By Matt McCallNov 28, 2018
“We’re dealing with the operating instructions of a human being. It’s a big deal.”
It sure is.
A Chinese scientist named He Jiankui claims to have “edited” the DNA of embryos so they would not be susceptible to the HIV virus. Two of the babies – twin girls – were just born in early November.
This stunning announcement didn’t come in a medical journal, from a university, or even from a hospital. He announced it in a YouTube video. The story has been all over the place, from CNN to Fox News. From The Washington Post to The Wall Street Journal.
A controversy erupted immediately. The quote above is from Dr. Eric Topol of the Scripps Research Translational Institute, who said this experiment was “far too premature.” Others called it immoral, unethical, unconscionable.
He didn’t even provide independent verification that what he claims is true. There is much we don’t yet know. There are also ethical considerations.
We do know this: Gene therapy and related disciplines such as gene editing and gene testing are the future of medicine.
History will show that the application of this knowledge marked a demarcation point in human evolution. Advancements in genetics will save, lengthen, and improve the quality of billions of lives.
Any such breakthrough has enormous financial implications, especially when it involves how long and how well we live. I have no doubt this one will create incredible wealth for investors who understand those implications.
Scientists have tinkered with the idea of changing genes for decades. In the last six years, a new technology has radically changed what we can do in this field. It is called CRISPR/Cas9. He says he used it to edit the genes of those embryos.
To say CRISPR/Cas9 is revolutionary is an understatement. I wrote extensively about this technology in the July issue of Early Stage Investor, where I also recommended specific gene editing stocks.
CRISPR is an acronym for “Clustered Regularly Interspaced Short Palindromic Repeats.” We’ll stick with CRISPR, which we can pronounce like “crisper.”
CRISPR lets you modify any region of a genome. It can be performed on any species with accuracy and without harming other genes. It has the potential to wipe out thousands of diseases that have no cure.
I’m no scientist, but I have done a lot of research into CRISPR and talked to experts about it. Let me give you a brief explanation on how it works.
Once a genome is mapped and problem genes are located, a protein (Cas9) is used to identify and cut the sequence where the mutated gene will be edited (Cut & Revise in the chart below, in which the faulty sequence is fixed and reinserted), deleted (Cut & Remove altogether) or replaced (Cut & Replace with new healthy genetic code). Correcting mutations can ultimately cure a disease.
Think of it like the “find and replace” function in word processing software. Once you find the word, you can delete, edit, or replace it – the same options with CRISPR.
CRISPR could be the secret weapon that will eliminate many diseases.
Take sickle cell disease (SCD), which affects over 100,000 people in the U.S. Another two million people have the trait, and one in every 13 African-American babies is born with the trait. Sufferers lack enough healthy red blood cells to carry adequate oxygen throughout the body. There is no cure.
One “misspelled letter” of DNA causes SCD, also known as sickle cell anemia. If this genetic typo can be fixed, a disease that causes severe pain and often premature death could be wiped out.
SCD is caused by a mutation in just one gene. According to the World Health Organization, there are 10,000 of these “monogenic” diseases. Others include cystic fibrosis, hemophilia, and Huntington’s disease, to name a few.
Sadly, about 95% of monogenic diseases go untreated. Gene editing may be about to change that.
If thousands of diseases can be cured, millions of lives will be saved.
You can see how CRISPR will be huge when it’s ready for prime time.
One investing company, ARK Investment Management, projects the addressable market is $75 billion each year based on new diagnoses. Even more astounding, ARK sees a $2 trillion market of one-time treatments in people already diagnosed with monogenic diseases.
Let’s do a little valuation analysis to put that into context.
If even one CRISPR company captures 10% of the new diagnoses annually and just 1% of the cures for already diagnosed patients, it would amount to $27.5 billion in annual sales.
Biogen (BIIB), one of the largest biotech companies in the world, trades at a price-to-sales ratio of about 5. Let’s give these earlier-stage companies a conservative ratio of 3. That puts the market cap at $82.5 billion.
The average market cap of the CRISPR stocks I recommend in Early Stage Investor is approximately $1.3 billion. Simple math tells us that it takes a 63-bagger to get to the $82.5 billion market cap!
As CRISPR technology gets closer to approval, the market caps of these stocks will jump to more like $20 billion – still a hugely profitable 15-bagger from current valuations.
You don’t get many chances to invest in a once-in-a-lifetime, game-changing medical breakthrough. Be sure to take advantage.
Note: CRISPR is starting to get noticed. Scientific American calls it “a genetic gold rush,” and smart investors who get in early stand to make a lot of money.
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