Editas Medicine (EDIT 2.96%), a small-cap biotech company, is up by 81% since January. But zooming out gives us a completely different picture. The gene-editing specialist has significantly lagged the market over the past year -- and since the turn of the decade, for that matter; it's down more than 90% since 2020.
Its upward trend in 2025 may attract investors who might see even more potential upside for a stock whose shares still trade below $3 apiece. Before you get on the bandwagon, though, it's essential to figure out whether Editas can maintain this momentum over the long run.
Image source: Getty Images.
What's going on with Editas?
Editas encountered several clinical setbacks over the past few years. The company failed to find a partner to help it develop reni-cel, an investigational therapy for sickle cell disease (SCD), a rare blood disorder. Although data from a clinical trial for reni-cel were encouraging, Editas apparently thought pursuing this opportunity without a partner was not feasible.
It reached the same conclusion with EDIT-101, a gene-editing therapy for Leber congenital amaurosis type 10, an eye disorder. Editas has now shifted its strategy to focus exclusively on in vivo gene-editing medicines.
Why is this significant? Administering in vivo gene-editing therapies involves introducing a therapeutic agent into patients. In contrast, ex vivo medicines like reni-cel are far more complex. They require harvesting cells from patients to manufacture the medicine specifically for each person, and then administering it.
Editas now boasts several investigational in vivo gene-editing therapies in its pipeline, including some for SCD and beta-thalassemia (another rare blood disease), along with some oncology products it's developing with the help of pharmaceutical giant Bristol Myers Squibb. In December, announcing that it was switching to in vivo therapies, Editas said it intended to achieve human proof of concept for some of these candidates in two years -- so by the end of 2026.
These candidates are still in the very early stages of development, and Editas initiated cost-cutting measures to extend its cash runway. The help of a larger company with deeper pockets won't hurt, either.
Not worth the trouble
Editas Medicine could see its shares soar even more if it achieves its goal of human proof of concept within two years. If by some chance the biotech goes on to post consistent clinical and regulatory wins, the upside could be enormous. But how likely is that?
First, even the company's goal for the next two years (or so) isn't guaranteed. And given that there isn't much else going on with Editas, if it fails, its shares will plummet.
Second, even if it succeeds at human proof of concept, Editas will still have a lot of work to do before it can dream of earning regulatory approval for its candidate. Any biotech company with only early-stage pipeline programs is risky, even if it has the help of a larger company.
However, Editas Medicine's recent history makes it even more so. The company has already changed its strategy at least twice because of clinical failures. After being forced to abandon the development of EDIT-101, Editas shifted its focus to targeting blood disorders and gave up the development of medicines for eye-related diseases. After its leading ex vivo candidate for those blood diseases failed, it shifted its strategy again, this time deciding to focus solely on in vivo therapies.
None of that means the company's new plan won't work, but successive failures certainly don't inspire confidence. Here's the bottom line: Editas Medicine would be an incredibly risky stock even without its prior failures. When taking those into account, it becomes even more challenging to make a decent case for the company performing well over the long run. So it's best not to invest in the stock right now, and not even in the next two years.
If Editas achieves human proof of concept as per its stated goal over this period, it might be worth revisiting the question.
