A Break for Young Biotechs
On December 13, Vertex announced a non-exclusive licensing agreement with Editas for its Cas-9 gene-editing technology. This agreement specifically covers Vertex’s gene therapy for sickle cell disease, Casgevy, developed in collaboration with CRISPR Therapeutics and recently approved by the FDA.
Under the agreement, Vertex will pay $50 million upfront, an additional $50 million upon meeting certain conditions, and potential licensing fees ranging from $10 million to $40 million per year until Editas’ gene-editing patent expires in 2034.
Extra Time and Financial Support
Editas had $446 million in cash, equivalents, and short-term investments at the end of Q3. However, with only two clinical-stage candidates, both in early-stage trials, and regulatory approval still years away, Editas needed additional time and resources.
While the licensing agreement provides much-needed financial support, Editas may still face challenges. The market for gene therapies targeting sickle cell disease and beta-thalassemia could potentially be saturated by the time Editas gains approval for its treatments, as Vertex and CRISPR Therapeutics are already well-positioned in this market.
Vertex’s commitment to licensing Editas’ gene-editing technology could set the stage for additional partnerships. With a major player like Vertex on board, other companies may show interest in collaborating with Editas, leading to potential catalyst events in the coming years.
However, while licensing deals provide recurring revenue, it is crucial for Editas to establish strong clinical data and capture significant market share to sustain long-term success. Without these key factors, investors may hesitate to drive up the stock price.
Investors should recognize that Editas remains a risky investment, albeit with reduced risk since partnering with Vertex. Until Editas demonstrates evidence of a sustainable approach, relying solely on licensing deals for income, caution is advised.