7 Moonshot Investments Shaping a $10 Trillion Industry

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This article is excerpted from Tom Yeung’s Moonshot Investor newsletter. To make sure you don’t miss any of Tom’s potential 100x picks, subscribe to his mailing list here.

Gene editing prescriptions by 2023?

“First CRISPR gene-editing drug is coming, possibly as soon as next year,” an article in fast company announced last week. “Soon, we could see regulators approving the first-ever treatment using this gene-editing technology in an effort to combat rare inherited blood disorders that affect millions of people around the world.”

Biotech industry watchers have known for years that it was only a matter of time before gene-editing drugs hit the market. MIT’s NEWDIGS drug development program predicts that more than 60 gene and cell therapies could be available to consumers by 2030.

But news that Vertex Pharmaceuticals (NASDAQ:VRTX) could have the first gene-editing drug on the market as soon as next Christmas still surprises many. Vertex shares have added $10 billion to its market capitalization since mid-June.

And it’s a game-changing technology. Rather than relying on small molecules or biologics, gene-editing drugs alter the literal genome of bacteria, cancer cells, or their human hosts. Genetic disorders could soon be literally “erased” from a person.

As companies finally get their gene therapy drugs approved, headlines like this will continue to snowball. Investors ready to step in early have the most to gain as CRISPR-led companies disrupt the $10 trillion healthcare market.

Source: Ico Maker / Shutterstock.com

The 7 gene-editing companies shaking up the $10 trillion healthcare market

Almost three decades ago, a retired investment professional gave me some advice.

“Tom – there are going to be three technological revolutions in your life,” he said. “First it’s information technology…then biotechnology…then nanotechnology. Be sure to remember that.

It wasn’t just my first exposure to long-term thematic investing…

…his words were surprisingly prescient.

Over the next decade, the development of the Internet and faster processors unleashed untold first-wave power: information technology.

Seemingly sentient chatbots… supercomputers the size of kit-kat bars… even an AI that can draw pictures of the Kool-Aid Man in ancient hieroglyphics.

A screenshot of a tweet showing images generated by Dall-E Mini based on the prompt "Kool aid man ancient hieroglyphs."

How to confuse future archaeologists. | Source: Twitter.com

Investors also largely benefited. $10,000 invested in Apple three decades ago is worth more than $5 million today. And since then, venture capitalists have made outsized bets to find the next Amazon/Netflix/Tesla.

The rise of biotechnology

Over the past decade, another industry has also quietly taken off:

Biotechnology.

The invention of CRISPR gene-editing technologies created a whole new class of drugs that cured patients by using genetic “scissors” to cut out certain genes.

In other words, once-incurable cellular disorders, from cancer to sickle cell disease, may soon be “erased” from your genome. It’s a healthcare revolution waiting to happen.

But investors have a problem. Much like the early years of internet competition, CRISPR drug dominance is still a game to be won.

For drugmakers themselves, early leaders like Vertex Pharmaceuticals can quickly fall behind if other platforms prove more successful. Investors would do well to remember that he was eBay (NASDAQ:EBAY), not Amazon (NASDAQ:AMZN) which was once the world leader in e-commerce profits.

And ‘pick and shovel’ games aren’t necessarily winners either, as a tech giant Cisco (NASDAQ:CSCO) learned the hard way when he started Palo Alto Networks (NASDAQ:PANW) took the top spot in the lucrative firewall market.

Today, biotech support companies like Veeva systems (NYSE:VEEV) are regularly viewed online as “a mess,” as one employee put it.

“The product got you here, but current practices won’t keep you on top,” grumbled another.

But as the first round of CRISPR drugs move toward FDA approval, there are clues about which companies will emerge ahead.

Speed ​​to market. Precursors still have a significant advantage, even if it does not guarantee their dominance. Today, no less than seven companies have CRISPR therapies for sickle cell disease in their pipeline; approval of Vertex Pharmaceutical’s CTX001 therapy could give the company significant market share years before rivals exit.

CRISPR platform. Not all gene editing techniques are created equal. CRISPR-Cas9 has become the preferred technology, with leading companies like Crispr Therapeutic (NASDAQ:CRSP) to the best. Meanwhile, upstarts Beam Therapy (NASDAQ:SHINE) and Editas Medicine (NASDAQ:EDIT) are testing alternative techniques known as Basic and SLEEK editors – advanced techniques that may eventually prove superior to CRISPR-Cas9.

Drug market size. The United States operates without regulatory oversight on drug pricing, which means prices are set by what insurers and the Centers for Medicare & Medicaid Services (CMS) are willing to pay. Drugs targeting “expensive” chronic diseases like Alzheimer’s are more likely to become billion-dollar blockbusters than those treating rare diseases or those that cost less. Companies like Therapeutic Intellia (NASDAQ:NTLA) and Regeneron Pharmaceuticals (NASDAQ:REGN) are currently exploring candidates that could potentially solve protein folding disorders such as Alzheimer’s disease, Parkinson’s disease and Huntington’s disease.

Funding. And finally, the best biotech companies all need money. A lot. The average gene therapy drug will cost $5 billion, according to the Institute for Innovative Genomics, about five times the cost of developing traditional drugs. Well-funded companies like biogenic (NASDAQ:IBIB) are much more likely to resist the Fed-induced belt-tightening that threatens small businesses.

How Gene Editing Companies Score

Not surprisingly, many biotech companies perform poorly on traditional quantitative scores. Their lack of profits – plus weak cash flow generation and strained finances – make them look more like bankrupt companies than high-potential startups.

But the quantitative Benefit & Protection does not necessarily select quality. Instead, the system considers what has worked in the past. And as big winners in investing have shown, buying “ugly” companies is sometimes the best path to success.

  • Vertex Pharmaceuticals (VRTX). A+
  • Editas Medicine (EDIT). A
  • Beam Therapy (SHINE). A
  • Regeneron Pharmaceuticals. A-
  • Therapeutic Intellia (NTLA). A-
  • Crispr Therapeutic (CRSP). A-
  • biogenic (BIIB). B-

And don’t forget to join me on Thursday when we take a closer look at the gene-editing companies investors absolutely must buy from this top list.

The disadvantages of gene editing companies

If you’re suspicious of biotech companies, I don’t blame you.

In November, I advised investors to buy shares of Longeveron (NASDAQ:LGVN), a company that I named “My best small-cap biotech moonshot.”

“With insiders buying between $3.30 and $3.80, regular investors may also want to buy a few stocks before the official Phase 1 results are announced; LGVN leaders act as if they know something that we don’t.

Shares have doubled since… But not before launching a wild 1,400% rally to $45 before making a round trip to $6.

Stable investments, those are not.

Moralists could also challenge many biotech practices.

In 2021, Nature Magazine curtly noted that “gene therapy products for sickle cell disease will likely cost US$1 million for a single dose.” And just like Tylenol and other common drugs, CRISPR-Cas9 can use embryonic stem cells to develop and test therapies. And in vivo treatments that alter the genetic code are arguably the closest thing medicine has to “playing God.”

But biotechnology and gene editing can also change lives for the better. Experts estimate that 300,000 babies are born each year with sickle cell disease. A cure for the hereditary disease could extend their lives by a quarter of a century. Imagine a world where cancers are a thing of the past.

Much like the computer revolution, biotechnology will experience bumps along the way. But in the grand scheme of investing, my old family friend was right. Biotechnology will become a driving force of innovation in our lives.

PS Do you want to know more about cryptocurrencies? Penny stocks? Choice ? Drop me a note at [email protected] or connect with me on LinkedIn and let me know what you’d like to see.

As of the date of publication, Tom Yeung had (neither directly nor indirectly) any position in the securities mentioned in this article.

Tom Yeung, CFA, is a Registered Investment Advisor on a mission to simplify the world of investing.

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