rewrite this title When Will Gene Editing Stocks Finally Take Off? – Nanalyze

Gene editing is essentially being able to tinker with Nature’s recipes. Mastering this craft means we can start to create organisms on demand, or alter existing organisms to treat diseases. The superpower thesis is easy to understand, but investing in the opportunity is anything but. You could be the biggest expert on gene editing in the world but you still won’t be able to predict legal outcomes for the underlying technologies. Even attorneys can’t predict outcomes. Then there’s the ubiquitous clinical trial risk. Success means business as usual while unexpected failure can devastate the company’s entire prospects.

In looking at the past performance of the longest trading gene editing stocks we see consistent losses over time with strong correlations.

Stocks that are strongly correlated move together. Anything .70 or above would be considered strongly correlated and exhibit the same levels of correlation that stocks in a similar industry would. While we chose to “spray and pray” and invest in three gene editing leaders, you could also make the case for investing in the largest in hopes it eventually becomes the leader. (More on this in a bit.) Below we’ve compared the market cap of each player today against a year ago when we last checked in with gene editing stocks.

Today’s gene editing leader would be CRISPR Therapeutics (CRSP) if size is any indication of leadership along with progress being made towards deploying the first approved gene editing drug that cures an uncurable disease.

The First Drug to Market

We’re finally going to see just how lucrative a gene editing drug can be. Eventually. With final FDA approval reached in late 2023, we’re now waiting for CRISPR Therapeutics to see the benefits from the first commercialized gene editing drug, Casgevy, a cure for sickle cell disease. With a price tag of $2.2 million per treatment in the U.S., that’s significantly less than the estimated $5 million lifetime healthcare costs for managing the disease. A pharma firm called Vertex Pharmaceuticals (VRTX) has partnered with CRSPR with a 60/40 split of profits with Vertex enjoying the lion’s share. Analysts project a run rate of around $3 billion per year for Vertex – eventually – and that would represent about 27% of their revenues last year. So, there’s upside for Vertex, but the bigger thesis might be what other gene editing drugs might be following their first success story.

As for CRISPR, their profit-sharing agreement means a newly found cash cow will soon start pouring money into their coffers to fuel more R&D leading to more drugs. Investors now need to focus on the next treatment CRISPR plans to market – CTX112 is the next furthest along candidate in CRISPR’s pipeline in Phase 1/2 clinical trials for B-cell malignancies with data expected in 2025.

How fast the Casgevy platform gets rolled out will determine how quickly the money starts flowing. At the peak, Grok estimates 600 to 700 million in annual revenues for CRISP at the aforementioned $3 billion run rate. The reality is that not even the smartest AI algorithms know because there are so many unknowns. While we hurry up and wait for the Casgevy dollars to start rolling in, let’s check in with our second gene editing holding, Intellia (NTLA).

Is “In Vivo” The Way Forward?

There are two types of therapies in the gene editing world. The first, “ex vivo,” involves a complicated process where bone marrow stem cells are removed, modified, then returned to the body. The actual therapy takes place “ex vivo” or outside the body. The second type of gene editing treatment, “in vivo,” is a shot that’s administered after you take some pills. In other words, just a normal day in your average American’s life.

The FDA has approved a phase 3 study which represents the final step towards regulatory approval for Intellia’s “in vivo” treatment for hereditary angioedema (HAE) which is expected to be commercialized in 2027 with a BLA filed next year (the final regulatory step towards commercialization).

One problem we noted in last year’s gene editing summary is that Intellia’s expected windfall isn’t anything like CRISPR’s with Intellia anticipating royalties in the 7-12% range based on comments made by the CEO in the past pertaining to the Regeneron partnership. Of that, Caribou (CRBU) is expected to receive 1-5% which means the windfall remains quite uncertain. Even Editas (EDIT) is expected to receive some royalties.

Bulls might point to NTLA-2002 being listed with no partnerships which implies that Intellia takes all the spoils. However, they’ll eventually need a partner to help with all the commercialization heavy lifting, and it’s credible to think that future partnership terms will resemble past ones.

If Intellia is on the cusp of commercializing multiple drugs – three Phase III studies completed by 2027 – then the diversified revenue streams it might be producing would be quite compelling. With all these drugs being “in vivo” we’re also exposed to what will likely become the future platform for most gene editing therapies. The complicated process behind ex vivo treatments is likely to become the exception, not the rule.

In looking at the leaders of the pack by market cap, it’s clear that holding CRISPR makes sense. All eyes on them as the first company to commercialize a gene editing drug. Then there’s Intellia which claims to be on the cusp of greatness – just two more years to wait. They also provide exposure to “potentially “in vivo” treatments which should see quicker adoption given their simplicity. We’ll continue to watch NTLA-2002 closely to see if it achieves commercialization by 2027 so we can better understand the economics of “in vivo” treatments. But what about Beam Therapeutics?

Base Editing and Prime Editing

There is more than one way to skin a cat or edit a gene, and two methods – base editing and prime editing – are being touted as better tools for gene editing at a much earlier stage of maturity. The former is being developed by Bem Therapeutics (BEAM) while the latter is being pursued by Prime Medicine (PRME). Both companies were co-founded by David Liu and enjoyed a close relationship back in 2019 when they cross-licensed each others’ technologies.

Prime Medicine

Today, those agreements are being disputed which relates to Beam’s technology that Prime Medicine is using. (Beam Therapeutics claims they aren’t using any of Prime’s technology at the moment.) This implies the relationship between the two may be souring, though all eyes were on Prime this past May when we saw the first clinical applications of prime editing in a human. That landmark accomplishment was overshadowed by Prime Medicine letting go 25% of their staff as the President and CEO exited (read all about it). Following that, cash runway is expected to fund operations into the first half of 2026.

While there’s a temptation here to see the reorganization as something positive – they’re finally back on track! – our experience shows that turmoil like this is indicative of systemic problems as opposed to temporary stutter steps. With their pipeline currently being refined, we’ll wait until the next annual checkup to identify which lead candidate investors should be watching the closest. That’s always proved to be a good leading indicator of success or failure. As for Beam Therapeutics, it’s all eyes on BEAM-101.

Beam Therapeutics

The recent investors deck for Beam contains a very succinct description of what’s going on with key pipeline candidates along with proposed times when we can expect updates.

The one to watch is BEAM-101 for several reasons. First, it’s the candidate that’s showing the most progress towards commercialization. Second, it’s addressing the same disease as Casgevy but can potentially reduce off-target risks. That’s because the base editing method used by Beam is much more precise and could represent a better technology than what CRISPR uses. Then you have BEAM 301 and BEAM-302 which are in vivo treatments for certain diseases which involve a single injection.

Beam raised $500 million earlier this year – a testament to progress being made – which extends their cash runway “into 2028.” Provided these companies make sufficient progress in meeting regulatory milestones, finding cash won’t be tough. It’s when things go south that the cash quickly dries up and it becomes a pivot into survival mode. We’ll continue to monitor the progress Beam makes, especially in the context of how BEAM-101 might disrupt Casgevy.

Other Gene Editing Stocks

Other notable events worth mentioning include the acquisition of Verge Therapeutics (VERV) by Ely Lily. Verge was working on a gene editing one-shot that stood to disrupt the cholesterol drug market but then ran into some problems and halted enrollment for their lead candidate, VERV-101. Verve’s lead program is now VERVE-102, “a potential first-in-class in vivo gene editing medicine targeting PCSK9, a gene linked to cholesterol levels and cardiovascular health.” The deal is expected to close in the third quarter of this year.

As for Editas, we bailed on them a while ago and don’t have much interest in what they’re getting up to aside from waiting for some royalties to transpire from their intellectual property. The stock may be up +160% year-to-date but we invest in companies, not stocks. With a market cap under $300 million they’re just too small to be on our radar. The same holds true for Caribou (CRBU) which sports a $230 million market cap.

Also worth noting is the continued decline of Metagenomi (MGX), a recently emerged gene editing stock with a very compelling value proposition. They’re using (wait for it) artificial intelligence to generate numerous gene editing methods which they’ll then license across the industry. However, revenues have been declining for the past three quarters now giving the company a market cap of under $100 million. That’s just far too small to even consider looking at so we’ll drop them off our radar until they can show some consistent revenue growth over time which should result in subsequent market cap appreciation. Without a change in the fundamentals, stock price appreciation just represents hype.

Finally, there’s another threat to consider for all gene editing stocks. It’s the emergence of competition that’s hiding in the startup world which may not be so obvious. Remember, just because a thesis sounds appealing, it doesn’t mean you’ll eventually reap rewards that exceed an appropriate benchmark. Figuring out when to sell is much more difficult than figuring out when to buy.

Conclusion

The present value of all gene editing stocks discussed today – around $10.7 billion, up from $9.7 billion a year ago – reflects the market’s current perceptions of the opportunity. Investors in this space often think there’s some massive upside waiting to be unleashed, and perhaps there is. The reality is that this thesis will be subjected to lots of volatility as external factors create “unknown unknowns” and shares react accordingly. It’s business as usual while we wait for revenues to start flowing over at CRISPR Therapeutics.