In my last post on Beam Therapeutics (NASDAQ: RADIUS), its stock price was hovering around $82.52 and, in fact, the 2022 bear market only accelerated the bottom of this gene-editing leader. Recently, BMO Capital Markets launched a hedge on Beam with a “Market Perform” rating, driving the stock up >10% on the news. This follows a massive 4-year partnership announced with Pfizer (DFP) in April that generated $300 million in upfront payments and the potential for over $1 billion more. While the S&P 500 and NASDAQ both remain in a technical bear market (at the time of writing), we may have seen Beam bottoming and a new opportunity to build up a long position in anticipation of positive news about gene editing in 2023.
The Beam Therapeutics gene-editing platform is designed to perform base changes without double-strand breaks in target DNA, a slight variation of the classic CRISPR-cas9 system (for reference, see previous articles here or from other analyzes well done by the SA authors). Their portfolio has a strong foundation with flagship programs that include:
- BEAM-101: hematopoietic cell therapy that activates fetal hemoglobin protein for the treatment of sickle cell disease and beta-thalassemia.
- BEAM-102: Directly correcting the hemoglobin mutation for sickle cell disease by editing the bases to mimic a natural variant of hemoglobin.
- BEAM-201: Multiplexed base edition that silences CD7 chimeric antigen receptor T cells for the treatment of relapsed/refractory T-cell acute lymphoblastic leukemia and T-cell lymphoblastic leukemia.
Recent agreements and catalysts
The Pfizer offer comes after massive hurdles for Pfizer’s own gene-editing portfolio, including the tragic death of a patient in their Phase 1b mini-dystrophin gene therapy trial for Duchenne muscular dystrophy (DMD). Further issues have arisen due to the hemophilia B asset in partnership with Roche (OTCQX: RHHBY) which is postponed another year to 2023. Addressing these shortcomings with a step in gene therapy core editing is a natural fit for the pharma giant, well captured with their stated goal “…on live base editing programs for three targets for rare genetic diseases of the liver, muscle, and central nervous system. In total, Beam receives an upfront payment of $300 million, potential milestone payments of up to $1.35 billion, and the right to receive worldwide net sales royalties for each licensed program. In addition, Beam will conduct research activities by selecting development candidates for three undisclosed targets, one in liver, muscle and one in CNS, in which case Pfizer may opt for exclusive worldwide licenses for each development candidate ( and be responsible for all business developments, potential regulatory approvals, commercialization, etc.).
We have a strong track record in developing gene replacement therapies for rare diseases, and we see this collaboration with Beam as an opportunity to advance the next generation of gene editing therapies – an exciting scientific frontier – that can lead to a transformation for people living with rare genetic diseases. .
Mikael Dolsten, MD, Ph.D., chief scientific officer and global president of research, development and medicine at Pfizer.
Surprisingly, the recent changes to the Verve-Beam agreement did not warrant a press release, but they are worth mentioning here. The Amendments grant Beam the per-target option to license GalNAc-LNP delivery technology from Verve Therapeutics (VERV) for the delivery of base editing machines, as well as additional rights to 35% expense and benefit share for additional hepatic-mediated treatment, cardiovascular target. Another big reveal in the new deal is that Verve is granting Beam an exclusive, fully paid license to an undisclosed preclinical program being developed by Verve. All of that considered, it reads like another shot at goal for the team at Beam Therapeutics, with another biotech lining up with the potential for gene base editing.
In addition to these external collaborations, Beam has planned several preclinical data releases for 2H2022. First, Beam plans to present updated preclinical data of its BEAM-301 program on 25e Meeting of the American Society of Cell and Gene Therapy (ASGCT). BEAM-301 is a base-editing therapy using liver-targeting LNPs that aims to correct the R83C mutation in patients with glycogen storage disorder Ia (GSDIa). Beam also plans to launch IND-enabling studies for BEAM-301 in the second half of 2022. Publish).
Looking at the company’s financials for the first quarter of 2022, we see a balance of cash and short-term investments of $1.23 billion (compared to $965.6 million as of December 31, 2021) and R&D expenses of $65.4 million. It should be noted that only about $6.3 million of Pfizer’s initial revenue has been accounted for. From 10-Q:
For the three months ended March 31, 2022, the Company recognized $6.3 million in revenue related to the Pfizer agreement. As of March 31, 2022, there were $95.6 million and $198.1 million of current and long-term deferred revenue, respectively, related to the Pfizer agreement.
The fall from the Beam highs in July 2021 was huge, entering a downtrend channel (Pearson r: 0.96) that lasted nearly 10 months, erasing 75% of its September value. Although Beam is still trading below its 200EMA (purple line), it closed above the 50EMA, and with the posting of higher lows and the confirmed breakout of the 10-month channel, there is definitely momentum. bullish to consider. The 200EMA cap appears to be the next point of resistance, and a breakout that would signal sustained bullish momentum.
While the bear market is an especially massive headwind for risky, cash-intensive biotech stocks, a technology platform like the one Beam Therapeutics is developing warrants a long-term approach to investing. There are a number of gene-editing biotechnologies with clinical data expected to report through 2H2022 and into 2023, and as we have seen with the positive bluebird bio (BLUE) β-thalassemia data , gene editing data affects all related companies. Finally, the due diligence performed by Pfizer and Verve Therapeutics is more impactful than any analysis an outside analyst like me can perform, and having these names behind Beam should give investors the confidence to weather the storm. .