With Recent Advancements, Are Gene Editing Stocks Worth A Look?

BLUE: bluebird bio logo
BLUE
bluebird bio

Our theme on Gene Editing stocks remains down by 20% year-to-date, although it has rallied by close to 10% over the last month or so. There are a couple of positive factors driving the theme higher. Firstly, the U.S. FDA recently approved Bluebird Bio’s one-time beta-thalassemia treatment, Zynteglo, also known as betibeglogene autotemcel (beti-cel). Although the $2.8 million therapy is unlikely to become a big money maker for Bluebird, it serves to validate the effectiveness of gene therapy as a cure for rare diseases boding well for the prospects of other gene-editing players’ pipelines. Separately, CRISPR Therapeutics and its partner Vertex Pharmaceuticals are on track to submit late-stage trial data to regulators by the end of this year for a medicine that treats sickle cell anemia and beta-thalassemia. The drugs appear promising based on recent data which indicated that it helps to significantly reduce the symptoms of the diseases.

So what’s the outlook like for the gene-editing theme at large? Market capitalizations of gene editing stocks remain depressed following the sell-off over the last two years (the theme was down by 22% over 2021 as well) and with the Fed likely to continue with its path of rate hikes, the theme could remain under some pressure in the near-term. However, with the recent progress being made on the development front, we could see more positive data from companies in the theme. Moreover, gene editing players could be targets of acquisitions by big pharma companies who want to build expertise and pipelines in the gene-editing space, adapting the technology to tackle cancer and chronic disease. This could make the theme worth a look at current levels. Within our theme, Intellia Therapeutics (NASDAQ:NTLA) has been the worst performer with its stock down by about 50% year-to-date. On the other side, Vertex Pharmaceuticals stock (NASDAQ:VRTX) has been the best performer, with its stock up by around 26% year-to-date.

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Returns Aug 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BLUE Return 46% -41% -90%
 S&P 500 Return -3% -16% 79%
 Trefis Multi-Strategy Portfolio -3% -16% 236%
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[1] Month-to-date and year-to-date as of 8/30/2022
[2] Cumulative total returns since the end of 2016

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