As the old saying goes, strike when the iron is hot. That's what a new gene editing start-up named Beam Therapeutics hopes to do by conducting an initial public offering (IPO) less than two years after forming and more than a year before it asks regulators for permission to begin clinical trials. Given the excitement over genetic medicines, it might be wise to take advantage of the open window now.

Assuming the IPO proceeds as planned, Beam Therapeutics will offer investors a second chance to own a next-generation gene editing technology platform and the first next-generation CRISPR tool. Here's why investors might want to keep the business on their radar.

What makes Beam Therapeutics unique?

Beam Therapeutics bears some similarities to Editas Medicine (NASDAQ:EDIT). Both trace their origins back to the Broad Institute in Boston. They share a trio of all-star scientific founders: Dr. Feng Zhang, Dr. David Liu, and Dr. Keith Joung. Each company's technology platform is built on CRISPR-based tools.

But the differences are more important for investors. Editas Medicine is developing gene editing tools that require Cas enzymes to cut both strands of DNA. While that theoretically provides the ability to delete or insert genetic sequences to treat diseases, the approach relies on innate DNA repair mechanisms. When the built-in safeguards on those mechanisms break down, cells can turn cancerous. CRISPR-CasX tools can also create unintended genetic edits, and have a relatively low efficiency.

Beam Therapeutics is developing gene editing tools based on a new technique called base editing. The enzymatic approach doesn't make double-stranded breaks in DNA. Instead, it induces chemical reactions to change the sequence of the genetic alphabet -- A (adenine), T (thymine), C (cytosine), and G (guanine) -- one letter at a time. Base editing can make A-to-G edits, C-to-T edits, G-to-A edits, and T-to-C edits.

The next-generation approach decouples CRISPR gene editing tools and the need to make double-stranded breaks in DNA, which is the most pressing concern facing Editas Medicine, CRISPR Therapeutics (NASDAQ:CRSP), and Intellia Therapeutics (NASDAQ:NTLA).

Clinical Consideration CRISPR-CasX Gene Editing CRISPR Base Editing Does it cut DNA? Yes, enzymatically cuts both strands of DNA No Can be used to insert new genetic material into a sequence? Yes No, but it can enzymatically change an existing DNA sequence Does it trigger DNA repair mechanisms? Yes No

A range of partnerships to expand capabilities

While base editing can't make every possible edit (example: A-to-T edits), it can target a number of disease-driving genetic errors. And Beam Therapeutics has inked important collaboration deals to augment the capabilities of its technology platform:

In May 2018, Beam Therapeutics signed an exclusive license agreement granting it access to certain base editing and CRISPR gene editing patents owned by Editas Medicine. However, the start-up would have to pay Editas Medicine milestone payments for products developed, and is also on the hook for certain payments to the Broad Institute related to the patents in the deal. In September 2018, Beam Therapeutics acquired Blink Therapeutics, a start-up from the Broad Institute using base editing to engineer RNA. It must make payments to the Broad Institute on behalf of the subsidiary. In May 2019, Beam Therapeutics and Bio Palette of Japan signed an agreement to share their base editing patent portfolios. In October 2019, Beam Therapeutics signed a collaboration with Prime Medicine to license certain patents related to CRISPR prime editing, yet another gene editing technique. Prime Medicine also traces its roots back to the Broad Institute.

After reviewing the details, investors see that there's a tangled web of related transactions that all flow back to the Broad Institute, which is going to great lengths to extract every ounce of value from its scientific discoveries. Similar actions have caused a stir in the scientific community in recent years. If the profit-seeking terms of the non-profit research institution's agreements are too strict, then it may pose a risk to Beam Therapeutics at the expense of investors.

This pipeline is buzzing with activity

Investors familiar with gene editing stocks will immediately recognize the programs included in the pipeline of the base editing pioneer. The lead assets take aim at blood disorders, and are part of a push to engineer better immunotherapies to treat cancer.

In beta thalassemia and sickle cell disease, Beam Therapeutics is first attempting to increase the production of fetal hemoglobin, which confers natural immunity to both conditions. That's similar to the lead drug candidate of CRISPR Therapeutics, which recently demonstrated promising results from the first two patients in a phase 1 clinical trial.

A second program in sickle cell disease aims to directly correct the genetic mutation responsible for the blood disorder. It involves changing a single base -- perfectly suited for base editing.

In immunotherapy, Beam Therapeutics is working to engineer better chimeric antigen receptor T (CAR-T) cells that can be used as cellular medicines to treat various types of cancers. CRISPR Therapeutics, Editas Medicine, and Intellia Therapeutics are deploying CRISPR gene editing in the same applications, while Precision BioSciences (NASDAQ:DTIL) is leaning on ARCUS gene editing to do the same. The latter's lead drug candidates are in immunotherapy, a unique distinction among gene editing stocks.

Beam Therapeutics' pipeline also includes a range of potential assets aimed at gene correction, gene silencing, and more complex editing, but none have entered clinical trials. The company doesn't expect to file investigational new drug (IND) applications -- required for regulators to sign off on the start of clinical trials -- until 2021. But since the window for an IPO might be slammed shut by then, the business is exploring a market debut now.

A (potential) gene editing stock to watch

There aren't many details in the company's S1 filing concerning a potential date for a market debut or how much money the company is aiming to raise. The filing says $100 million, but that's just a placeholder for the initial submission. The actual amount will be determined once Wall Street gets an idea of the level of interest in an IPO, which will determine the number of shares to offer and the price.

Assuming the IPO takes place, Beam Therapeutics and base editing offer investors a technological upgrade over the first-generation gene editing platforms leaning on CRISPR-CasX tools. The next-generation tools aren't perfect, and there are risks related to the agreements with the Broad Institute and sister start-ups, but this is certainly a gene editing stock worth watching.