The promise of gene editing is moving closer to being a reality. If you’re an investor with a speculative appetite and appropriate risk tolerance, you may want to consider a long position in gene editing stocks.
The idea at the core of gene editing is personalized medicine. Tools like 23-and-Me can help you understand your DNA. While knowledge is power, in the case of your personal health, that knowledge has limitations. After all, knowing that you are more genetically predisposed to a certain disease is like getting a lock without a key.
Gene editing has the potential to take things a significant step forward. Because, as the name suggests, gene editing is trying to fulfill the promise of replacing disease-causing genes with healthy ones.
According to Allied Market Research, the global gene editing market will grow at a compound annual growth rate (CAGR) of 6.7% and reach $7.4 billion by 2031. And for investors with a longer horizon, gene editing has the potential to be a much larger addressable market.
That’s because, initially, many companies in this area are focusing on rare diseases with relatively small addressable patient pools. But the end game is that gene editing will be used for other genetic-based diseases such as cancer or Alzheimer’s disease.
Here are three gene editing stocks that investors can buy today to ride this opportunity for significant long-term gains.
Editas Medicine (EDIT)
Editas Medicine (NASDAQ:EDIT) is using its proprietary gene editing technology based on CRISPR/Cas9 technology to create gene editing-based therapies. EDIT stock is up 29.5% in the last three months as investors cheered new safety and efficacy data which the company released for its lead candidate, EDIT-301. This is a gene editing therapy for treating severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT).
Investors are also cheering news that Editas has entered into a licensing agreement with Vertex Pharmaceuticals (NASDAQ:VRTX). Under terms of the non-exclusive agreement, Vertex will use Editas’ gene editing technology to develop its approved SCD gene therapy.
In return, Editas announced that its cash runway will now run through 2026. That takes away one of the key risks for long-term investors.
Like many gene editing stocks, Editas can’t be evaluated using traditional fundamental metrics. The company is not profitable and until EDIT-301 is improved in 2025 (at the earliest), investors can’t expect much by way of revenue growth. But with stocks like EDIT, if you wait for absolute certainty, you’ll miss the biggest gains.
Beam Therapeutics (BEAM)
One of the arguments for Beam Therapeutics (NASDAQ:BEAM) is that it uses proprietary base editing technology. An article in Labiotech describes base editing as the ability to “generate gene knockouts or to correct certain errors or mutations in the DNA of intact cells.”
The promise of base editing is that it may address a limitation of gene editing. And Beam Therapeutics is a leading name in the field. The company has two candidates in mid- to late-stage clinical trials. BEAM-101 is being developed to treat sickle cell disease and BEAM 201 is an “investigational therapy for relapsed and refractory T-cell acute lymphoblastic leukemia and T-cell lymphoblastic lymphoma.”
Like many gene editing companies, Beam is not yet profitable and will not be generating significant revenue until it receives commercial approval for BEAM-101 or BEAM-201. Both candidates will still be in clinical trials in 2024. However, the company has a cash runway through 2027.
After being down 31% in the last 12 months, analysts give BEAM a consensus price target of $40.62 which is 75% higher than the stock’s closing price as of Jan. 10.
Verve Therapeutics (VERV)
One way to profit from gene editing stocks is to look for companies working in relatively unexplored areas. That’s the argument for Verve Therapeutics (NASDAQ:VERV). The biotech company is developing gene editing therapies with the intention of disrupting the current chronic care model for cardiovascular diseases, the leading cause of death globally.
The company has several candidates in its pipeline that are being brought through clinical trials in partnership with Eli Lilly (NYSE:LLY). Verve received clearance from the U.S. Food & Drug Administration (FDA) to conduct clinical trials in the United States. That being said, the company is years away from having an approved candidate.
According to analysts, VERV stock has the highest upside of the three gene editing stocks on this list. The consensus price target of$45.89, which gives the stock the potential for a 232% upside. For those that are interested, Cathie Wood is investing in gene editing stocks, and Verve is one of the names in her portfolio.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
