Why Gene-Editing Pioneer Editas Skyrocketed 28.8% in August

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What happened

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Editas Medicine (NASDAQ: EDIT) is researching the use of gene editing to treat disease. After the company updated investors on its progress on Aug. 9, shares soared 18.8% last month, according to S&P Global Market Intelligence.

So what

Editas Medicine is conducting preclinical-stage research on a gene-editing technique called CRISPR-Cas9, which it licensed from the Broad Institute (affiliated with Harvard and the Massachusetts Institute of Technology).

It doesn't have any gene-editing medicines in human clinical trials yet, but plans to begin trials next year. The company's first gene-editing target is a rare inherited eye disorder called LCA10, and it says it's on track to file for approval from the U.S. Food and Drug Administration to begin enrolling patients in phase 1 studies by the middle of 2018.

Editas Medicine is also making preclinical-stage progress in using gene editing to create next-generation chimeric antigen receptor T-cell therapy (CAR-T). The company's CAR-T research is being done under an agreement with Juno Therapeutics (NASDAQ: JUNO), a leader in T-cell reengineering.

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According to Editas Medicine, it has achieved milestones in creating T-cells or T-cell receptors (TCRs) that can overcome the tumor microenvironment and boost T-cell persistence. These advances are important because they could lead to more effective and safe CAR-T and TCR therapies.

Editas Medicine also said it bolstered its patent portfolio by adding a patent for CRISPR-Cpf1, a second gene-editing approach that could increase the number of genomic sites that can be edited, simplify manufacturing, and improve gene repair versus CRISPR-Cas9.

Now what

Editas Medicine has a lot of gene-editing irons in the fire. However, we're still a long way away from knowing if gene editing is effective and safe in humans. A lot of competitors are also researching gene editing, and a patent war still needs to be resolved between the Broad Institute and the University of California, so some caution is warranted.

Overall, around 6,000 diseases are caused by genetic mutations, so there's potentially a big market opportunity for gene-editing medicine. Nevertheless, investors should approach Editas Medicine and its competitors with a healthy dose of skepticism -- historically, over 90% of drugs entering human clinical trials have failed to pan out, and that has cost investors countless billions of dollars in losses.

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Todd Campbell has no position in any of the stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.