Beam Therapeutics (BEAM 0.15%) stands out among gene-editing stocks because the company uses base editing as a more precise method than the first generation of CRISPR gene editing. The thought is that, instead of cutting both strands of DNA, Beam trims single "letters" of the genome, hopefully meaning fewer off-target effects for its therapies.

Cathie Wood's ARK Genomic Revolution and ARK Innovation exchange-traded funds (ETFs) have long been high on Beam and together own around 8.3 million shares of the clinical-stage gene-editing stock. So far in October, the ARK Genomic Revolution ETF has bought 20,000 shares of Beam.

The company is in the news because of its recently announced reorganization. On Oct. 19, management said it plans to cut 20% of Beam's workforce and narrow its pipeline, including pausing the development of an in-vivo hepatitis-B treatment. It also said it plans to look for partners to help develop CAR T-cell immunotherapies to treat T-cell leukemia and T-cell lymphoblastic lymphoma.

In the short term, the company is building its own manufacturing center and said it expects a phase 1 early readout on sickle cell disease (SCD) candidate BEAM-101 in 2024, and the submission of regulatory applications for its alpha-1 antitrypsin deficiency treatment BEAM-302 in the first quarter of 2024.

That's a lot to consider when contemplating whether this stock might make a good portfolio addition. As you develop your decision, you also might want to consider five reasons to stay away from Beam Therapeutics stock, at least for now:

1. Investor sentiment on Beam is headed the wrong way

Beam's initial public offering of $17 per share came in February 2020, just before the start of the coronavirus pandemic. The stock initially did well and shot up to $136.79 in the summer of 2021 when biotechs were booming. Since then, its share prices are down 85%. So far in 2023, the stock has fallen more than 49%.

Sometimes it makes sense to go against investor sentiment; fortunes can be made that way. However, the stock's fall makes it harder for Beam to raise money, and with no potential therapy approvals in sight, it might be a long wait for a turnaround.

2. Beam's lead therapy candidate is late out of the gate

Beam's lead blood cancer gene-editing therapy, BEAM-101, is still in phase 1/2 trials to treat sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TBT), with the studies' primary completion date not expected until 2025.

In the meantime, two other gene-editing SCD and TBT therapies -- exa-cel by CRISPR Therapeutics and Vertex Pharmaceuticals and lovo-cel by Bluebird Bio -- could be approved by the Food and Drug Administration (FDA) by the end of this year. That means the two could be on the market at least two years ahead of BEAM-101, assuming that therapy is approved.

This would be a big advantage since doctors, hospitals, and patients would be more familiar with those therapies, and promotions for the pair would be ramped up long before BEAM-101 hits the market.

CRISPR and Vertex submitted their biologics license application (BLA) for exa-cel in April to treat severe SCD and TDT, the same month that Bluebird submitted its BLA for lovo-cel to treat SCD patients age 12 and older who have had a history of vaso-occlusive events. Both submissions got the FDA's Priority Review status for treating SCD, speeding up the process for potential approval.

3. Beam's losses are growing

As a clinical-stage biotech, the company isn't making any revenue, not even collaboration revenue. But it is spending a lot as it tries to develop its pipeline. In the second quarter, the company reported a net loss of $82.8 million, or a loss of $1.08 in earnings per share (EPS), compared to a loss of $72 million and an EPS loss of $1.02 in the same period last year.

Beam does have a lot of cash. As of June 30, it said it had $1.1 billion. Thanks to the reorganization plan, the company said that it should have enough to fund operations into 2026. But in the short term, the losses will likely get worse before they get better because the company expects to spend $6.6 million in cash in the fourth quarter related to the severance of 20% of its workforce.

4. Beam's difference complicates things

Beam's emphasis on base editing sets it apart from other gene-editing biotechs. Standing out makes things more difficult for the company to get approval from the FDA for trials and could ultimately slow approval for its therapies.

The FDA's greater scrutiny of base editing has pushed back Beam's development timelines. In one case, it took four months for the company to get approval for a clinical trial after the FDA paused the development of BEAM 201, the therapy for relapsed/refractory T-cell acute lymphoblastic leukemia.

5. Analysts' opinions matter

Since the start of this year, seven analysts have either downgraded their price targets for Beam stock or lowered their positions on it. Only one analyst, at Credit Suisse, has upgraded the price target for the stock this year.

Analysts obviously can be wrong, but to have so many of them down on the stock weighs on the minds of potential investors.