(NTLA) Archives

The Future of Medicine

Winning the Nobel Prize in 2020 provided biotechnology companies more traction on Wall Street.

The victory led to commercializing the 2012 discovery, Crispr-Cas9, at breakneck speed, with gene editing companies like CRISPR Therapeutics (CRSP), Editas Medicine (EDIT), and Intellia Therapeutics (NTLA) gaining considerable boost in their values.

Since then, the total market value for the products of these three has more than doubled in recent months to reach $23 billion.

Basically, Crispr-Cas9 functions like molecular scissors.

What makes this technology incredible is that Crispr-Cas9 can classify a single address out of 3 billion letters within the genome by using only a particular sequence. With this, we can repair thousands of genetic conditions and even offer more potent ways to battle cancer.

The market favorite among the gene editing companies so far is CRISPR Therapeutics, with $8.72 billion in market capitalization.

In comparison, Editas has $2.76 billion while Intellia Therapeutics has $4.15 billion.

CRISPR Therapeutics is currently working on a treatment that would implant tumor-targeting immune cells in cancer patients. The company is also prioritizing therapies that could edit cells to treat diabetes.

So far, it has made significant progress in developing treatments for a genetic disorder called sickle cell.

In the US alone, at least 100,000 people suffer from sickle cell disease, with 4,000 more born every year. Conservatively, we can estimate at least 3,000 patients availing of this one-time treatment at over $1.6 million a pop.

To date, CRISPR Therapeutics has five candidates under clinical trials for diseases like B-thalassemia, sickle cell disease, and other regenerative conditions.

It has four more queued, which target diabetes, cystic fibrosis, and Duchenne muscular dystrophy.

Compared to its rivals in the space, it’s clear that CRISPR Therapeutics is ahead when it comes to product development and trials.

Two of its candidates, transfusion-dependent beta thalassemia treatment CTX001 and sickle cell disease therapy CTX110, have already been submitted for clinical tests for safety and efficacy.

Recently, Vertex (VRTX) boosted its 2015 agreement with CRISPR Therapeutics by 10%, with the deal reaching $900 million upfront to push for quicker results in developing CTX001.

This is a crucial move for Vertex, but more so for CRISPR Therapeutics as CTX001 holds a highly lucrative addressable market.

The additional funding significantly widened the gap between the Vertex-CRISPR team and bluebird bio (BLUE) in the race to launch a new gene editing therapy targeting sickle cell disease and beta thalassemia.

To sustain its growth, CRISPR Therapeutics’ strategy is to develop drugs that only require mid-level complexity but can rake in generous financial rewards.

This is a similar tactic used by bigger and more established biotechnology companies like Pfizer (PFE), Novartis (NVS), and Gilead Sciences (GILD).

Evidently, this strategy is a great way to ensure cash flow.

Aside from its earning from the commercialization of these products, CRISPR Therapeutics can also attract larger companies to buy the intellectual property of their breakthrough treatments.

After all, startups generally get 100% premiums in contracts with Big Pharma.

Good examples of this are Novartis that bought AveXis and Roche’s (RHHBY) purchase of Spark Therapeutics.

The Roche-Spark agreement led to the first-ever FDA-approved treatment since gene therapy trials started in the 1990s. It was for the genetic blindness therapy Luxturna, which received the green light in 2017.

The second approved treatment was a muscle-wasting disease therapy Zolgensma, which was the fruit of the Novartis-Avexis acquisition.

Both conditions are rare, but the financial rewards are impressive.

At $2 million for each treatment, Zolgensma sales reached $1.2 billion annually. At the rate the therapy is selling, Novartis estimates that Zolgensma will surpass the $2 billion mark in 2021.

Novartis and Roche aren’t the only ones partnering with smaller gene editing companies.

Pfizer has been working with biotechnology companies BioMarin Pharmaceutics (BMRN) and UniQure (QURE) to develop a treatment for blood-clotting disorder hemophilia.

The COVID-19 frontrunner is also collaborating with Sarepta Therapeutics (SRPT) to come up with a treatment for Duchenne muscular dystrophy.

Gene editing has also served as the foundation for several biotechnology companies out there today like Sangamo Therapeutics (SGMO), Cellectis (CLLS), and Allogene Therapeutics (ALLO).

The market size for gene editing treatments is estimated to be worth $11.2 billion by 2025, with the number rising between $15.79 billion to $18.1 billion by 2027.

This puts the compounded annual growth rate of this sector to be at least roughly 17%.

While this is already groundbreaking with only a handful of companies knowing how to utilize the technology, the gene editing world has come up with a more advanced technique than Crispr-Cas9.

The technology is founded on the “base editing” or “prime editing” technique, which is the simplest type of gene editing that alters only one DNA letter.

So far, one company holds exclusive rights to this technology: Beam Therapeutics (BEAM).

When the technology became public, Beam stock has increased sixfold since its IPO in February 2020.

This latest development can resolve thousands of genetic diseases. However, it still requires further trials since “base editing” can also trigger damaging responses from the body.

Overall, I think CRISPR Therapeutics is the safest among these high-risk stocks.

The data from two of its candidates, CTX001 and CTX110, are incredibly promising. Plus, the added funding from Vertex boosts the confidence of investors that regulatory approval is well on its way.

The company is also capitalizing on the surging price of its stock and investing aggressively across different rare disease programs.

While the company has yet to be considered a major force in the biotechnology world, the potential multiple successes of its products could generate a company worth hundreds of billions.

This potential alone offers an investing opportunity with a substantial asymmetric advantage for its current share price.

However, bear in mind that the stock is still a risk and should be played as a long-term investment. Hence, you should buy on dips.

crispr

September 10, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
September 10, 2020
Fiat Lux

Featured Trade:

(CAN CRISPR STOP THE SILENT KILLER?)
(CRSP), (VRTX), (EDIT), (NTLA)

Can CRISPR Stop the Silent Killer?

Biotech Letter

Obesity has virtually tripled worldwide since 1975.

In 2019 alone, the World Health Organization classified 38 million children under 5 years old as overweight or obese.

More alarmingly, obesity has been dubbed as the “silent killer” because it is one of the leading factors that cause premature deaths.

In 2017, 4.7 million or 8% of global deaths were linked to this condition.

For context, the number of deaths caused by obesity is 4 times the fatality rate from road accidents and almost 5 times the number of those who died from HIV/AIDS.

Right now, 39% of adults across the globe are considered overweight and 13% are obese.

By 2030, nearly half the adult population of the United States is expected to be suffering from obesity.

Now, we might have the answer to this “silent killer:” CRISPR gene editing.

A recent Harvard study showed that CRISPR gene editing can be used to engineer cells to avoid weight gain and even potentially stop the onset of obesity-related diseases like diabetes.

The solution is straightforward.

The scientists will convert the body’s white fat, which is the “bad fat,” into brown fat or the "good fat.”

Brown fat is known as the healthy fat because it produces heat for the body by burning calories. Meanwhile, white fat tends to build up and leads to obesity.

Through CRISPR gene editing, the white fat is transformed into brown fat. This will then be burned by the body and used as an energy source, which can also result in weight loss.

So far, the technology proved to be successful in mice which were put on a high-fat diet.

What CRISPR targets is a gene for a protein called UCP1, which is distinctly found in brown fat.

The function of UCP1 is to turn chemical energy into heat.

Using the UCP1, the researchers created cells that closely resembled brown fat cells. These are called human brown-like cells or HUMBLE cells.

The manufactured HUMBLE cells are then transplanted into the mice with weakened immune systems. These mice were also fed with a high-fat diet.

Upon observation, they found that the modified cells actively helped in preventing the progression of obesity in mice and even showed improvements in the metabolic function of the animals.

Over the course of 12 weeks, the mice given white fat cells continued to gain weight while those transplanted with the HUMBLE cells showed weight loss. The latter also showed higher sensitivity to insulin, indicating that they could be protected against diabetes.

This is where it gets interesting because the technique can ultimately lead to cell therapies not only for obesity but also other metabolic disorders.

In the future, the process could evolve into something as convenient as removing a small amount of a patient’s white fat and having that engineered into brown-like fat and re-implanted to the same person’s body.

Apart from that, the HUMBLE cells also appear to send a chemical trigger to the existing brown fat stored in the mice’s own bodies, stimulating them to burn more energy.

This means that a simpler treatment method could be explored in which the experts could mimic the signal to activate the patient’s own brown fat. This will no longer require re-engineering the white fat and re-implanting it, making the entire treatment extremely straightforward.

The release of this study has profound implications to the total available market for CRISPR gene editing technology.

In the US alone, over 34 million are suffering from diabetes. The medical spending and loss of work wages linked to this is valued at roughly $327 billion annually.

If this technology proves to be effective in boosting a patient’s insulin sensitivity, then it could open an exponentially huge market.

Aside from diabetes, obesity is also considered a major risk factor in certain types of cancer, fatty liver and kidney disease, osteoarthritis, and even pregnancy problems.

This study is another example of how gene editing can be utilized to find treatments for untreatable conditions in the past years.

With this groundbreaking potential, it is no wonder investors are lining up to get their hands in biotechnology stocks in the gene editing sector.

The most widely known gene editing stock is CRISPR Therapeutics (CRSP).

With a market capitalization of $5.72 billion, this company is the only one in its field with actual treatments set for launch in the market soon.

One is a rare genetic disease treatment called CTX-001. Every year, about 60,000 people are born with this condition, causing anemia, lifelong pain, and early death. The other treatment is CTX-100, which is geared towards cancer patients.

Compared to its competitors like Editas Medicine (EDIT), which has a market capitalization of $1.82 billion, and Intellia Therapeutics (NTLA) with $1.03 billion, CRSP has a financial runway that can be reassuring to its investors.

CRSP also has minimal debt and a beneficial partnership with healthcare giant Vertex Pharmaceuticals (VRTX). This makes it one of the most attractive gene editing stocks out today.

Nonetheless, buying early stage companies, especially in the biotechnology sector, can be like oil wildcatting back in the 1930s. The key is to spread your bets broad enough to boost your chances of finding a gusher.

If this CRISPR gene editing technology works to treat obesity and even diabetes, then it could revolutionize the medical field.

While it’s still wise to exercise caution when investing in gene editing stocks, this technology undoubtedly embodies how the future of medicine looks like.

August 27, 2020

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
August 27, 2020
Fiat Lux

Featured Trade:

(THE FUTURE OF GENE-EDITING TECHNOLOGY)
(CRSP), (VRTX), (BAYRY), (NTLA), (NVS), (EDIT), (BMY)

The Future of Gene-Editing Therapy

Biotech Letter

There are wise investments, and there are excellent investments.

CRISPR Therapeutics (CRSP) has been proving to qualify in the latter category.

In fact, the company is considered one of the best biotechnology stocks to own during these turbulent times. It is estimated to dominate the gene-editing therapy market, which will reach roughly $11.2 billion in worth by 2025.

Four years ago, CRISPR Therapeutics stock was trading at $14.09. Today, each share is worth $90.35.

This means that CRISPR Therapeutics biotechnology company has been trading for 540% more than its value since it went public in 2016.

This is a remarkable pace for a biotechnology stock, with CRISPR Therapeutics raking in $289 million in trailing 12-month revenue thanks to strategic collaborations.

It even has a decent $890 million stored in cash, with the company reporting a 16% profit margin despite not having any treatment or drug available in the market yet.

More importantly, CRISPR Therapeutics holds a novel position of being under absolutely zero pressure to push a product out the door.

Nonetheless, the investor confidence in CRISPR Therapeutics relies heavily on the company’s leading position in the groundbreaking world of gene-altering treatments.

Basically, the company specializes in creating and developing therapies for genetic diseases with either no cure available or require frequent transfusions.

Looking at the results of the recent tests on the company’s pipeline candidates, CRISPR Therapeutics is projected to transform into a household name in the next five to 10 years.

CRISPR Therapeutics has five cell therapy candidates in the clinical stage. Three of these target immuno-oncology, while the two are designed for genetic blood disorders like beta-thalassemia sickle cell disease.

Among the five, the most advanced is CRISPR Therapeutics’ collaborative work with Vertex Pharmaceuticals (VRTX) on beta-thalassemia therapy CTX001.

This candidate received a fast-track designation from the FDA, with CRISPR Therapeutics releasing promising preliminary results recently.

However, it is another Vertex collaboration drug that actually yielded CRISPR Therapeutics $25 million at the beginning of 2020.

The drug, which is developed to treat muscular dystrophy disorder, is expected to account for approximately $800 million in future milestone payments in the next few years.

Although the genetic blood disorder programs are raking in millions these days, CRISPR Therapeutics’ cancer treatment pipeline offers an even greater potential in terms of stable revenue streams.

The company is utilizing a gene-editing platform, called CRISPR/Cas9, to create “off the shelf” novel chimeric receptor (CAR) T-cells.

If successful, then CRISPR Therapeutics can use a single batch to treat a broad group of cancer patients.

This is groundbreaking because the typical way involves harvesting T-cells from the patients, tailor-fitting the therapies, then re-introducing the cells to the body.

With this technology, CRISPR Therapeutics can easily cover more markets and offer regular treatments for patients within shorter intervals.

That’s why it comes as no surprise that a major biotechnology player like Bayer (BAYR) reached out to the smaller company for a collaboration.

The CAR T-cell market is projected to hit $8.4 billion by 2027, with an estimated compound annual growth rate of roughly 15%.

Specifically, CRISPR Therapeutics expects this product to become a leader in the solid tumor cancer therapy space, pegged to reach $425 billion by 2027.

However, it is not only CRISPR Therapeutics that is widely known in the gene-editing sector.

To date, the company has two close competitors: Intellia Therapeutics (NTLA), which has a strategic partnership with Novartis (NVS), and Editas Medicine (EDIT), which is working alongside Bristol Myers-Squibb (BMY).

Both are also using the CRISPR/Cas9 technology to come up with treatments.

Although Intellia Therapeutics and Editas went public the same year as CRISPR Therapeutics, neither has performed quite as well.

For perspective, CRISPR Therapeutics currently has a market capitalization of $6.3 billion. In comparison, Intellia Therapeutics has $1.13 billion while Editas Medicine has $2.13 billion.

Keep in mind though that clinical-stage companies, particularly in the biotechnology sector, are inherently risky plays.

Among the companies in the space, CRISPR Therapeutics is emerging to be a solid bet not only from a cash perspective but also based on its strong pipeline and profitable collaborations.

Overall, CRISPR Therapeutics is still considered a high-risk option.

Hence, the safest way to invest is to build a carefully hedged portfolio filled with well-researched gene-editing stocks. This will minimize your risks and guarantee your exposure to the upside in case any of your chosen biotechnology companies makes it to the market with a groundbreaking therapy.

crispr

November 19, 2019

Biotech Letter

Mad Hedge Biotech & Healthcare Letter
November 19, 2019
Fiat Lux

Featured Trade:
(TAKE A WALK ON THE WILD SIDE WITH GENE EDITING),
(EDIT), (NTLA), (CRSP), (VRTX), (REGN), (NOVN)

Take a Walk on the Wild Side with Gene Editing

Biotech Letter

No other industry has inspired fear as much as the biotech world, and no other sector of the biotech industry has garnered such mixed reactions as the gene-editing group.

At the moment, the public has been grossly undervaluing the three major companies that actually hold the power to control the foundational patents for CRISPR-CAS9 — the gene-editing technique with the greatest potential to dominate the biotech industry. These overlooked Big 3 companies are Editas (EDIT), Intellia Therapeutics (NTLA), and CRISPR Therapeutics (CRSP).

There are distinct differences between these three pioneering biotech firms. With a market value of $2.7 billion, Crispr Therapeutics (CRSP) is the first company to venture into clinical trials, attracting Vertex Therapeutics (VRTX) as one of its major investors. Editas, which has a market cap of $1.3 billion, is a close second to Crispr Therapeutics in terms of clinical trials. Despite the issues plaguing its executive department lately, the company is anticipated to eventually land a big partner to help fund its research as well.

Then there's Intellia Therapeutics (NTLA). The company, which has a market cap of $850 million, is considered the laggard in the CRISPR gene-editing world. What further fuels the ambivalence of investors is the expectation that clinical trials for its lone drug candidate won't be ready until 2020 or even 2021. The lack of flashy updates from Intellia Therapeutics has several investors wondering if this low market cap company is actually a good buy.

In its third-quarter earnings report though, Intellia Therapeutics posted revenues worth $10.62 million — a jump from the $7.41 million recorded during the same period in 2018. Aside from that, the company managed to attract Novartis AG (NOVN) as one of its major investors. Recently, the company also established a partnership with Regeneron Pharmaceuticals (REGN), which is viewed as a promising step towards bolstering Intellia Therapeutics’ growth.

Based on their recent updates, Regeneron and Intellia Therapeutics are working on NTLA-2001. This is a treatment for a rare disease called transthyretin amyloidosis (ATTR), also known as a protein misfolding disorder which causes an abnormal protein buildup in the body's organs and tissues.

While this has yet to reach human trials, the preclinical studies involving non-human primates showed an over 95% reduction of the protein in the patient's liver. Since this disease requires chronic dosing throughout the lifetime of the patient, the success of NTLA-2001 has an incredible disruptive potential for one-shot treatments of ATTR. Apart from that, this treatment will position Intellia Therapeutics as the sole dominating force in this gene-silencing sector.

As things stand today, Intellia Therapeutics may seem as if it has been straggling behind Crispr Therapeutics and Editas. However, the promising plans of the company may prove this statement false. While its move to take its time before pulling the trigger on NTLA-2001 may be frustrating for investors eager to see the results, the recent developments show that this was a necessary precautionary measure to protect the company’s potentially revolutionary delivery system. Despite the delay, this move could translate to dividends across all the drugs and treatments in Intellia Therapeutics’ pipeline in the next years.

Despite their status of being on the verge of discovering treatments for the incurable diseases, it’s baffling to watch how investors continue to sidestep these Big 3 companies, which have a measly $5 billion valuation among all three of them.

Gradually though, a number of forward-thinking investors are starting to shift out of growth names and turn into more defensive investment strategies. With this switch in style slowly making its way to the public, more and more biotech stocks are revealed to be extremely undervalued — and it’s only a matter of time before the likes of Crispr, Editas, and Intellia become a household name among investors.

While the biotech industry can be a scary place to invest in, the key to succeeding in this sector is understanding the market. It’s also advisable to diversify your portfolio. However, bear in mind that not all portfolios chock full of trials in their pipeline guarantee success. At times, a company only needs one or two promising treatments that can eventually serve as the stepping stone to 30 or more moneymakers.

Buy Intellia Therapeutics on dips, as it is the cheapest of the lot.

January 24, 2019

Diary, Newsletter, Summary

Global Market Comments
January 25, 2019
Fiat Lux

Featured Trade:
(JANUARY 9 BIWEEKLY STRATEGY WEBINAR Q&A),
(TSLA), (EDIT), (NTLA), (CRSP), (SJB), (TLT), (FXB), (GLD),
(THE PRICE OF STARDOM AT DAVOS)

January 23 Biweekly Strategy Webinar Q&A

Diary, Newsletter

Below please find subscribers’ Q&A for the Mad Hedge Fund Trader January 23 Global Strategy Webinar with my guest and co-host Bill Davis of the Mad Day Trader. Keep those questions coming!

Q: Would you buy Tesla (TSLA) right now?

A: It’s tempting; I’m waiting to see if we take a run at the $250-$260 level that we saw at last October’s low. If so, it’s a screaming buy. Tesla is one of a handful of stocks that have a shot at rising tenfold in the next ten years.

Q: CRISPR stocks are getting killed. I know you like the science—do you have a bottom call?

A: What impacted CRISPR stocks was the genetic engineering done on unborn twins in China that completely freaked out the entire industry and killed all the stocks. That being said, CRISPR has a great long-term future. They will either become ten-baggers or get taken over by major drug companies. The first major CRISPR generated cure will take place for childhood blindness later this year. The ones you want to own are Editas (EDIT), Intellia Therapeutics (NTLA), and CRISPR Therapeutics (CRSP).

Q: Do you ever reposition a trade and add contracts?

A: I very rarely double up. I’d rather go on to a new trade with different strike prices. A bad double up can turn a small loss into a big one. Sometimes I will do a “roll down,” or buy back one spread for a loss to earn back that loss with a spread farther in-the-money.

Q: For us newbies, can you please explain your trading philosophy regarding purchasing deep in the money call spreads and how that translates to risk management?

A: I did a research piece in Global Trading Dispatch yesterday on deep in-the-money call spreads, and today on deep-in-the-money put spreads. The idea is to have a position where you make money whether the market goes up, down, or sideways. Your risk is defined, and you always have time decay working for you, writing you a check every day. Here are the links: Vertical Bull Call Spread and Vertical Bear Put Spread.

Q: What’s the risk reward of floating rate corporate debts?

A: Number one: interest rates go down—if we go into recession, rates will fall. That wipes out the principal value of the security. Number two: with corporate debts, you run the risk of the corporation going bankrupt or having their business severely impacted in the next recession and their credit rating cut. It’s far safer to invest in a bank deposits yielding 2-2.5% right now. Some smaller banks are offering certificates of deposit with 4% yields.

Q: What are your thoughts on the British pound (FXB)?

A: I think Brexit will fail eventually and the pound will increase 25%; so play from the long side on the (FXB). It would be economic suicide for Britain to leave the EC and eventually people there will figure this out. If the Brexit vote were held today, it would lose and that may be how they eventually get out of this.

Q: Is it a bear market for bonds (TLT)?

A: Yes, it’s back on again. I expect we will visit $112 in the (TLT) sometime this year, down from the current $121. That brings us back up to the 3.25% yield on the ten-year US Treasury bond. That is down nine points from here, so it’s certainly worth taking a bite out of.

Q: What’s the best time to buy the ProShares Short High Yield (SJB)?

A: At the top of the next equity market run. It rose a whopping 10% during the December stock market meltdown so that gives you a taste of what can happen. Junk bonds are called “junk” for a reason.

Q: How do you see gold (GLD)?

A: Take profits now and buy back on the next dip. If we dip 5%-10% in gold, that would be a good entry point for a larger move later on in the year. To get a real move in gold, we need to see real inflation and that will eventually come. Another stock market crash will also gain you another 10% in gold.

Q: When will the government shutdown end?

A: I think it will go a lot longer than anyone realizes because Trump needs a deal worse than the Democrats do. Trump is basically saying pay for my wall or I’ll keep shooting another of MY supporters in the head every day. The Democrats can wait a really long time in that circumstance. Trump’s standing in the polls has also collapsed to new lows. By the way, the Chinese are using the same approach in the trade talks so that could be a long wait as well.

Q: There’s been a big shift in the MHFT Profit Predictor in the last 30 days—does this mean we should not be adding any positions?

A: Absolutely; this is a terrible place to be adding any new positions. The index went from 2 to 57 which shows you how valuable it is at calling market bottoms. Now we are at the top end of the middle of the range. All markets are now dead in the middle of very wide trading ranges which means the best thing you can do is take profits on existing positions, which I have been doing. Or watch Duck Dynasty and Pawn Stars replays. As for me, I am an Antiques Roadshow guy.

Q: What percentage should you be invested in the market now?

A: I’ve gone from 60% to 30% and have only 3 weeks left on my remaining position. I’m looking to go 100% cash as long as we’re stuck in the middle of this range. Better to sit on your hands than chase a high risk/low return trade.

Did I mention that we have had the best start to a New Year in a decade?

June 25, 2018

Diary, Newsletter

Global Market Comments
June 25, 2018
Fiat Lux

Featured Trade:
(THE MARKET OUTLOOK FOR THE WEEK AHEAD, OR IS THIS A 1999 REPLAY?),
(AAPL), (FB), (NFLX), (AMZN), (GE), (WBT),
(JOIN ME ON THE QUEEN MARY 2 FOR MY JULY 11, 2018 SEMINAR AT SEA),
(JUNE 20 BIWEEKLY STRATEGY WEBINAR Q&A),
(SQ), (PANW), (FEYE), (FB), (LRCX), (BABA), (MOMO), (IQ), (BIDU), (AMD), (MSFT), (EDIT), (NTLA), Bitcoin, (FXE), (SPY), (SPX)

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