Buying Opportunity in CRISPR Gene Editing Market

By Anthony Summers
Senior Research Analyst

Market Trends

Earlier this year, Bill Gates wrote an op-ed for Foreign Affairs magazine in which he advocated for CRISPR and related gene editing technologies.

“Over the next decade,” Gates wrote, “gene editing could help humanity overcome some of the biggest and most persistent challenges in global health and development.”

Today, gene editing research is one of the most exciting and promising trends in global healthcare. Last year, the CRISPR gene editing market alone was valued at approximately $546 million.

By 2023, the market is expected to reach $5 BILLION.

Genomics research holds the potential to unlock the code to treating previously incurable rare diseases. And recent gene editing breakthroughs have made such treatments not only possible but probable.

Several different gene editing approaches have emerged, but the most promising to date has focused on CRISPR.

The CRISPR/Cas9 system is a genome editing defense mechanism found in bacteria. Methods developed based on this system allow scientists to edit and correct mutated or disease-causing genes.

Currently, there are no FDA-approved CRISPR treatments in clinical trials.

But investors who want to own a stake in the CRISPR biotech revolution have a few options on the public market.

First and foremost is CRISPR Therapeutics (Nasdaq: CRSP), which has become the flagship stock for the industry.

The company was co-founded in 2013 by Emmanuelle Charpentier, who – together with researcher Jennifer Doudna – developed the CRISPR/Cas9 gene editing method most widely used today.

As a result, it’s been the most popular CRISPR stock. And the company is inking partnerships with many big drugmakers interested in developing gene editing treatments.

But it’s not the only stock with great promise.

Editas Medicine (Nasdaq: EDIT) is another biotech company focused on CRISPR-based treatments. It received early funding from Bill Gates and other investors back in 2015 and has several treatments in its pipeline.

Intellia Therapeutics (Nasdaq: NTLA) has also pushed forward as a leading competitor in the field.

But while excitement behind this breakthrough technology has given these and other stocks momentum, the industry hit a bit of a snag recently.

A couple of studies published this past summer suggested that gene editing using CRISPR could increase the risk of cancer.

As a result, shares of biotech companies involved in gene editing began to slide. And that slide was made worse by the broader market correction.

Skeptics have used the studies as an excuse to throw bearish sentiment at the industry, but these studies are far from a deal breaker.

For example, one study focused on how inhibiting a special p53 protein – a protein important for tumor suppression – can help make gene editing more efficient.

But as a spokesperson from Editas noted, p53 inhibition is not needed for developing gene correction treatments.

And last month, the FDA made the exciting decision to lift its hold on clinical trials for a new gene editing treatment for sickle cell disease being developed by CRISPR Therapeutics and Vertex Pharmaceuticals (Nasdaq: VRTX).

So, despite the hiccup, momentum in this burgeoning industry hasn’t – and won’t – stop.

That’s why I believe the recent correction presents a good opportunity to reconsider these beaten-down stocks.

Gene editing stocks are trading at multiyear lows on the basis of price-to-sales.

To date, CRISPR Therapeutics is one of the more expensive players in the industry, yet it’s trading at a deep discount compared with past valuations.

Intellia Therapeutics – a close competitor of CRISPR Therapeutics – is on the cheaper end of the spectrum, in line with its 2017 valuation.

There are also other gene editing companies working on non-CRISPR-based treatments.

For example, Sangamo Therapeutics (Nasdaq: SGMO) is developing treatments using zinc finger nucleases (ZFNs) – an alternative to CRISPR.

And Bluebird Bio (Nasdaq: BLUE) is using a wide range of methods – including CRISPR, ZFN and others – to develop treatments.

Overall, adding some exposure to the gene editing biotech sector will undoubtedly prove to be a smart investment – especially at today’s relatively low valuations.

Good investing,

Anthony