Summary
- Today, we are putting Beam Therapeutics back in the spotlight after an initial article on this gene editing name last summer.
- Beam Therapeutics' stock has sunk by a third since that avoid recommendation, but the shares have recently been upgraded by several analyst firms.
- Should investors buy the dip in Beam Therapeutics Inc. now? An update to the investment analysis is provided in the paragraphs below.
"To be a philosopher, just reverse everything you have ever been told...and have a sense of humor doing it. " - Criss Jami
Our first look at gene editing concern Beam Therapeutics Inc. ( BEAM ) was in mid-September. We concluded that article with this recommendation:
This is not the kind of environment that shares of high beta, early stage development companies typically do well in. Outside an unforeseen event (for example, a buyout by Pfizer), the stock is most likely dead money at best until overall market dynamics improve. Therefore, for the present moment, BEAM goes down as an AVOID for now ."
The stock is down by a third since our original investment thesis. One of the reasons we passed on making a positive investment recommendation on the stock was that, " The analyst community, in general, does not have a positive view on BEAM stock after its recent runup ."
Well, the stock has given up that runup, and the analyst community has become noticeably more positive on BEAM over the past couple of months. Therefore, we will revisit Beam Therapeutics. An updated analysis follows below.
Company Overview:
This clinical staged developmental concern is focused on developing precision genetic medicines through base editing. It has multiple candidates within its pipeline.
January Company Presentation
The company has a four-year research collaboration deal with drug giant Pfizer Inc. ( PFE ) in vivo base editing programs for three targets for rare genetic diseases of the liver, muscle and central nervous system. This agreement was inked in early 2022. It included a large $300 million upfront payment to Beam. Beam Therapeutics can also garner potential milestone payments of up to $1.35 billion. In addition, it could earn royalties on any future commercialized sales. Beam Therapeutics Inc. stock currently trades just under $40.00 a share and sports an approximate market capitalization of $2.8 billion.
January Company Presentation
Recent Developments:
There have been a few developments around the company's pipeline since we last looked in on Beam Therapeutics Inc. In early November, Beam postponed filing an investigational new drug or IND for it base editing candidate BEAM-102. Instead, it will focus on developing candidate BEAM-101, which is also targeting sickle cell disease [SCD], and is currently enrolling patients in a Phase 1/2 clinical study called BEACON.
January Company Presentation
The same day, the FDA placed a hold on Verve Therapeutics, Inc.'s ( VERV ) IND for its gene editing candidate VERVE-101. This in vivo base editing candidate being looked at as a treatment for high cholesterol and was licensed from Beam Therapeutics. Pfizer and Verve are just two of several names Beam Therapeutics has partnered with.
January Company Presentation
In early December, the FDA lifted clinical hold and greenlighted Beam's IND for its blood cancer therapy candidate BEAM-201, which will target relapsed/refractory T-cell acute lymphoblastic leukemia (T-ALL)/T-cell lymphoblastic lymphoma (T-LL).
January Company Presentation
Like all gene editing concerns, Beam's pipeline is advancing slowly. Analyst opinion, however, has improved dramatically on the shares, starting late last year.
Citigroup kicked off the parade of analyst kudos on December 13th when it initiated coverage on Beam Therapeutics with a Buy rating and $62 price target. Citi's analyst noted that " the preclinical data for the company's lead asset, BEAM-101 for sickle cell disease, was competitive" and that BEAM-101 could see approximately $1.2 billion in peak sales if eventually approved.
A week later, BMO Capital Markets upgraded the stock from Market Perform to Outperform and bumped their price up five bucks a share to $66. The analyst there cited two key catalysts set to occur from licensing partner Verve Therapeutics in 2023. The first potential catalyst would obviously be the lifting of the current FDA hold on VERVE-01. The second would be clinical data from an early stage trial once the hold is lifted and the study can proceed.
Finally, Cantor Fitzgerald at the beginning of this month placed an Outperform rating and $62 price target on BEAM, noting the company was developing " novel medicines that are highly differentiated from competing therapies ."
Balance Sheet & Insider Activity:
Insiders certainly aren't buying the recent pullback in the equity. They have been frequent and consistent sellers of shares over the past couple of years. So far in 2023, they have disposed of nearly $7 million collectively. In addition, approximately 20% of the outstanding float in the shares is held short. The same level as in September, even as the stock has lost a third of its value.
The company ended the third quarter with approximately $1.1 billion in cash and marketable securities after posting a net loss of $109.6 million for the quarter. The company has no long-term debt. The next earnings report is expected on February 28.
Verdict:
January Company Presentation
Beam Therapeutics Inc.'s stock is down roughly 35% since our first look at the company. Positive analyst coverage has certainly picked up around the company over the past few months. I do wish the short percentage in the stock would have declined and/or insiders would have stepped up and purchased the dip in the stock.
January Company Presentation
However, the company has plenty of cash on hand and is advancing on multiple fronts within its pipeline. Beam Therapeutics also has several key strategic partnerships. With some catalysts in 2023 and potential commercialization of BEAM-301 and/or BEAM-302 as early as sometime in 2024, Beam Therapeutics Inc. stock now seems worthy of a small, speculative " watch item" position within a well-diversified biotech portfolio. I have established a small holding in my personal portfolio in BEAM using covered call orders.
January Company Presentation
January Company Presentation
"A happy man doesn't reconsider life ." - Eraldo Banovac
For further details see:
Beam Therapeutics: An Upgraded View