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2 Top Gene Editing Stocks to Watch in June

By Zhiyuan Sun – May 16, 2020 at 10:00AM

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Here's what's behind two of the most exciting stocks in the gene therapy sector.

Investing in gene therapy companies is no doubt an exciting venture. Indeed, sector players are rapidly making progress in combating rare or difficult to treat diseases that traditional chemical based drugs simply cannot accomplish.

While the market for such novel treatments is still young, it is expected to grow by over 18% annually. Here are two stocks making waves in the gene editing sector that avid biotech investors will not want to miss.

Researchers cutting model gene structure with a pair of scissors.

Image Source: Getty Images.

An innovator in hematology 

In collaboration with Vertex Pharmaceuticals (VRTX 3.08%), CRISPR Therapeutics (CRSP 5.23%) is investigating its CTX-001 gene editing technology for serious blood disorders. The treatment is theorized to function via modifying the deficient genes that instruct on the formation of hemoglobin. In an interim data release from a phase 1 clinical trial, two patents with hemoglobin related disorders achieved close-to normal hemoglobin levels after treatment. One patient who had a life-threatening condition related to deformed red blood cells was free of the condition when the treatment course ended. 

The trial is set to conclude by January 2021, and CRISPR Therapeutics can more than handle its financials until then. Currently, the company has over $900 million in cash in hand, compared to about $240 million in annual expenses. If successful, the gene therapy will be able to target a $5 billion market opportunity for hemoglobin related blood disorders. 

Aside from this, CRISPR Therapeutics also possesses three other candidates in the field of cancer immunotherapy. The gene editing technology at play here is called CAR-T cell therapy, which involves a process where blood plasma from the body of a patient or suitable donor is withdrawn and then separated into plasma and T-cells in laboratories. Next, millions of T-cells are genetically engineered to target specific receptors within cancer cells. Finally, the activated T-cells are infused back to a patient's body to produce an immune response in combating their tumor.

CRISPR Therapeutics expects interim phase 1 clinical data for these programs to be released sometime this year. Meanwhile, another gene editing company has moved further into the next generation of cellular immunotherapy with a novel discovery. 

A visionary in cellular immunotherapy 

Unlike CRISPR Therapeutics, Fate Therapeutics (FATE 6.58%) has decided to pursue the induced pluripotent stem cell (iPSC) technology to develop its own series of next generation cellular immunotherapies.

Unlike the CAR-T cell therapy, iPSC consists of clones of just one single master stem cell that can differentiate into more than 200 different cell types with a one-time genetic engineering event. During this process, different antigens can be attached to different types of cells and then be called upon in a data bank when a specific type of anti-tumor immune response is required. The process is entirely artificial, and eliminates the need to process extracted T-cells from patients or suitable donors. 

Currently, the company's leading candidate utilizing iPSC is called FT500, and has made it into phase 1 clinical trials. So far, the biologic's safety and immunogenicity (the ability of an antigen to provoke an immune response in the body) have been well tolerated as per an analysis of its interim data release. 

Similar to CRISPR Therapeutics, the company also has a line of immunotherapy candidates based on donor derived technology, including NK100, which is based on a select subset of natural killer cells (cells that distinguish normal healthy cells from tumor cells) and is currently under investigation for targeting various forms of solid tumor malignancies. 

In its interim phase 1 data release, all three patients with leukemia who took a single dose of the biologic saw the disappearance of nearly all leukemia cells, accompanied by recoveries of their bone marrow. When 10 patients with ovarian cancer and other advanced stage cancers were treated with escalating doses of NK100, four patients witnessed a halt to the growth of their tumor activities (although their tumors didn't shrink either). During the trial, there was a case of severe abdominal pain deemed likely related to treatment via NK100. 

When evaluated all together, the risk-reward profile of NK100 early on seems decent, especially in the case of treating leukemia. Both the NK100 clinical trial and the FT500 clinical trial are expected to conclude within the next year or two, and investors should be on the lookout for data release in the meantime.

It is also worth noting Fate Therapeutics has $319 million in cash and equivalents, which is more than enough to offset its annual run rate loss of $120 million. And on an interesting note, more than 90% of the company is owned by institutional investors that can vouch for the company's technology. 

Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends CRISPR Therapeutics. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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Stocks Mentioned

CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
$66.96 (5.23%) $3.33
Fate Therapeutics, Inc. Stock Quote
Fate Therapeutics, Inc.
$23.32 (6.58%) $1.44
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
$293.52 (3.08%) $8.78

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