What happened

Shares of Editas Medicine (NASDAQ:EDIT) and Beam Therapeutics (NASDAQ:BEAM) rose as much as 23% and 29%, respectively, today after the pair were rumored to be considering a merger. Although investors shouldn't invest based on speculation, a merger would make sense on multiple fronts.

The duo already have an agreement in place to collaborate on genetic medicines, but the struggling pipeline of Editas Medicine could receive a significant boost from Beam Therapeutics. It would also allow Editas shareholders to avoid many of the technical pitfalls of first-generation CRISPR gene-editing tools, which have yet to be adequately reflected in stock prices. Of course, the flip side is that the merger doesn't make as much sense for Beam Therapeutics.

As of 12:50 p.m. EDT, both small-cap stocks had settled to gains of about 14%.

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There are multiple reasons a merger makes sense. Consider that:

There's not much to the report that Editas Medicine and Beam Therapeutics are considering a merger. Only one digital publication mentions "chatter" without providing any follow-up details. The rumors are at least plausible given the ties to the Broad Institute and overlap of the scientific founders, but investors simply don't have much to go on. That said, a merger would make more sense for Editas Medicine than Beam Therapeutics, as the latter has a much stronger technical foundation to lean on for the long haul.

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Here's Why Shares of Editas Medicine and Beam Therapeutics Are Soaring Today - Motley Fool