Stock Beam Therapeutics: Now is not a good time to own (NASDAQ:BEAM)

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anusorn nakdee

Each blade has two edges; he who hurts with one hurts himself with the other.“-Victor Hugo

Today we take a first look at Beam Therapeutics Inc. (NASDAQ: RADIUS). The stock of this early-stage development company have been on a good streak since the beginning of June. However, there are signs that this strength may not last. An analysis follows below.

Stock chart

Looking for Alpha

Company presentation:

Beam Therapeutics is a clinical-stage, multi-program company based in Cambridge, MA, just outside of Boston. The company develops precision genetic drugs through basic editing and has a broad portfolio of drug candidates. The stock is currently trading around $60.00 per share and has a market capitalization just south of $4 billion.

cytosine base editor

Company Website

The company has a growing portfolio of proprietary gene-editing technologies. These include base editing, master editing, nuclease editing, and RNA editing. Their current base editor technology includes a cytosine base editor and an adenine base editor.

adenine base editor

Company Website

Basic editors consist of two key components. First there is a CRISPR protein. This is linked to a guide RNA, which then exploits the established DNA-targeting ability of CRISPR. However, it is modified so as not to cause a double-strand break. The second component is a base editing enzyme, such as a deaminase. This performs the desired chemical modification of the target DNA base.

Basic Editor Diagram

Company Website

The company designed this proprietary combination to enable precise targeting and editing of a single DNA base pair or multiple bases at the same time. Beam management believes that the modular and individual components of these core editors can be customized for specific diseases and create new therapeutic programs.

Pipeline

Company Website

As can be seen above, the company has many candidates in development. Most of them are at a very early stage. For the purposes of this analysis, we will look at some of the more advanced efforts.

Beam Therapeutics is advancing two ex vivo base editing programs called Beam-101 and Beam-102. In these studies, cells are taken from the patient. They are then modified and then reinjected into the individual. To create space for the modified cells to implant in the bone marrow, patients must follow a conditioning regimen. This usually involves treatment with busulfan, which is the current standard of care in hematopoietic stem cell or HSC transplantation.

BEAM-101 is an investigational therapy that produces core modifications designed to potentially mitigate the effects of sickle cell disease {SCD} and beta-thalassemia. It does this by mimicking genetic variants seen in individuals who have hereditary persistence of fetal hemoglobin. The company plans to enroll the first patient in a “BEACON-101” Phase 1/2 clinical trial targeting SCD sometime before the end of 2022.

BEAM-102 seeks to directly correct the hemoglobin mutation for SCD by editing the bases to mimic a natural hemoglobin variant. In early August, the FDA placed Beam’s investigational new drug application, or IND, on clinical hold. The company hopes to resolve this issue by the end of the year at the latest.

The company also offers a candidate called BEAM-201. It is an investigational multiplex-edited anti-CD7 CAR-T cell therapy for relapsed and refractory acute lymphoblastic T-cell leukemia and lymphoblastic T-cell lymphoma. is planned for the second half of 2022

The company plans to initiate IND activation studies for BEAM-301 by the end of this year. This candidate is a base-editing therapy using liver-targeting LNPs that aims to correct the R83C mutation in patients with glycogen storage disorder Ia (GSDIa).

Finally, in mid-July, Verve Therapeutics (VERV) revealed that the company had dosed its first patient in an early-stage trial for its lead asset, in vivo base-editing candidate VERVE-101. This effort involves an adenine base-editing messenger RNA that has been licensed by Beam Therapeutics.

Analysts’ comments and results:

The analyst community is currently not optimistic about the company’s prospects. Over the past five weeks, BMO Capital (target price of $61), Barclays (target price of $60) and RBC Capital (target price of $76) have all reissued Hold ratings while SVB Securities (target price of 113 $) and William Blair maintained their buy ratings on the Stock.

So far in the third quarter, insiders and beneficial owners have sold approximately $4.5 million worth of shares in total. In addition, more than one in five shares of outstanding float is currently held short. Beam’s balance sheet is in good shape. At the end of the second quarter, the company held $1.2 billion in cash and marketable securities, after posting a net loss of $72 million for the quarter.

Much of that money came from a four-year research collaboration agreement that Beam signed with Pfizer (PFE) earlier this year, which included a hefty $300 million upfront payment from the pharmaceutical giant. This collaboration will focus on in vivo base-editing programs for three rare genetic disease targets of liver, muscle and central nervous system. These were not part of Beam’s existing programs at the time of the deal. Under this agreement with Pfizer, Beam may also collect potential milestone payments of up to $1.35 billion, as well as royalties on potential worldwide net sales for each licensed program.

Verdict:

There are a few positive attributes about Beam. The company is fairly funded at the moment and appears to be pioneering some potentially intriguing technology that has led to a diverse set of product candidates. The collaboration agreement with Pfizer helped validate Beam’s approach and provided a significant cash injection. However, all of the company’s development efforts are at an early stage and many, many years away from potential commercialization.

The analyst community, in general, does not have a positive view of BEAM stock after its recent surge, and some insiders are engaged in a decent amount of profit taking. More importantly, the economy appears to be heading into a recession, both here and in Europe. Interest rates have risen sharply in 2022 and inflation levels are at their highest level in four decades.

In short, it becomes more and more a “take risks” market environment with the NASDAQ down more than 25% in 2022 to date. This is not the kind of environment in which stocks of high beta development companies generally do well. Barring an unforeseen event (eg, a Pfizer takeover), the stock is likely dead money at best until overall market momentum improves. . Therefore, for now, BEAM becomes an AVOID for now.

Revolutions always appear impossible in perspective and inevitable in retrospect. »David Sinclair

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