Our indicative theme of Gene Editing stocks is down by about 24% year-to-date, compared to the S&P 500 which has remained almost flat over the same period. The recent sell-off comes on the back of rising bond yields, which have caused investors to rotate out of technology and other growth stocks. Gene Editing players have been particularly badly hit considering that they are mostly clinical-stage biotechs with high betas making them more sensitive to market movements. That said, not much has changed fundamentally for most of the companies in our theme. This could be a good time to look at these stocks, considering that the companies are working on technologies that could likely revolutionize medicine and treat conditions ranging from cancer to rare genetic conditions.
Within our theme, Editas Medicine (EDIT) has been the worst performer, declining by about 42% year to date, partly due to its big rally late last year and also due to some changes at the top management level. The company has two clinical studies underway. It is dosing patients for an early stage study for the treatment of rare genetic eye disease and has a phase 1/2 study for a drug treating sickle cell disease. On the other side, Intellia Therapeutics (NTLA) was the best performer, remaining roughly flat year-to-date. The company has early clinical stage trials focused on the treatment of transthyretin amyloidosis and sickle cell anemia, and also has eight other candidates which are in the research or pre-clinical stages. See our earlier updates below for a detailed look at the components of our Gene Editing stocks theme.
[2/10/2021] Gene Editing Stocks To Watch
Our indicative theme of Gene Editing Stocks is up by about 187% since the end of 2018 and by about 5% year-to-date. Gene editing has received more attention this year, as scientists used the technology to cure progeria syndrome in mice, raising hopes for therapy in humans as well. Progeria is a very rare genetic condition that causes premature aging in children, shortening their lifespan to approximately 14 years. Investors also remain interested in the sector, given that it could revolutionize medicine and also due to the fact that absolute valuations aren’t too high, with most of the companies remaining in the mid-cap space.
Within our theme, Intellia Therapeutics (NASDAQ: NTLA) has been the strongest performer year-to-date, rising by around 35% since early January. The company recently outlined strategic priorities for 2021, which include the continued advancement of a phase 1 study for a single-course therapy for protein misfolding disorder and the planned submission of regulatory applications for the treatment of acute myeloid leukemia and hereditary angioedema this year. On the other side, Vertex Pharmaceuticals (VRTX), has declined by about 10% year to date, driven partly by weaker than expected Q4 2020 results. See our updates below for a detailed look at the components in our theme.
[1/27/2021] How Are Gene Editing Stocks Faring?
Gene-editing technology is used to insert, edit, or delete a gene from an organism’s genome, and shows promise in treating medical conditions ranging from cancer to rare genetic conditions. Our indicative theme on Gene Editing Stocks has returned over 170% since the end of 2018, compared to the broader S&P 500 which is up by about 54% over the same period. The theme has returned about 2.4% year-to-date. Investor interest in gene-editing remains high, given the upside potential of the sector and considering that absolute valuations aren’t too high, with most of the stocks remaining in the mid-cap space. Intellia Therapeutics (NASDAQ: NTLA) has been the strongest performer in our theme this year so far, rising 18% since early January. The gains come as the company has outlined strategic priorities for 2021, which include the continued advancement of a phase 1 study for a single-course therapy for protein misfolding disorder and the planned submission of a regulatory application for the treatment of acute myeloid leukemia.  On the other side, Editas Medicine (NASDAQ:EDIT) has declined by about 13% year to date, after the company indicated that it plans to raise additional capital, issuing about 3.5 million shares at $66 per share. See our update below for a detailed look at the components in our theme.
[1/8/2021] Gene Editing Stocks
Gene editing has emerged as a promising biotech theme. The technology is used to insert, edit, or delete a gene from an organism’s genome, helping to replace the defective genes responsible for a medical condition with healthy versions. This technology is being used to develop treatments for a range of diseases from cancer to rare genetic conditions, that are otherwise hard to treat, and is also being considered for diagnostic purposes. While there are broadly three gene-editing technologies, “clustered regularly interspaced short palindromic repeats” or CRISPR, as it is popularly known, has emerged as the method of choice with most companies, considering that it is relatively inexpensive, simpler, and more flexible compared to other tools such as ZFN and TALEN.
While most gene-editing players remain in the clinical stage with a limited financial track record, funding has risen meaningfully and larger pharma companies are also partnering with these companies, considering that the treatments could be lucrative and the broader technologies may be highly scalable. While the upside remains large, investing in these companies is risky. Being a new technology that has never been used in humans before, there are risks of significant side effects or of the therapies not being effective. The economics of producing and selling these drugs also remains uncertain. These stocks are also volatile, seeing big swings as any new research or data on their potential or risk is outlined. Our indicative theme on Gene Editing Stocks – which includes names such as CRISPR Therapeutics, Editas Medicine, and others – has returned about 230% over the past 2 years, compared to the broader S&P 500 which is up by about 52% over the same period. Below is a bit more about these companies.
CRISPR Therapeutics AG (CRSP) is one of the best-known names in the gene-editing space. The company is working with Vertex Pharmaceuticals to co-develop CTX001, an experimental gene therapy that has provided promising results for people with sickle cell disease (SCD), and transfusion-dependent beta-thalassemia (TDT) – disorders that affect the oxygen-carrying cells in human blood. The company is also developing cancer therapy candidates independently. The company was profitable last year, due to collaboration revenues from Vertex.
Editas Medicine (EDIT), another leading CRISPR-focused biotech company, with a flagship program, EDIT-101 is targeting the treatment of hereditary blindness. The company recently finished dosing for its first group of patients in earlier-stage human trials. The company also recently filed a request with the U.S. FDA to commence phase 1/2 study of EDIT-301 in treating sickle cell disease. The company also has multiple other pre-clinical drugs focused on genetic diseases.
Intellia Therapeutics (NTLA) is developing a drug for a rare and fatal disease known as transthyretin amyloidosis in collaboration with Regeneron. The drug is in phase 1 trials currently. The company is also working on ex-vivo Sickle Cell Anemia treatment with Novartis that involves editing cells outside the body before infusing them into the patient. The candidate is entering Phase 1/2 trails. While the company has 8 other candidates, they are still in the research or pre-clinical stages. 
Sangamo BioSciences (SGMO) focuses on multiple areas in the genomic medicine space, including gene therapy, cell therapy, in vivo genome editing, and in vivo genome regulation. The company pioneered the zinc finger nuclease (ZFN) gene-editing method. The company’s most advanced development is a treatment for Hemophilia A, which is being developed with Pfizer and is in phase 3 trials. The company also has 4 candidates in the phase 1/2 stage and 13 in the Preclinical stage. 
While gene-editing stocks look attractive, 2020 has also created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Pfizer vs Merck.