Editas Medicine, Inc. (EDIT) stock intrinsic value fair value estimate & owner earnings analysis

Editas Medicine develops gene-editing medicines based on CRISPR/Cas9 technology. It has no product of its own on the market, and its lead program, EDIT-401, was still preclinical when the latest annual report was filed. EDIT-401 is designed as a one-time treatment that lowers LDL cholesterol by editing the LDL receptor gene. In animal studies it reduced LDL cholesterol by 90% or more. The company said it planned to file to start human testing in patients with inherited high cholesterol by mid-2026, with early human data expected by the end of 2026 and topline results from the first trial in 2027. The company has reported an operating loss in every year since it was founded, and its accumulated deficit was $1.6 billion at the end of 2025. How we measure earnings: we start from cash generated by operations and subtract working-capital swings, stock compensation, and the part of capital spending needed just to stay in place. On that basis the business has consumed cash in every one of the last ten years. Owner earnings per share ran from a loss of $3.16 (2022) to a loss of $1.62 (2025), with a ten-year median loss of $2.63 per share. Large one-time receipts, such as the $81.7 million increase in deferred revenue in 2017 and the $50 million Vertex upfront payment in late 2023, are timing items and are not treated as recurring earnings. Lease costs are treated as a real operating cost. The one contract that produces cash is the license to Vertex covering the BCL11A gene, which Vertex uses for its CASGEVY sickle cell and beta thalassemia therapy. Vertex paid $50 million up front in late 2023 and $10 million annual fees in early 2024 and early 2025, and the agreement provides further annual fees of $5 million to $40 million through 2034, plus a possible $50 million contingent payment. However, Editas sold most of that stream: DRI Healthcare paid $57.0 million up front and is buying up to 100% of certain future fixed and sales-based annual fees, and Editas also owes a share to the Broad Institute and Harvard. Editas kept rights to certain portions of certain sales-based fees and the contingent payment, but we cannot quantify what remains after those obligations, so we give the Vertex agreement no future value. What the shares are worth: with nothing that produces earnings, the only value we can point to is cash left over after the spending needed to run the company. Cash and cash equivalents were $181.8 million and short-term investments were $29.8 million at June 30, 2026, together $211.6 million, up from $146.6 million at year-end 2025. Over the same time the share count rose sharply, from a weighted average of 88.7 million shares in 2025 to 119.3 million in the second quarter of 2026, so existing holders were diluted. Spending has fallen: cash used in operations was $165.2 million in 2025, $210.3 million in 2024, and $52.6 million in the first half of 2026 versus $98.0 million in the first half of 2025. Year-one growth in our base case therefore follows the recent trend: owner earnings per share improved from a loss of $2.93 in 2024 to a loss of $1.62 in 2025, and we assume the first-half 2026 pace of roughly $105 million a year continues, which is well below the 2025 rate because spending was already cut, as the reported 2025 and first-half 2026 cash figures show. Bear case, $0 per share: spending stays near the 2025 rate of $165 million a year. Cash of $211.6 million would last about 1.3 years at that rate, after which the company would need to sell more shares, and nothing is left for current holders. Base case, $0.84 per share: spending continues at about $105 million a year for one year, which is about the time the company has guided to human data, and the program does not yet earn anything we can count. We then assume spending stops. We deduct the cost of that year (about $102 million in today's money) and the roughly $3.5 million of 2027 lease payments that fall after that point and the $6.0 million due in 2028 (about $8.6 million together in today's money), leaving about $100.8 million, or $0.84 across 119.3 million shares. Bull case, $1.24 per share: spending continues at the same pace for only six months, through the end-2026 date the company has guided to for early human data, and then we assume it stops. That leaves about $147.8 million after about $51.9 million of spending and about $12.0 million of remaining 2027 and 2028 lease payments in today's money, or $1.24 per share. This case does not credit any value from a successful cholesterol therapy, because results from human patients do not exist yet. What could make this wrong: if EDIT-401 or another program works in people, the shares could be worth far more than these cases. We leave that out because there is no human data to point to. On the other side, if the company keeps spending and issues more shares, holders get less than the base case. The company said in March 2026 that its cash would fund operations for at least the next twelve months, and that report contains no going-concern warning. Because the outcome depends almost entirely on cash left over rather than on earning power, the margin-of-safety price is set at a small fraction of the base case.