Shares of Editas Medicine (NASDAQ: EDIT) and Beam Therapeutics (NASDAQ: BEAM) rose as much as 23% and 29%, respectively, today after the pair were rumored to be considering a merger. Although investors shouldn't invest based on speculation, a merger would make sense on multiple fronts.
The duo already have an agreement in place to collaborate on genetic medicines, but the struggling pipeline of Editas Medicine could receive a significant boost from Beam Therapeutics. It would also allow Editas shareholders to avoid many of the technical pitfalls of first-generation CRISPR gene-editing tools, which have yet to be adequately reflected in stock prices. Of course, the flip side is that the merger doesn't make as much sense for Beam Therapeutics.
As of 12:50 p.m. EDT, both small-cap stocks had settled to gains of about 14%.