The Evolution of Gene Editing
Nearly 50 years have passed since the we first engineered a new form of life.
In 1973, a pair of American biochemists were among the first to cut DNA into fragments, put them back together with some other gene fragment, and inject them into E. Coli which then reproduced.
For the next 40 years genetic engineering technology progressed slowly. But that all changed in 2012 when CRISPR hit the scene.
This advance dramatically reduced the time and expense required to discover which genes to edit and the best way to manipulate them. And the discovery proved such a breakthrough that its inventors won a Nobel Prize in Chemistry last year.
Indeed, it’s hard to overstate the impact this technology could have on human health and society.
Most diseases have a faulty gene as their cause. The key to much longer lifespans resides in our genes. And with a few tweaks to their genetic code, researchers can recruit microorganisms to manufacture everything from health and beauty products to food and nutritional supplements and all the way to drugs cheaply and at massive scale.
Now, at around $5 billion in sales globally, the gene editing industry is still small. But with gene editing revenue on pace to double every three years, we’re looking at a $30-plus billion market by the end of the decade.
And the stock price gains in store for companies that discover even better methods than CRISPR could easily outstrip overall industry growth by a factor 10:1.
And that’s why I want to tell you about one company with a lock on CRISPR 2.0…
Easy Isn’t the Same as Right
CRISPR created such a buzz because it made the design of gene edits easy and fast.
Heck, almost anyone can order a kit and toy around with gene editing. And for those of you that find that hard to believe, I’d recommend you check out the documentary unnatural selection on Netflix.
But CRISPR can make for a sloppy process.
The enzymes used in the process are large, making them difficult to insert into human cells. CRISPR also requires multiple enzymes to get the job done, which increases complexity. CRISPR also cuts both strands of DNA and it’s sometimes hard to predict how the code will reassemble itself. Plus, the edits sometimes occur at random, which introduces another source of uncertainty.
But a new process – called ARCUS – solves those problems. Where CRISPR is easy and fast, ARCUS is precise.
And all the intellectual property to utilize ARCUS rests in the hands of one company – Precision BioSciences (NASDAQ:DTIL)
A Treatment Pipeline for the Long-Haul
Precision Bio has over 80 patents protecting its IP.
And it’s using that IP to develop cancer immunotherapy treatments, which recruit the body’s immune system to fight cancer.
These edits are done with donor T cells that, once edited, get injected in the patient for treatment.
But another development in the pipeline is editing genes directly in the body – or in vivo. The earliest of these potential treatments should be in clinical trials by next year.
Over the last year, the company’s revenue jumped from less than $20 million to over $100 million. Consensus street estimates have revenue growing another 5-fold next year. Which puts the company’s current $561 million market cap at a little more than 1X forward 12-month sales.
That’s cheap by any measure, especially for a company growing the top-line at triple digits.
The stock trades at just under $10 per share, but I’d comfortably put a long-term price target of $36 on the stock. So, consider adding this gene editing company with a lock on the next big step past CRISPR to your portfolio. Earnings set to be released on November 10 could prove a short-term catalyst. But the big gains will come as the company’s proprietary ARCUS IP enables it to develop better treatments faster than its competition.
