thalassemia and sickle cell disease) as Bluebird, not to mention other powerful competitors like CRISPR Therapeutics, so it'll likely struggle to gain market share because it'll show up so late.
Therefore, despite Bluebird's challenges with funding its near-term future, it's the better gene-editing stock of the pair. Nonetheless, unless you have a very high risk tolerance, it's probably better to park your money elsewhere.
The fact that Bluebird failed to gain traction in the E.U. with its gene therapies means that getting it to be profitable could be a bigger problem than management is letting on, and it's possible the company will need to take out new debt or issue more shares to buy time, assuming it could be fruitful to do so.
