Editas Medicine Announces $50+ Million Monetization Financing with DRI Healthcare Trust

Rhea-AI Summary

Editas Medicine (Nasdaq: EDIT) has announced a $57 million upfront cash payment from DRI Healthcare Trust in exchange for certain future license fees and payments under its Cas9 license agreement with Vertex Pharmaceuticals. This non-dilutive capital will support Editas Medicine's pipeline development and strategic priorities.

The deal includes up to 100% of future annual license fees ranging from $5 million to $40 million per year and a mid-double-digit percentage of Editas Medicine's portion of a potential $50 million contingent upfront payment from Vertex. Editas Medicine retains rights to fixed annual license fees for 2024 and a mid-single-digit million-dollar payment upon Vertex achieving certain annual sales milestones.

This agreement follows Editas Medicine's December 2023 non-exclusive license to Vertex for Cas9 gene editing technology in sickle cell disease and beta thalassemia treatments, including CASGEVY®.

Positive

• Received $57 million upfront cash payment, strengthening balance sheet
• Non-dilutive capital to fund pipeline development and strategic priorities
• Potential for additional payments from Vertex's sales milestones

Negative

• Giving up future revenue streams from Vertex license agreement
• Potential loss of up to 100% of certain annual license fees ranging from $5-40 million

Insights

Financial Analyst

This financing deal is a strategic move by Editas Medicine to bolster its balance sheet without diluting shareholder equity. The $57 million upfront cash payment provides immediate liquidity, which is important for a clinical-stage biotech company with ongoing R&D expenses. This non-dilutive capital injection strengthens Editas' financial position, potentially extending its cash runway and reducing the need for near-term equity offerings.

The structure of the deal, involving the sale of future license fees and payments from the Vertex agreement, demonstrates creative financial engineering. It allows Editas to accelerate cash flow from long-term assets, trading future income for present capital. This could be particularly beneficial if the company has high-potential pipeline projects that require immediate funding.

However, investors should note that this deal may impact future revenue streams. The company is foregoing up to $40 million in annual license fees and a portion of a potential $50 million contingent payment. The long-term impact on Editas' financials will depend on how effectively they utilize this capital to advance their pipeline and create value.

Biotech Industry Expert

This financing deal underscores the value of Editas Medicine's intellectual property portfolio, particularly its Cas9 gene editing technology. The willingness of DRI Healthcare Trust to invest $57 million upfront for future payments indicates confidence in the commercial potential of Editas' licensed technology, especially in the context of Vertex's CASGEVY® for sickle cell disease and beta thalassemia.

The retention of rights to fixed annual license fees for 2024 and potential milestone payments suggests that Editas has maintained some upside exposure to the success of Vertex's programs. This balanced approach allows the company to secure immediate funding while still benefiting from future developments.

For the broader biotech sector, this deal highlights an alternative financing mechanism that could be attractive to other companies with valuable IP but near-term revenue. It also reflects the growing interest in gene editing technologies and their potential to generate significant returns, both for developers and investors in the space.

Strengthens balance sheet with non-dilutive capital to enable further pipeline development and related strategic priorities

CAMBRIDGE, Mass., Oct. 03, 2024 (GLOBE NEWSWIRE) -- Editas Medicine, Inc. (Nasdaq: EDIT), a clinical-stage gene editing company, today announced the sale of certain future license fees and other payments owed to Editas Medicine under its Cas9 license agreement with Vertex Pharmaceuticals to a wholly-owned subsidiary of DRI Healthcare Trust (DRI) for an upfront cash payment of $57 million. The upfront cash payment brings non-dilutive capital to Editas Medicine, helping enable further pipeline development and related strategic priorities.

“We are pleased to partner with DRI to monetize a portion of the licensing payments from the Vertex Cas9 license deal we announced last December, providing us with considerable non-dilutive capital that we can put to work immediately as we develop our pipeline of future medicines,” said Gilmore O’Neill, M.B., M.M.Sc., President and Chief Executive Officer, Editas Medicine. “We look forward to an ongoing relationship with DRI as we continue to execute our strategy.”

Under the terms of the agreement, Editas Medicine will receive an upfront cash payment of $57 million in exchange for up to 100% of certain future annual license fees payable to Editas Medicine, ranging from $5 million to $40 million per year (inclusive of certain sales-based annual license fees that may become due) and a mid-double-digit percentage of Editas Medicine’s portion of a $50 million contingent upfront payment for which Editas Medicine is eligible under the Vertex license agreement. In addition to a portion of any such contingent upfront payment, Editas Medicine retains rights to fixed annual license fees for 2024 and a mid-single-digit million-dollar payment due to Editas Medicine in the event of Vertex’s achievement of certain annual sales milestones.

In December 2023, Editas Medicine announced that the Company and Vertex entered into a license agreement. Under the terms of the agreement, Vertex obtained a non-exclusive license for Editas Medicine’s Cas9 gene editing technology for ex vivo gene editing medicines targeting the BCL11A gene in the fields of sickle cell disease and beta thalassemia, including CASGEVY® (exagamglogene autotemcel).

Editas Medicine is the exclusive licensee of certain CRISPR patent estates for making human medicines. These include a Cas9 patent estate owned and co-owned by Harvard University, Broad Institute, the Massachusetts Institute of Technology, and The Rockefeller University.

TD Cowen served as exclusive financial advisor and WilmerHale served as legal advisor to Editas Medicine. Cravath, Swaine & Moore served as legal advisor to DRI Healthcare Trust.

About Editas Medicine
As a clinical-stage gene editing company, Editas Medicine is focused on translating the power and potential of the CRISPR/Cas12a and CRISPR/Cas9 genome editing systems into a robust pipeline of treatments for people living with serious diseases around the world. Editas Medicine aims to discover, develop, manufacture, and commercialize transformative, durable, precision genomic medicines for a broad class of diseases. Editas Medicine is the exclusive licensee of Broad Institute’s Cas12a patent estate and Broad Institute and Harvard University’s Cas9 patent estates for human medicines. For the latest information and scientific presentations, please visit www.editasmedicine.com.

Forward-Looking Statements
This press release contains forward-looking statements and information within the meaning of The Private Securities Litigation Reform Act of 1995. The words ‘‘anticipate,’’ ‘‘believe,’’ ‘‘continue,’’ ‘‘could,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘predict,’’ ‘‘project,’’ ‘‘target,’’ ‘‘should,’’ ‘‘would,’’ and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements in this press release include statements regarding the initiation, timing, progress and results of the Company’s preclinical studies and its research and development programs and the Company’s expected use of the funds received from the financing. The Company may not actually achieve the plans, intentions, or expectations disclosed in these forward-looking statements, and you should not place undue reliance on these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements as a result of various important factors, including: uncertainties inherent in the initiation and completion of pre-clinical studies and clinical trials, and clinical development of the Company’s product candidates and availability of funding sufficient for the Company’s foreseeable and unforeseeable operating expenses and capital expenditure requirements. These and other risks are described in greater detail under the caption “Risk Factors” included in the Company’s most recent Annual Report on Form 10-K, which is on file with the Securities and Exchange Commission, as updated by the Company’s subsequent filings with the Securities and Exchange Commission, and in other filings that the Company may make with the Securities and Exchange Commission in the future. Any forward-looking statements contained in this press release speak only as of the date hereof, and the Company expressly disclaims any obligation to update any forward-looking statements, whether because of new information, future events or otherwise.

This press release contains hyperlinks to information that is not deemed to be incorporated by reference in this press release.

FAQ

What is the value of Editas Medicine's (EDIT) monetization deal with DRI Healthcare Trust?

Editas Medicine (EDIT) will receive an upfront cash payment of $57 million from DRI Healthcare Trust in exchange for certain future license fees and payments under its Cas9 license agreement with Vertex Pharmaceuticals.

How will Editas Medicine (EDIT) use the funds from the DRI Healthcare Trust deal?

Editas Medicine (EDIT) plans to use the non-dilutive capital from the DRI Healthcare Trust deal to enable further pipeline development and related strategic priorities.

What rights does Editas Medicine (EDIT) retain in the monetization deal with DRI Healthcare Trust?

Editas Medicine (EDIT) retains rights to fixed annual license fees for 2024 and a mid-single-digit million-dollar payment due upon Vertex's achievement of certain annual sales milestones.

When did Editas Medicine (EDIT) enter into the Cas9 license agreement with Vertex Pharmaceuticals?

Editas Medicine (EDIT) announced the Cas9 license agreement with Vertex Pharmaceuticals in December 2023.