On Tuesday, Jones Trading initiated coverage on Beam Therapeutics Inc (NASDAQ:BEAM), assigning a Hold rating to the stock. The firm highlighted that Beam Therapeutics stands out as a leading company with a base editing platform and an enterprise value (EV) over $1.3 billion.
However, the firm pointed out that Beam's lead indication in sickle cell disease (SCD) is entering a highly competitive market. Similarly, its second indication for Alpha-1 Antitrypsin Deficiency (AATD) is also in a space with a variety of competing treatments, including gene editing, gene therapy, RNA therapy, augmentation therapy, and small molecule approaches.
Beam Therapeutics' position in the market is challenged by Editas Medicine (NASDAQ:EDIT), which is significantly ahead in the SCD space, with pivotal data expected by the end of 2024 and in 2025. In the AATD sector, Intellia Therapeutics (NASDAQ:NTLA), along with seven other companies, is ahead of Beam, boasting data ranging from Phase 1 to late Phase 2 trials. This competitive landscape informs Jones Trading's cautious stance.
The firm's valuation method involves a combination of discounted cash flow (DCF), sum of the parts (SOTP) net present value (NPV), and price/earnings (PE) ratio, which collectively suggest that the price per share for Beam Therapeutics does not meet the 15% upside threshold that would warrant a more bullish rating. Consequently, Jones Trading has decided to commence its coverage with a neutral Hold rating for Beam Therapeutics' stock.
Beam Therapeutics' future in the market will be closely watched as it navigates through the competitive fields of SCD and AATD, where the company's success hinges on its ability to differentiate and advance its therapies amidst a crowded space of established and emerging treatments.
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