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7 gene editing stocks promising to change our DNA
SEP 15, 2021
Gene editing stocks are ready to take off as the underlying tech moves from fiction to fact
In the 1980s, the field of genetics surged in popularity. At the time, I’m sure there were many articles promising investors that genetics stocks were on the cusp of spectacular gains. Investors who were looking for short-term payoffs then were disappointed, but now, gene editing stocks look far more promising.
Researching the genetic origin behind certain diseases and conditions has led to truly breakthrough treatments. Almost all of us know a cancer survivor or someone with a chronic condition who is living a longer, more fulfilling life than was ever thought possible. Our deeper understanding of genetics has a lot to do with that.
Once scientists identified problematic gene sequences, they began searching for a way to selectively delete or change certain parts of them. That’s where CRISPR technology comes in.
Currently, gene editing with CRISPR is encumbered by enormous amounts of data that researchers have struggled to comb through. However, that is changing quickly.
The key today, as Luke Lango wrote this summer, is the convergence of artificial intelligence and gene editing. This gives companies the ability to comb through and understand the voluminous data.
That means ideas that were once the stuff of science fiction are becoming scientific fact. And that’s why investors are looking at companies that are on the forefront of this movement.
These companies are not yet profitable, as many are in the pre-revenue stage. But that’s okay. This is a multi-year event that’s unfolding. Time is on your side.
If you’re looking to make a speculative buy in this sector, here are seven gene editing stocks to consider:
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Crispr Therapeutics is a pioneer of the CRISPR/Cas9 gene editing platform. Like other companies in the sector, it illustrates what investors are dealing with in this growing space.
Crispr has four products in its pipeline, but is probably several years away from bringing any of them to market. The one that is closest to approval is being co-developed and co-commercialized with Vertex Pharmaceuticals (NASDAQ:VRTX). The company recently made a $900 million pledge to Crispr.
That’s one of the challenges of investing in gene editing stocks. Bringing products to market requires resources that many companies like Crispr lack. And while the support of Vertex will help a great deal, Vertex will get 60% of the profits from future sales.
CRSP stock briefly got caught up in the Reddit stock trade in January, soaring above $200 per share. Since then, the stock has declined significantly. However, it now trades at a significant discount to the consensus price target set by analysts.
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Among gene editing stocks, Intellia is one of the few pure-play CRISPR/Cas9 picks.
If you were an investor in NTLA stock on June 21, you would have been delighted with your year-to-date (YTD) gain of 42%. But Intellia was just getting started.
The stock gapped up to close at $171.65 on July 1. Even though the stock has fallen since that point, investors are still sitting on 170% gains for the year.
Investors were enthusiastic because the company announced that its leading drug candidate, NTLA-2001, saw impressive phase one results. The drug is designed to treat transthyretin (ATTR) amyloidosis, a rare genetic disease. NTLA-2001 is probably several years away from approval, but a successful early stage trial is a heartening result.
Intellia has several other drug candidates in its pipeline, which means investors have more than one opportunity to see the company deliver. NTLA stock is covered by 17 analysts that, on average, rate it a “buy.”
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Regeneron has become a household name because of its monoclonal antibody treatment for Covid-19. REGEN-COV2 has been a major driver of revenue for the company, and that is likely to continue for the next several quarters.
But that is only one of several drugs that Regeneron has on the market. There’s more to like about the company beyond its Covid-19 treatment.
Regeneron also invests in many other companies. As it relates to the field of gene editing, Regeneron is partnering with Intellia to bring its ATTR drug to market.
In June 2021, Regeneron and Intellia expanded their partnership. A key element of that expanded agreement allows Regeneron to use Intellia’s tech to develop and commercialize therapies that will re-engineer cells.
If you purchased REGN stock on Jan. 31, 2020, you’re sitting on a tidy 96% gain. The stock is now bumping up against the consensus price target of analysts. However, since reporting earnings on Aug. 5, REGN stock has received several analyst upgrades with price targets that suggest there is more upside potential.
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Editas is another gene editing company that uses CRISPR/Cas9 technology. In what is a familiar story in this sector, Editas does not currently have a product on the market. Instead, it’s all about the pipeline, and that’s where the company shines.
Its most promising candidate is EDIT-101, which targets the gene responsible for Leber Congenital Amaurosis, the leading cause of pediatric blindness.
However, Editas has about half of the market cap of Crispr Technologies. This could make it a savvy addition to a portfolio of gene editing stocks, which may explain investors’ enthusiasm for its shares. EDIT stock has risen nearly 90% in the last 12 months and is currently trading above the expectations of analysts.
Another reason for investor optimism could be the company’s cash position. At this point, Editas appears to be capitalized through 2023. That may buy it enough time to bring one of its candidates to market.
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Up to this point, we’ve been focusing on companies that use the CRISPR/Cas9 platform — with good reason. However, investors should note that there are other gene editing approaches being explored, and that’s the case with Cellectis.
The company is using a gene-editing technology called TALEN, and its focus on oncology should make it a favorite of investors. Cellectis has six candidates in its pipeline, three of which are wholly controlled by the company.
CLLS stock is down 27% in the last 12 months. However, the company was also caught up in the meme stock wave back in January. The stock briefly climbed to more than $34 per share.
Perhaps investors that were caught in the subsequent selloff are being cautious. If that’s the case, they may wish to take a bullish signal from analysts, who give the stock a 12-month price target around $33. That would be a 137% gain.
Beam Therapeutics is another company that is taking a different approach to gene editing by specializing in base editing.
This approach does not attempt to “cut” the genome. Instead, according to the company’s website, base editors are “pencils” that “enable erasing and rewriting one letter of the genome at a time.”
Beam has an extensive pipeline. However, like many companies on this list, it is probably years away from having a product ready to go to market.
Analysts have a consensus buy rating for BEAM stock with a price target that gives investors more than 20% upside. Additionally, Bank of America (NYSE:BAC) just initiated coverage on the company with a $150 price target.
BEAM stock is showing a nice technical setup, as prices are consolidating with the stock trading in the upper half of its 52-week range. Short interest has also increased slightly in the last month, putting the short percentage of total float above the 10% level.
Closing out our list of gene editing stocks is Bluebird Bio, a small-cap company with a $1.21 billion market capitalization. The company does not use the CRISPR/Cas9 gene editing platform, but it has multiple products on the market or in its pipeline.
Bluebird illustrates the risks involved in investing in the gene editing sector. BLUE stock is down about 10% since the release of its last earnings report. And while it would be easy to place the blame on the company’s poor financial results, that would be oversimplifying the problem.
The real issue is that the lead candidate in the company’s pipeline saw its Phase 3 clinical trial suspended by the Food and Drug Administration (FDA) after a patient in the trial was diagnosed with myelodysplastic syndromes (MDS).
The company is optimistic, believing the trial will resume in 2021. But until investors get more clarification on that, BLUE stock will likely remain depressed.
A potential catalyst for BLUE stock is the spinoff of its oncology unit, now named 2seventy. This will allow Bluebird to have a more targeted focus.
While the analyst community gives the stock a “hold” rating, it does have a 12-month price target over $34. That would be a gain of more than 37% from its level as of this writing.