EDIT - Beam Therapeutics: Base Editing Leader With Major Catalyst Next Year

2023-05-20 08:00:00 ET

Summary

• Beam is a leader in base editing and has strong lab data.
• It has a huge amount of cash and a major deal with Pfizer.
• Next year, Beam will produce first human data.

I covered Beam Therapeutics (BEAM) in April last year, when the stock had a market cap of $3.7bn. Today, despite some derisking events, it has a market cap of $2.6bn. The stock price has fallen 30% as well.

Co-founded by David Liu, the Broad Institute and Harvard biochemist who also founded Editas, Beam is the leading developer of genetic therapies using base editing. Base editing is the simplest form of gene editing that changes a single DNA letter. It also has exclusive rights to prime editing technology, which can insert or delete longer DNAs.

Interestingly, while prime editing is the next generation technology compared, in some respects, to even CRISPR/Cas9, Beam's current pipeline is entirely focused on base editing. It has only one clinical program, BEAM-101 for Sickle Cell Disease or SCD, and this program is all base editing. Its IND was cleared last year.

Beam also licensed its base editing technology to Verve Therapeutics (VERV), whose VERV-101 uses it to treat heterozygous familial hypercholesterolemia (HeFH). Last year, this program was put on a clinical hold on what are exclusively safety issues. I discussed this in my February article on Verve. The problem is, this is not an one-off event. Beam's own BEAM-201's IND targeting CD7 for relapsed, refractory T-cell acute lymphoblastic leukemia was also put on a clinical hold last year. The issues were, again, safety related. It was lifted in a few months, so one would expect a similar situation obtaining with Verve. However, persistent safety-related questions from the FDA about base edited molecules may (or may not) be a bad thing. That depends on how these get resolved, and how soon.

BEAM-101 has broadly successful data in animal studies. The technology edits a certain point mutation, inducing it to cause these cells to exhibit a hereditary trait seen in certain individuals where they persist with Fetal hemoglobin or HbF throughout their lives. Thus, the technology is able to improve the volume of HbF available in the body, which, it is conjectured, will be useful for patients with SCD and thalassemia. Animal studies have shown robust HbF induction using this technology.

As I noted earlier :

Last year, Beam went up considerably after preclinical data was presented in two abstracts at ASH. I discussed this data in detail earlier. One abstract showed that Beam manages to bypass two potential off-target effects of base editing. The other one showed that BEAM-101 and 102 were both able to achieve very high levels of allelic editing.

An analyst noted the following competitive data for BEAM-101 in SCD versus Editas, which showed higher HbF induction for Beam-101:

…Editas Medicine's (EDIT) EDIT-301 demonstrated proof-of-concept for editing the promoter region of HGB 1/2 leading to 45.4% fetal hemoglobin (HbF) induction, while preclinical data for BEAM-101 was ~65% HbF induction.

The BEAM-102 program's IND was postponed last year in favour of pushing BEAM-101 forward. After this data, Beam got into a major deal with Pfizer with an upfront payment of $300M and potential milestone payments of up to $1.35B, plus royalties. As deals go, this was a good deal for an almost preclinical company. This deal brings together Beam's base editing expertise with Pfizer's LPN (lipid nanoparticle) expertise. The two companies will use mRNA and lipid nanoparticles to deliver base editors to the target organs.

All this was in April last year, and since then, there have been a few developments. First and most important are the clinical holds we just discussed - Beam's hold has been lifted. Since then, the BEACON trial for BEAM-101 in SCD has activated multiple sites and is enrolling patients, as of the latest update . Further highlights:

In the sentinel cohort, which is designed to include three patients treated on a sequential basis, the first patient enrolled in the BEACON trial in late 2022 has been withdrawn from the study by the investigator due to personal, non-medical reasons prior to treatment with BEAM-101.

Two additional patients have been enrolled in the sentinel cohort and are undergoing the screening procedures required to enable mobilization and ultimately treatment with BEAM-101.

Beam expects to fully enroll the sentinel cohort in 2023. The company is also planning to begin a clinical trial for BEAM-201 this year. They also plan to report BEACON data in 2024. This is important because this is going to be their first human patient data. However, there is no other major development here. We are going to be in a long waiting for mode for the next 3-4 quarters, until Beam produces the BEACON data.

Financials

BEAM has a market cap of $2.57bn and a cash balance of $1.1bn. They have a debt of some $182mn. R&D expenses were $99.6 million for the first quarter of 2023, while G&A expenses were $23.5. At that rate, they have cash for 8-9 quarters.

The company has high institutional presence, although retail holders are also around. Keyholders are Cathie Wood's ARK Investment, and then the usual large funds. Insiders do not buy stock; it is mostly a lot of sales and some option exercises.

Bottomline

BEAM is trading near its 52-week lows. Current valuation is much lower than what it used to be two years ago, when they also had less cash and even less data. They are going to get human trial data next year. There are no signs yet, from the lab, that this will be poor. Big Pharma is very interested in the space, and you will hear good things about base editing from around the academic world. I think a small pilot makes sense at these prices, with an averaging down later if necessary. I am going to buy a few shares.

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