Why Shares of Editas Medicine Dropped 15.5% in November

What happened

Shares of Editas Medicine (EDIT -4.10%), a clinical-stage biotech company, fell by 15.5% in November, according to data from S&P Global Intelligence. The stock closed October at $12.55 a share, then opened November at $13. It fell steadily throughout the month, dropping to a low of $9.61 on Nov. 17, not far from its 52-week low of $9.54. The stock has a 52-week high of $32.37 and is down more than 62% year to date.

So what

Last month, Editas, which uses a CRISPR gene-editing platform to find unique therapies, paused its phase 1/2 trial of EDIT-101 as a treatment for Leber congenital amaurosis type 10 (LCA10), a rare genetic eye disease that involves the retina. The disease affects fewer than 50,000 people in the U.S. The problem with the trial was that it had a small sample size — just 14 patients — and only three showed clinically meaningful progress. On top of that, only two of those three had the type of genetic mutation that responded best to the therapy. And of the 50,000 people in the U.S. with the condition, the company estimates that just 300 have that specific mutation.

The company doesn’t have any marketed drugs yet, so the halting of the clinical trial was a big deal, though it doesn’t mean that Editas won’t continue to study EDIT-101 as a treatment for other indications. It does have a few other therapies in early-stage trials, led by EDIT-301 as a potential treatment for the genetic blood disorders sickle cell disease and transfusion-dependent beta-thalassemia. The company said it plans to deliver a clinical update on EDIT-301’s phase 1/2 RUBY trial on Tuesday.

Now what

Editas said it is looking for a sponsor to help it continue the development of EDIT-101, so while the LCA10 trial has been paused, that’s not necessarily the end for this therapy. In the meantime, investors in the biotech company are waiting to see how EDIT-301 looks as its clinical trials progress. In the third quarter, Editas only took in $42,000 in collaboration revenue, down from $6.2 million in the prior-year period. It reported a loss of $55.7 million in the quarter, or $0.81 per share, compared to a loss of $39.1 million, or $0.57 per share in Q3 2021.

Editas has cash and cash equivalents of $478.5 million on the books, which it has said will be enough to fund its operations into 2024. Like any clinical-stage biotech, Editas poses plenty of risks for investors, but just one Food and Drug Administration approval would send the stock soaring.