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Top Gene-Editing Stocks for Long-Term Investors


"Practically overnight, we have found ourselves on the cusp of a new age in genetic engineering and biological mastery -- a revolutionary era in which the possibilities are limited only by our collective imagination." -- Jennifer A. Doudna, A Crack in Creation: Gene Editing and the Unthinkable Power to Control Evolution

You might think that those words written by Jennifer Doudna about gene editing are too over the top. Talk about being "on the cusp of a new age" and in "a revolutionary era" could seem overly dramatic. But Doudna, a pioneer of the CRISPR gene-editing approach , wasn't just laying it on thick. She's exactly right.

Gene editing truly does hold incredible potential to change the face of healthcare. It also holds tremendous potential to generate wealth for long-term investors . And there are four top gene-editing stocks that you can buy to profit from the game-changing technology.

Image of DNA double helix over outstretched palm

Image source: Getty Images.

What is gene editing?

First, let's look at exactly what gene editing is. A gene is made up segments of DNA (deoxyribonucleic acid). DNA is structured as a double helix, which looks somewhat like a twisted ladder. The steps of this DNA ladder consist of pairs of four chemical bases: cytosine, guanine, adenine, and thymine. These bases are typically referred to by their initials -- C, G, A, and T. Adenine (A) always pairs up with thymine (T), while cytosine (C) always pairs with guanine (G).

Gene editing involves inserting, deleting, or replacing these DNA base pairs within a gene. This is different from another technology called gene therapy. With gene therapy, a new gene is inserted into a cell to replace or inactivate another gene. This insertion is usually accomplished through a virus that delivers the new gene. Gene editing holds the promise of being more precise and flexible than gene therapy.

There are three primary methods that scientists use to edit genes. The oldest is zinc finger nuclease (ZFN) technology , which uses genomic "scissors" made up of engineered proteins used to cut DNA at specific locations. ZFN was first used in the early 1990s.

Another gene-editing tool was developed in 2009. This approach, called TALEN (for transcription activator-like effector nuclease), was similar to ZFN but allowed more specific targeting of sections of genes.

The latest -- and potentially most powerful -- gene-editing method is CRISPR, which stands for clustered regularly interspaced short palindromic repeats. CRISPR uses bacterial enzymes to cut targeted sections of DNA. The approach is cheaper and faster than earlier gene-editing methods.

Why invest in gene editing?

The primary reason to invest in gene editing is that billions of dollars could be made using the technology in the coming years. Gene editing research is under way for improving agricultural crop yields and nutritional value. Probably the biggest market, however, will be in treating and curing diseases.

Over 10,000 diseases are caused by a mutation in a single gene. Even more diseases result from mutations in multiple genes. Research is under way right now that could lead to cures for over a dozen genetic diseases using gene editing. Treating genetic disease is already a big business. Vertex Pharmaceuticals , for example, made over $2 billion last year treating only a fraction of patients who have cystic fibrosis.

Gene editing can also be used in the treatment of diseases that aren't inherited. Current CAR-T therapies rely on inactivated viruses to engineer T cells to seek out and kill cancer cells. However, there is considerable potential for use of gene editing to engineer these T cells.

But gene editing isn't just limited to curing and treating disease. The technology could be used in several other transformative ways , including genetically engineering pig organs for use in human transplants, altering mosquitoes' DNA so they can't carry disease, creating superfoods that don't spoil, and even resurrecting extinct species like the wooly mammoth -- although that's still a long way off.

What are the top gene-editing stocks?

As you might expect, many biopharmaceutical companies and agriculture products companies are intensely interested in gene editing, but only a handful of companies focus primarily on it. The four top stocks that specialize in gene editing are relatively small -- but all of them have big partners.

Company

Market Cap

Major Partners

CRISPR Therapeutics (NASDAQ: CRSP) $2.3 billion

Allergan , Bayer , Vertex

Editas Medicine (NASDAQ: EDIT) $1.6 billion Celgene
Intellia Therapeutics (NASDAQ: NTLA) $863 million

Regeneron , Novartis

Sangamo Therapeutics (NASDAQ: SGMO) $1.6 billion

Shire

( Gilead Sciences (NASDAQ: GILD) , Pfizer , and Sanofi  are also partnering on gene therapies)

Data sources: Yahoo! Finance, Company websites and SEO filings.

Following are key highlights for each of these gene-editing stocks.

CRISPR Therapeutics

You probably can guess which gene-editing method CRISPR Therapeutics uses. The company was co-founded by one of the early pioneers of CRISPR, Dr. Emanuelle Charpentier.

CRISPR Therapeutics employs a type of CRISPR called CRISPR-Cas9 to target several genetic diseases. CRISPR Therapeutics is also developing "off-the-shelf" CAR-T therapies for fighting cancer that could overcome some of the complexities associated with the manufacturing of CAR-T cells.

Vertex partnered with CRISPR Therapeutics on its lead candidate, CTX001. This therapy targets two diseases caused by mutations in the same gene -- beta-thalassemia and sickle cell disease, both of which are blood disorders that affect the production of hemoglobin. CRISPR Therapeutics expects to begin phase 1 clinical testing of CTX001 this year in Europe for beta-thalassemia and in the U.S. for sickle cell disease. The company also plans to submit an application in the fourth quarter of 2018 to seek Food and Drug Administration approval to begin human testing of its CTX101 CAR-T cell therapeutic candidate.

CRISPR Therapeutics has several pre-clinical programs as well. The company's ex vivo programs (where gene editing is performed in cells taken from the body then reintroduced into the body) target two rare genetic diseases, Hurler syndrome and severe combined immunodeficiency, in addition to two CAR-T therapies. CRISPR Therapeutics' in vivo programs (where gene editing is done inside the body) target glycogen storage disease, hemophilia, and cystic fibrosis.

Editas Medicine

Editas Medicine was co-founded by another CRISPR pioneer, Dr. Feng Zhang. Dr. Zhang is a core member of the Broad Institute, which owns key patents to use of CRISPR in eukaryotic cells (cells that have a nucleus, including all human and animal cells). Editas holds an exclusive license to these patents for genetic targets of its choosing.

The company's lead program is EDIT-101. This therapy uses CRISPR-Cas9 to edit the CEP290 gene in human retinal tissue to treat Leber Congenital Amaurosis type 10, a genetic eye disease that can cause blindness in children. Editas plans to apply for FDA approval to advance EDIT-101 into a phase 1 clinical trial perhaps within the next few months. In March, Allergan inked a deal with Editas to license EDIT-101 and up to five other gene-editing programs targeting eye diseases.

Editas is partnering with Juno Therapeutics, which was acquired by Celgene earlier this year , on use of CRISPR to engineer T cells for treating cancer. The company thinks its technology could significantly expand the types of cancer that can be treated by CAR-T.

In addition, Editas' pipeline includes several other pre-clinical programs. The company is targeting another genetic eye disease, Usher syndrome type 2a, plus other genetic diseases including alpha-I antitrypsin deficiency (AATD), beta-thalassemia, cystic fibrosis, Duchenne muscular dystrophy, and sickle cell disease.

Intellia Therapeutics

Intellia Therapeutics was co-founded by Jennifer Doudna, the CRISPR co-discoverer whose quote appeared at the beginning of this article. Like CRISPR Therapeutics and Editas Medicine, Intellia focuses on the use of CRISPR gene editing in treating genetic diseases and cancer. Also like the other two biotechs, Intellia doesn't have a program in clinical studies yet.

Regeneron partnered with Intellia to target amyloid transthyretin (ATTR) amyloidosis. The program is currently in the latter stages of pre-clinical development, with testing under way in non-human primates. Novartis teamed up with Intellia on another program that's roughly at the same stage -- use of gene editing in hematopoietic stem cells, the stem cells from which all of the various types of blood cells originate.

Intellia is also focused on a genetic disease that Editas is targeting -- AATD. In addition, the company has pre-clinical development in progress targeting use of CRISPR gene editing in treating primary hyperoxaluria Type 1 and hepatitis B virus.

Also, like both CRISPR Therapeutics and Editas Medicine, Intellia is researching CAR-T therapies using CRISPR to engineer T cells. Novartis has partnered with the biotech on this program.

Sangamo Therapeutics

Sangamo Therapeutics is the only one of the four biotechs that doesn't use CRISPR. Instead, Sangamo's gene-editing approach relies on ZFN.

Sangamo has five gene-editing programs in development. The company's most advanced programs are in early stage clinical testing. These therapies target hemophilia B, mucopolysaccharidosis type I (MPS I), and mucopolysaccharidosis type I type II (MPS II).

Two of Sangamo's gene-editing programs are in pre-clinical testing. Shire partnered with the biotech on one of them, a therapy targeting Huntington's disease. The other program targets neurodegenerative diseases associated with tau protein aggregation, including Alzheimer's disease.

In addition, Sangamo is developing gene therapies to target several diseases. Pfizer is working with the company on developing a gene therapy for treating hemophilia A. Bioverativ, which was acquired by Sanofi in January , is collaborating with Sangamo to develop gene therapies for treating beta-thalassemia and sickle cell disease. Gilead Sciences also recently partnered with the company to develop gene therapies.

What are the risks with investing in gene-editing stocks?

Investing in gene-editing stocks comes with significant risks. All of the programs in development for these four biotechs are still only in very early stages. Most haven't even progressed to clinical studies.

The drug development process starts with drug discovery, which typically involves identifying a protein or gene to target. Pre-clinical studies in test tubes in a lab come next, followed by testing in animals. Researchers must then obtain government approval to begin phase 1 clinical studies in humans. If all goes well in phase 1, drugs advance to phase 2 . Most drugs that are successful in phase 2 go on to phase 3 clinical studies . The odds of a drug making it from phase 1 all the way to marketing approval is less than one in 10.

There's no guarantee that they'll be successful. Cellectis , which uses the TALEN gene-editing method, ran into safety issues last year that resulted in the FDA temporarily placing two clinical studies on hold .

Some issues have also been raised with the use of CRISPR. One was that CRISPR-Cas9 resulted in unintended gene mutations in DNA sequences that wasn't targeted. This is akin to a surgeon removing an appendix but inadvertently removing the patient's spleen also. These unintended gene mutations would have been a potentially crippling problem, except it turned out there wasn't a problem after all .

However, another issue -- that human immune responses to Cas9 could interfere with CRISPR-Cas9 gene editing in humans -- possibly will require researchers to adopt workarounds. Remember that CRISPR-Cas9 uses bacterial enzymes. These bacteria have lived in humans for a long time, resulting in humans developing immune responses to them. It's possible that CRISPR-Cas9 might not be as effective as needed because of these immune responses.

Also, because CRISPR Therapeutics, Editas, Intellia, and Sangamo don't have products on the market yet, they might at some point need to generate additional cash to fund operations by issuing more stock. That would cause the dilution of the value of existing shares, which would likely cause the stocks to drop at least temporarily. Dilution is similar to slicing a pie into more pieces. Some end up with new pieces of pie, but anyone who already had a piece finds his or her slice smaller than it was before.

There's also a risk that one or more of these biotechs could lose in the on-going patent battles over CRISPR. Editas owns the license to a group of patents for CRISPR-Cas9 and CRISPR-Cpf1 from the Broad Institute and Harvard College. CRISPR Therapeutics and Intellia licensed patents from the University of California. In 2017, the Broad Institute won a big victory when the U.S. Patent Trial and Appeal Board ruled in its favor. However, that ruling is currently being appealed in a federal court.

Investing in gene-editing stocks isn't for risk-averse investors or those only focused on the short term. But for long-term investors who can wait a few years for gene editing to mature, these stocks could generate impressive returns.

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Keith Speights owns shares of Celgene, Editas Medicine, Gilead Sciences, and Pfizer. The Motley Fool owns shares of and recommends Celgene and Gilead Sciences. The Motley Fool has the following options: short May 2018 $85 calls on Gilead Sciences. The Motley Fool recommends Editas Medicine and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: A , T , C , G , SGMO



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