Hello, InvestorPlace Readers! This is the second installment of our new “How to Invest” series. You can see the first here: The Ultimate Guide to Investing in Growth Stocks. We’ll be covering investment opportunities ranging from genetic editing (see below) to electric vehicles to SPAC IPOs and much more. If you’re interested in a particular sector, please drop us a note to make a suggestion: email@example.com.
In June 2012, the world changed forever when U.C. Berkeley professor Jennifer Doudna and Umea University professor Emmanuelle Charpentier unveiled a scientific breakthrough in that month’s issue of the Science journal — CRISPR-Cas9 genetic editing. This breakthrough would pave the way for a new niche of biotech stocks, dubbed CRISPR stocks.
Why is that important? Because the widespread emergence and application of genetic editing science in the 2020s will be one of the most transformative megatrends of our lifetimes.
Genetic editing, or CRISPR stocks, levered to this once-in-a-lifetime megatrend will end up being some of this decade’s biggest winners on Wall Street.
And it all starts right now.
At a high-level, what Doudna and Charpentier did was figure out a time- and cost-effective way for researchers to manipulate genetic materials and, to some extent, “play God.” What followed over the past near-decade has been relentless innovation in the emerging field of genetic editing. Already, academic studies in the field have yielded game-changing results, such as addressing vitamin A deficiencies in the emerging world.
And, over the next decade, CRISPR-Cas9 genetic editing systems will become a major disruptive force. They will, quite literally, edit our reality.
They will help cure disease, fix genetic disorders, create sustainable biofuels, engineer pest-resistant crops and make life significantly better.
It may sound complex (and it is) but here we will break down CRISPR-Cas9 systems, the business of genetic editing and why investors should care.
So what exactly are CRISPR stocks?
What Is CRISPR-Cas9?
For decades, humans have been obsessed with genetic engineering and editing.
The discovery of the double helix in the 1950s and the explosion of gene editing in the ‘60s put us on the modern path biology and genetics are on today.
But the concept of rewriting the genes themselves has always fell short in practice. Developments such as gene splicing and recombinant DNA moved the science forward, but they also posed an ethical hazard.
Instead of breeding two animals and hoping for the best, CRISPR-Cas9 allows scientists to rewrite entire genomes to create unheard of combinations.
Here’s the story: The principles of CRISPR were first pioneered by Francisco Mojica in 1993 as he worked with none other than bacteria. Yes. You heard that right. The most transformative scientific breakthrough of our lifetimes — and maybe ever — comes from bacteria.
Mojica’s discovery started a chain of advancements in the CRISPR world, including the famous “glo-fish” pets that built off of the fluorescence naturally occurring in fish to create sub-generations that quite literally glow in the dark.
By 2012, Doudna and Charpentier were able to advance CRISPR to its most vital breakthrough — making precise, targeted cuts in DNA — by inventing a pair of “scissors” (called CRISPR-Cas9 systems).These scissors could be used to cut specific DNA threads and modify genes inside of living organisms.
Doudna and Charpentier noted a naturally occurring genome editing system in bacteria — particularly its odd ability to capture snippets of DNA from invading viruses. They then leverage that captured DNA snippet to create a new DNA segment called a CRISPR array.
That CRISPR array is designed specifically to recognize the DNA of the invading virus. So, if/when the invading virus attacks the bacteria again, the CRISPR array recognizes the DNA of the virus. It promptly deploys a Cas9 enzyme to “cut” the invading DNA segment, which renders the virus ineffective.
It’s a genius defensive mechanism that bacteria employ to ward off invading viruses.
Doudna and Charpentier wondered if they could replicate this genius genomic editing system in bacteria, harness its power and subsequently use it elsewhere for other purposes.
They did just that.
Essentially, the two invented a way to engineer small CRISPR arrays paired to a target sequence of DNA in a genome. That CRISPR array is then injected into the genome, where it binds to the target sequence, and uses a Cas9 enzyme to cut the DNA at the targeted location.
Once the DNA is cut, researchers can insert, remove, and/or edit genetic material in that DNA sequence as they please.
The Potential Implications of Genetic Editing
If that sounds like a big deal, it’s because it is…
The potential implications of genetic editing at scale are infinite.
Doudna and Charpentier’s breakthrough discovery has since ushered in a new era of genetic engineering, wherein some of the smartest people in some of the most prestigious labs are using CRISPR-Cas9 systems to potentially change the world.
Research is being done right now to advance the use of CRISPR-Cas9 to cure diseases like cystic fibrosis, cancer and sickle cell disease. It is being used to potentially eradicate hereditary blindness. It’s also being used to enhance biofuel tolerance (and in turn, create more sustainable biofuels), while also being used to engineer more robust, pest- and disease-resistant crops.
In other words, CRISPR-Cas9 has given us a tool to create a better tomorrow without sickness, without food shortages and without resource depletion.
And so, I reiterate: the potential implications of CRISPR-Cas9 genetic editing systems are infinite — which, while important, shouldn’t be surprising. After all, every living thing in this world has DNA. A perfect CRISPR-Cas9 system could therefore theoretically change anything about anything.
But, if true, why aren’t CRISPR-Cas9 systems everywhere? Why hasn’t cancer been cured? Why are crops still dying from pests and disease?
After all, it’s been eight years since CRISPR-Cas9 systems were invented. Where are the real-world results?
The answer: Stuck behind an insurmountable mountain of genetic data.
And that’s where step two comes into play.
CRISPR Stocks and the Genetic Data Challenge
CRISPR-Cas9 genetic editing is a complex science. You are, after all, cutting DNA sequences — which, to do effectively and without producing unwanted side effects, requires precision and accuracy.
Imagine rearranging T.S. Elliot’s “The Wasteland” — a single change in the structure of the prose would change the entire meaning of the work, rendering it ineffectual. The removal of one stanza has an effect on not just the next one or the preceding stanza, but the work as a whole.
The same is true when it comes to cutting DNA sequences. If researchers are going to effectively, precisely and accurately cut a DNA sequence, they need to know everything about that DNA sequence. What’s in it? What’s next to it? What are we knocking out? What will happen when we knock that genetic material out? Will there by side-effects when we do this process? How do we control those side effects?
And, unlike cutting paper, cutting DNA sequences cannot be done willy-nilly. A genetic editing process gone wrong could result in seriously negative side-effects.
While researchers today are no less certain of their work than before (1,000 vaccine candidates tested may yield a handful of successful results), they are now able to be more precise and advance the science more quickly.
Certainty is achieved through data. If researchers have all the DNA sequencing data on all genetic things in the world, they know exactly where to cut, when to cut, what to inject after they cut and how to patch it all up when they’re done.
Unfortunately, that’s a big “if” which has proven to be an enormous obstacle to effectively administering CRISPR-Cas9 systems, and ultimately kept genetic editing mostly in the “hypothetical testing” phase thus far.
The human genome alone is made up of 20,000 genes and more than 3 billion base pairs. And everyone is different. Plus, every animal is different. Every crop is different. Everything is different.
You get the picture. The enormity of genetic data in the world is unparalleled. Up until recently, scientists simply had no way to effectively comb through and understand all of that genetic data.
Then artificial intelligence (AI) showed up to the party.
The AI Breakthrough in Genomic Editing
In essence, breakthroughs in artificial intelligence over the past few years have enabled machines and algorithms to time- and cost-effectively comb through and help researchers make sense of all the genetic data at their fingertips.
Case-in-point: Researchers at the Wellcome Sanger Institute have created a machine learning model that — thanks to ingesting data from over a billion mutational outcomes from CRISPR-Cas9 systems — can effectively predict the exact mutations from CRISPR-Cas9 cuts using just the sequence of the target DNA as an input, thereby enabling researchers to prevent unwanted “off-target” effects of such genetic engineering, and/or remedy such “off-target” effects quickly.
Another example: a research team led by Stephen Kingsmore of Rady Children’s Institute for Genomic Medicine paired a machine learning model called MOON with patient-specific information and data on more than 13,000 known genetic diseases in scientific literature to create an AI system that can identify likely-disease causing mutations out of 4.5 million potential variants in five minutes or less.
And yet another example: researchers at the University of Copenhagen have developed a machine learning algorithm that recognizes protein movement patterns and classifies genetic data in seconds — a process that used to take the researchers several days to accomplish.
I could go on and on. But you get the point.
Dozens of AI/ML models have popped up over the past few years, and they are slowly, but surely, enabling scientists to take the promising yet tricky and timely concept of CRISPR-Cas9 genetic editing systems, and turn them into a disruptive reality.
The Economic Value of Genetic Editing
Make no mistake. This transition towards tangible genetic editing will happen on a widespread scale over the next decade. As it does, humans will take a huge leap forward when it comes to curing disease, improving health, fortifying food safety and much, much more.
As CRISPR stocks become more “mainstream,” the economic implications of this tectonic shift are enormous.
On the disease front, researchers have identified over 6,000 genetic disorders. They affect about 1 out of every 50 people in the globally. CRISPR-Cas9 genetic editing systems have the potential to cure every single one of those disorders, and entirely replace the $50 billion genetic disorders drug market. In that vein, the addressable market for genetic editing in curing human disease alone is worth north of $50 billion.
Meanwhile, market research firms peg the global biofuels market as being worth north of $100 billion today, and somewhere around $150 billion within the next four to five years.
Genetic editing could be the scientific mechanism which unlocks even more significant value in that $150 billion and rapidly growing market.
The crop protection market measures north of $60 billion globally. Genetic editing could flip that entire market on its head, too.
When you add it all up, then, genetic editing systems have an addressable market that swells well over $200 billion.
Yet, most genetic editing companies today have a market cap of less than $5 billion. This discrepancy between current genetic editing company valuations, the long-term economic potential of genetic editing systems, is your opportunity.
5 Genetic Editing Stocks to Watch
Alas, we are ready to answer the most important question: What are the best genetic editing stocks to buy to play the biggest scientific breakthrough of the century?
Here are a few genetic editing stocks that should be on you radar:
- CRISPR Therapeutics (NASDAQ:CRSP) — the “mothership” of CRISPR-Cas9. Founded by Emmanuelle Charpentier — the French microbiologist who co-invented CRISPR-Cas9 systems back in 2012 — CRISPR Therapeutics is the largest and most well-established genetic editing company in the world. CRISPR is backed by the most robust and mature genetic editing therapy pipeline in the industry. That pipeline is mostly focused on curing sickle cell disease (with its CTX001 drug candidate that is in clinical trials) and delivering immuno-oncology cell therapy (with its CTX 110, CTX120, and CTX130 programs, all of which are also in clinical trials). The company also has a diabetes treatment in the pipeline with significant long-term potential. If you’re looking for a “blue chip” play on CRISPR-Cas9 genetic editing, CRSP stock is the best choice.
- Editas Medicine (NASDAQ:EDIT) — the blindness doctor. Editas Medicine is another large and well-established genetic editing company, with a focus on the ocular world. Specifically, Editas has a portfolio of gene-editing therapies (EDIT-101, EDIT-102, and RP4) which together aim to eradicate inherited retinal diseases (i.e. genetic blindness). EDIT-101 is the most advanced of these therapies, and is currently in Phase 1/2 clinical trials. Also of note, Editas in December 2020 submitted an Investigational New Drug (IND) application with the FDA for the initiation of a Phase 1/2 clinical trial for its new EDIT-301 therapy for the treatment of sickle cell disease. If you’re looking for a more-focused genetic editing play with a good risk-reward balance, EDIT stock is a great choice.
- Intellia Therapeutics (NASDAQ:NTLA) — the specialized gene editor. Founded by Jennifer Doudna — the other co-inventor of CRISPR-Cas9 systems — Intellia Therapeutics is a more specialized gene editor with a unique and potentially profound gene therapy delivery platform. Only one of the company’s gene therapies (NTLA-2001) is in clinical trials, so the company is a bit “behind the curve” of Editas and CRISPR on the commercialization front. But, all three of its therapies (NTLA-2001 alongside NTLA-2002 and NTLA-5001, both of which will submit INDs in 2021) are attacking competition-less end-markets like curing Hereditary Angioedema, Acute Myeloid Leukemia, and Transthyretin Amyloidosis. On top of that, Intellia’s therapies are built on a proprietary LNP delivery technology that has shown a great number of benefits in non-human primate studies. If you’re looking for a more specialized gene editor with potentially explosive upside, NTLA stock is a solid pick.
- Beam Therapeutics (NASDAQ:BEAM) — the “base” gene editor. Beam Therapeutics is a differentiated genetic editing company that utilizes a unique approach called “base” editing to modify genetic structure. Long story short, as opposed to entirely cutting open DNA strands using Cas9 “scissors”, Beam instead chemically changes one DNA base in a genetic sequence to another base, without completely cutting the backbone of the DNA. The result is a highly specific gene editing tool with substantially lower risk of off-target effects. Thus, while Beam’s therapy pipeline is very early-stage relative to other gene editors (no drugs are in clinical trials yet), the company’s differentiated and potentially breakthrough base editing approach imply that Beam could one day be the biggest genetic company in the world. So, if you’re looking for a more high-risk, high-reward genetic editing play, then BEAM stock could be your answer.
- Cellectis (NASDAQ:CLLS) — the cancer killer. Cellectis is a genetic editing company that is focused exclusively on curing cancer. Specifically, Cellectis is a long-time leader in using TALEN gene editing technology — a fundamentally different gene editing technology from CRISPR-Cas9 — to eradicate cancer cells. The company currently has three branded therapies in Phase 1 clinical trials, and another three partner therapies in Phase 1 clinical trials, too. If you’re looking for increased exposure to genetic editing outside of just CRISPR-Cas9 techniques, CLLS stock could be the right pick.
Bottom Line on CRISPR Stocks
Imagine a world where you can identify individual genes you don’t want, and replace them with ones you do. For the millions of people suffering incurable genetic disorders from sickle cell to Tay-Sachs, that would mean years of added life. For farmers, that would mean drought and pest-resistant crops. And for humankind, it would be a triumph of science.
The convergence of artificial intelligence, DNA sequencing and genetic editing is going to change our world in an enormous, almost-unthinkable way. Disease will be cured. Genetic disorders will be eliminated. Crops won’t die from pests or disease anymore.
Life will get substantially better.
And it all starts right now.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s how his Daily 10X Report has averaged up to a ridiculous 100% return across all recommendations since launching last May. Click here to see how he does it.