Shares of a Cambridge, Massachusetts-based biotechnology company that is taking a different approach to gene editing have gained more than 25% since its early February initial public offering.
Beam Therapeutics Inc.'s (NASDAQ:BEAM) stock traded near $32 just days after it went public at an offering price of $17, but has since receded to $21.49. At its current price, many think the company is a bargain.
Among the optimists are the analysts at several firms that underwrote the offering, reported 24/7 Wall Street. Of course, it's little surprise that they have a buy or outperform rating for the stock.
Jefferies started coverage with a buy rating and assigned a $32 target price, as did Barclays, who gave the stock at overweight rating. Meanwhile, JPMorgan also gave Beam as an overweight rating with a $31 target price. In his report, JPMorgan's Eric Joseph noted the company is focused on multiple targets "with a first-to-market or a best-in-class potential in rare disease and oncology indications."
According to the Encyclopedia Britannica, gene editing is the ability to make highly specific changes in the DNA sequence of a living organism, essentially customizing its genetic makeup. The technology uses enzymes to target a specific DNA sequence. Typically, cuts are made into the DNA strands and existing DNA is removed and replaced.
Beam is using a different method. The company hopes to use a chemical reaction to convert one of the four building blocks of a gene into a new, functioning one. This novel approach is one reason David Nierengarten of Wedbush Securities cited for rating the firm an outperform with a $32 target price target.
Beam is working to apply its platform to treat a number of diseases, including acute myeloid leukemia, sickle cell disease and vision loss caused by a form of macular degeneration. The company is collaborating with privately held Verve Therapeutics on a treatment for coronary artery disease.
More than half of the genetic errors associated with disease result from a single-letter change in the bases that form the human genome, according to an article in FierceBiotech. Given that there are 33,000 point mutations identified as being tied to genetic diseases, the potential application of Beam's technology is massive.
Beam is one of several companies co-founded by gene-editing scientists David Liu and Feng Zhang, as well as Harvard Medical School professor J. Keith Joung.
Another of their gene editing ventures, Editas Medicine Inc. (NASDAQ:EDIT), went public in 2016 at $16 a share and now trades at more than $26.
At the end of last year, Beam had cash, cash equivalents and marketable securities of nearly $92 million, which does not include the more than $188 million raised from the IPO. The company had a net loss of more than $78 million in 2019.
Disclosure: The author holds no positions in any of the companies mentioned in this article.
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