Intellia Therapeutics (NTLA) – a gene-editing company co-founded by CRISPR pioneer and Nobel prize winner Jennifer Doudna –  indicated that NTLA-2001, its experimental treatment for transthyretin amyloidosis (ATTR) provided very promising results in an early state trial.   Although the study was small, including just six patients, the company noted that there were significant reductions in levels of a harmful liver protein that is associated with the disease after a single infusion. Intellia stock has rallied by almost 80% over the last three trading days following the news.

Now, we think that this could be a big deal for the broader gene editing sector, as well. This was the first report from a clinical trial of genome editing carried out inside the human body to treat disease, and the results should broadly validate that gene-editing technology works in humans and also that it remains safe. Our indicative theme of Gene Editing stocks has rallied considerably over the last week, and remains up by roughly 20% year-to-date, compared to the S&P 500 which is up by about 15% over the same period. That said, the gains are primarily driven by Intellia stock, which is up by almost 3x year-to-date, and the five other stocks in our theme have actually underperformed the market, or declined this year. For example, CRISPR Therapeutics (CRSP) is up by just about 6%, while Vertex Pharmaceuticals (VRTX) and Editas Medicine (EDIT) are down by 15% and 19%, respectively. Sangamo Therapeutics (SGMO) is down 23% (chart, 10-k), while bluebird bio (BLUE) is down by 26%. As more of these companies move candidates into clinical stages and provide readouts, we could see gains in stock prices across the theme.

[6/14/2021] Should You Add Gene Editing Stocks To Your Portfolio?

Our indicative theme of Gene Editing stocks is down by about 12% year-to-date, compared to the S&P 500 which is up by over 13% over the same period. The decline comes as investors move money from high-growth and futuristic sectors to more cyclical and value stocks to ride the post-Covid surge in economic activity over the next few quarters. Gene Editing players have been particularly badly hit by this shift, given that they are mostly clinical or pre-clinical stage biotechs with little or no revenues. Now, although most of the companies in our theme are currently losing money, and are presently out of favor with the market, the longer-term upside could be sizable, given that they are working on potentially revolutionary drugs that could cure conditions from cancer to rare genetic disorders that currently lack treatments, to chronic conditions such as diabetes.

Within our theme, Intellia Therapeutics (NASDAQ:NTLA) was the strongest performer, rising by about 57% year-to-date, due to favorable views from brokerages and anticipation surrounding the company’s NTLA-2001 drug, which is a single-course, potentially curative therapy for transthyretin amyloidosis. A data readout from the phase 1 study on the drug is due later this month. On the other side, Editas Medicine (NASDAQ:EDIT) has been the worst performer in our theme, declining by about -47% year to date, partly due to its big rally late last year, multiple analyst downgrades, and some changes at the top management level.

[3/29/2021] Gene Editing Stocks Have Corrected. What Next?

Our indicative theme of Gene Editing stocks is down by about 19% year-to-date, compared to the S&P 500 which is up by about 6% over the same period. With the economic recovery expected to gather pace, on the back of declining Covid-19 cases and higher vaccination rates, bond yields have been trending higher, causing investors to move funds from highly valued growth names to more cyclical and value bets. Gene Editing players have been particularly badly hit by this shift, given that they are mostly clinical or pre-clinical stage biotechs with little or no revenues. That said, we think that this could be a good time to take a look at the sector, considering that these companies are working on potentially revolutionary developments that could cure conditions from cancer to rare genetic disorders.

Within our theme, Intellia Therapeutics (NASDAQ:NTLA) was the strongest performer, rising by about 19% year-to-date. Last November, the company began dosing under its phase 1 study is to evaluate its drug NTLA-2001 which is a single-course, potentially curative therapy for transthyretin amyloidosis. A data readout is due sometime in the next several months. On the other side, Editas Medicine (NASDAQ:EDIT) has been the worst performer, declining by about 42% year to date, partly due to its big rally late last year, multiple analyst downgrades, and some changes at the top management level. 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.

CRSP

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.

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