In June 2012, the world changed forever – and you probably didn’t even notice.
It was in that month’s issue of the Science journal that U.C. Berkeley professor Jennifer Doudna and Umea University professor Emmanuelle Charpentier unveiled what the scientific community has since labeled the “scientific breakthrough of the century.”
What was this breakthrough?
CRISPR-Cas9 genetic editing systems.
Long story short, Doudna and Charpentier invented a pair of biotechnology “scissors” – called CRISPR-Cas9 systems – that could be used to cut specific DNA threads and modify genes inside of living organisms, via inserting new genes, replacing current genes, or knocking out old genes.
If that sounds like a big deal, that’s because it is…
Doudna and Charpentier’s breakthrough discovery has since ushered in a new era of genetic engineering, wherein some of the smartest people in some of the most prestigious labs in the world are using CRISPR-Cas9 systems to potentially:
- Cure diseases like cystic fibrosis, cancer, and sickle cell disease.
- Create sustainable biofuels.
- Engineer more robust, pest- and disease-resistant crops.
- And much more.
Indeed, the potential applications of CRISPR-Cas9 genetic editing systems are endless, because it’s a DNA-editor, and every living thing on Earth has DNA.
Needless to say, the time to invest in gene editing stocks is right now.
Today we will tell you about one of the leading gene-editing companies in the world.
It’s a well-established gene editor with a rapidly expanding pipeline of breakthrough therapies that, once commercialized, could pave a path for 10X gains in the stock price.
An Undervalued, Well-Established Gene Editor with Huge Upside Potential
There are only a handful of large, well-established gene editors with robust and mature therapy pipelines in the world today. Of those, one that stands out is a $4.8 billion biotechnology company by the name of Editas Medicine (NASDAQ:EDIT).
We like Editas stock for three big reasons.
First, the company is well-positioned to dominate the multi-billion-dollar ocular therapy market.
Editas has established early leadership in developing gene-edited medicines for treating inherited retinal diseases (i.e. genetic blindness). EDIT-101 is the most advanced of these therapies, and is currently in Phase 1/2 clinical trials. Peer ocular medicine EDIT-102 is in the lead optimization phase, while RP4 is in the discovery phase.
This is – without competition – the most mature and diverse portfolio of gene-edited ocular medicines in the market today.
Thus, Editas has clear visibility to one day turn into the company that genetically cures blindness.
Second, Editas has recently expanded into and should emerge as a leader in the $10+ billion hemoglobinopathy market.
In December 2020, Editas submitted an Investigational New Drug (IND) application with the FDA for the initiation of a Phase 1/2 clinical trial for its new EDIT-301 medicine for the treatment of sickle cell disease. That’s a big deal, because it creates a viable pathway for Editas make in-roads in the soon-to-be $15 billion hemoglobinopathies market.
To be sure, Editas is “behind the curve” on gene-edited medicines for sickle cell. Peers like CRISPR Therapeutics are already in clinical trials with such medicines.
But this likely won’t be a winner-take-all market, and there should be plenty of room for Editas to capture sizable market share.
Third, the present valuation on Editas leaves tons of room for long-term upside potential.
Editas is roughly a $5 billion company. Its close peer, CRISPR Therapeutics, is a $15 billion company.
For years, this valuation discrepancy made sense since Editas was focused on the ocular therapy market, while CRISPR was focused on the much bigger hemoglobinopathies market. But, with the launch of EDIT-301, Editas now has exposure to both markets – and therefore, the valuation discrepancy makes significantly less sense.
Indeed, my numbers suggest that – thanks to its robust ocular pipeline, new sickle cell disease medicine, and relatively depressed valuation – Editas stock is a 10-bagger in the making.
Here’s the back-of-the-envelope math.
Global revenue from the genetic disorders market is expected to rise from ~$20 billion in 2016, to ~$50 billion over the next few years. Editas – with its market-leading medicine portfolio – is well-positioned to deeply penetrate that market. At just 10% share, that would imply $5 billion in revenues for the company.
Gross margins should come in fairly high at scale, around 70%. Opex rates should be fairly low once the medicine pipeline has matured. Assuming so, that $5 billion in revenue could flow into $2.5 billion in net profits.
A 20X multiple on that implies a potential future market cap for Editas of $50 BILLION – about 10X the current valuation.
So… if you’re looking for an explosive play on the biggest scientific breakthrough of the century… you should consider taking a position in Editas stock today.
— Luke Lango
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Source: Investor Place