2020 Nobel Prize for chemistry has been awarded for the discovery of CRISPR-Cas9 genetic scissors. Using these, researchers can change the DNA of animals, plants and microorganisms with extremely high precision. This technology has had a revolutionary impact on the life sciences, is contributing to new cancer therapies and may make the dream of curing inherited diseases come true.

How it works:

With this technology the DNA of an organism can be cut and rewritten at predeterminate positions by a protein complex called CRISPR-Cas9. Therefore, to start with, one needs to work out the section of DNA that want to modify, and design a CRISPR molecule capable target that specific region of the DNA. This means, one needs to know how the genome is structured in that specific location, and how to rewrite the genome. Once you have that, one needs to deliver the molecule to the target cells in an organism.

Discovery the tool needed to modify the genome it is only the first step. A more challenging goal is to understand which part of the genome needs to be modified and how. Furthermore, this system is still prone to errors because there are many repetitive sequences in the genome and when a specific position is modified, others could be affected. However, the large research effort in this field is rapidly overcoming these limitations.

Current applications:

The applications of CRISPR-Cas9 system are so broad that it is hard to define the area where CRISPR-Cas9 is having major impact. Here are just a few mentions:

  • Gene therapy. The aim is to correct the genes that are causing a disease. As an example, Vertex Pharmaceuticals and Moderna are using this system to cure cystic fibrosis. Editas Medicine is aiming to cure blindness.
  • Cell engineering. Crispr can be used to engineer cells to fight diseases. An example of this is Gilead-backed Timmunity which is developing CAR-T cells modified using CRISPR
  • Basic research. CRISPR is also an amazing tool to drive new discover and understand how each gene works.
  • Agriculture is a very large market for CRISRPR. Bayer AG is building a better blueprint to reduce the need of pesticide and other resources in crops.

How to invest in gene editing

The one mentioned above are just some examples. Probably the two most popular CRISPR stocks are Editas Medicine and Intellia Therapeutics, but nearly every big pharma and biotech has gene editing in its major research areas or is using CRISPR-Cas9 or have partnerships for developing new therapies. Also sequencing like Illumina can help to identify off-target gene modifications. As I mentioned before, it is not only about making the tool to modify the genome but also understand the disease to identify which part of the genome needs to be modified.

In my opinion, this is the type of technology that won’t lead to only a couple of winners but has the potential to push the entire biotech sector to new highs, causing a similar effect of the advent of next generation sequencing.

Indeed, next generation sequencing lead to biotech outperforming even Nasdaq 100 in the long run. A lot of scientists believe that this is just the tip of the iceberg for gene-editing and biotech. I have no doubt that biotech should be in every investor portfolio.

After the burst of the tech bubble, biotech and Nasdaq had similar performance. After 2011, biotech greatly outperformed Nasdaq, driven by next generation sequencing. The needs of Covid-19 treatments together with constant innovation can help biotech to keep outperforming tech stocks in the future.

CRISPR was also in the center of a patent dispute which is still ongoing and could limit the licensing of these technologies and harming some of the current top CRISPR stocks. An overview of the patent dispute can be found here.

Conclusions

In summary, biotech ETFs, $XBI and $IBB, are great starting points which will also limit the risk. If you are interested in a more diversified portfolio which included healthcare together with other industries, you can consider copying my trades.


Learn more

This is a great video explaining multiple aspects of gene-editing.

Links:

Nobel prize award: https://www.nobelprize.org/prizes/chemistry/2020/press-release/

My eToro account: https://www.etoro.com/people/simonerizzetto88

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