3 Top Gene-Editing Stocks with Long-Term Potential

As this technology becomes an increasingly prominent field of medicine, the following companies are well-positioned to reap the benefits of a range of existing and new gene therapy products in their portfolio.

Intellia Therapeutics (NTLA) is a company that specializes in gene editing, with a focus on creating therapeutics using the CRISPR/Cas9 system, a revolutionary technology used to precisely cuts DNA to disrupt, delete, correct, and insert genes to treat genetically defined diseases. The firm uses this technology to treat genetically defined diseases with high unmet medical needs, including ATTR amyloidosis, hereditary angioedema, sickle cell disease, and immuno-oncology.

“Intellia is utilizing this gene knockout approach to remove unwanted proteins using its proprietary lipid nanoparticle delivery system,” says a Morningstar equity report.

The biotech company has utilized its gene-editing proficiency to develop a range of therapies, both in vivo and ex vivo, for illnesses with significant unmet medical needs, the report adds.

However, given the high level of uncertainty related to regulatory approvals, the company as a pure-play exposure to novel gene editing technology may be more suitable for “long-term investors who have a high degree of risk tolerance,” says Morningstar equity analyst Rachel Elfman.

She assures, though, despite high uncertainty associated with the business, “we have a positive outlook for Intellia due to its developing pipeline spanning many rare diseases.”

 “We like that the company has multiple pipeline opportunities spanning rare diseases with high unmet medical needs, which could likely lead to pricing power,” says Elfman, who pegs the stock’s fair value at US$85.

Leading gene editing company, CRISPR Therapeutics (CRSP) is focused on the development of CRISPR/Cas9-based therapeutics to treat genetically defined diseases. CRISPR’s most advanced pipeline candidate, exa-cel, targets sickle cell disease and transfusion-dependent beta-thalassemia, which have high unmet medical needs.

The company is pursuing additional gene editing initiatives for immuno-oncology, as well as a therapy derived from stem cells to treat Type 1 diabetes. CRISPR’s emerging technology has led to a new class of therapies that target rare diseases or other disorders that are caused by genetic mutations.

The firm’s proprietary technology works by having CRISPR (pieces of DNA sequences) guide the Cas9 enzyme to edit, alter, or repair genes. “CRISPR Therapeutics' proprietary technology has the potential to build blockbusters in rare diseases with limited treatment options available,” says a Morningstar equity report.

The Swiss biotech currently has no approved drugs and a largely early-stage pipeline, creating a barrier an economic moat. Despite uncertainty around regulatory approvals for its early-stage portfolio, “we have a positive outlook for CRISPR due to its developing pipeline spanning many rare diseases,” assures Elfman, who puts the stock’s fair value at US$119.

The company provides long-term investors with pure-play exposure to novel gene editing technology. While the stock requires a high degree of risk tolerance, the company “has the funding and technological capabilities to potentially bring several of its pipeline programs to market,” says Elfman.

A global biotech company, Vertex Pharmaceuticals (VRTX) discovers and develops small-molecule drugs for the treatment of serious diseases such as cystic fibrosis, where Vertex therapies remain the standard of care globally.

The company is expanding its range of treatments by developing gene-editing therapies such as CTX001 for beta thalassemia and sickle-cell disease, as well as non-opioid treatments for acute and chronic pain using small-molecule inhibitors. They are also working on small-molecule inhibitors for kidney diseases caused by APOL1 and investigating cell therapies to deliver a potential functional cure for type 1 diabetes.

“Vertex’s most advanced pipeline candidate is its gene-editing drug, exa-cel, which is being developed in partnership with CRISPR Therapeutics as a one-time functional cure for two blood diseases: transfusion-dependent beta thalassemia and sickle-cell disease,” says a Morningstar equity report.

The report assigns a 60% probability of the drug’s approval which is anticipated to reach the market as early as 2024. “Vertex would have a 60% share of exa-cel’s sales,” says Elfman who recently raised the stock’s fair value to US$314 from US$306, prompted by Vertex’s strong performance as a result of robust uptake of its triple-combination therapy, Trikafta/Kaftrio.

Exa-cel could hold strong pricing power and become a blockbuster opportunity, says Elfman, adding that the firm’s pipeline therapies could account for roughly 30% of total revenue by the end of a 10-year forecast period.