Why Editas Medicine Stock Soared as Much as 42% Higher This Week

Shares of Editas Medicine (EDIT 4.67%) charged sharply higher this week, soaring as much as 41.6%, according to data from S&P Global Market Intelligence. By the time the market closed on Friday, the stock was still up 34.8%.

The catalyst that vaulted the gene editing specialist higher was the company’s quarterly report, which included a surprise announcement.

Alignment with the FDA

On Wednesday, Editas Medicine released its fourth-quarter results, which were better than investors had hoped. The company generated revenue of $60 million and a loss per share of $0.23. Financial results generally take a back seat to other announcements with small drug developers, but these were notable, as analysts’ consensus estimates were calling for revenue of $7.94 million and a loss per share of $0.54, so Editas sailed past expectations.

Perhaps more importantly, Editas reported it had cash, cash equivalents, and marketable securities of $427.1 million as of Dec. 31, 2023. Management said it believes that this balance, along with the near-term licensing fees and up-front payments from Vertex Pharmaceuticals, will be sufficient to “fund operating expense and capital expenditures into 2026.”

Editas also announced that the company was aligned with the Food and Drug Administration (FDA) and that its Ruby trial to test EDIT-301 (now called renizgamglogene autogedtemcel, or reni-cel) on severe sickle cell disease would be designated as a single phase 1/2/3 trial in support of the company’s expected biologics license application filing. Editas expects to have substantive data to support the filing later this year.

Wall Street cheers

In the wake of its report, Wall Street was more confident about the company’s prospects, with several analysts rushing to upgrade their price targets.

Analysts at Citi raised their price target on Editas stock to $16 from $11, while maintaining a buy rating on the shares. The analysts cited the fourth-quarter report and the FDA alignment. At the same time, Barclays analyst Gena Wang raised her price target to $11 while maintaining an equal weight (hold) rating on the shares, also citing the fourth-quarter results.

While the results are a step in the right direction, it’s important for investors to remember that Editas has just one clinical-stage program, and it’s still probably a year or more from submitting an application to the FDA. Furthermore, with a market cap of just $860 million, Editas is still quite risky.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Editas Medicine and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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