One Company at the Frontier of Gene-Editing Technology (Ticker Revealed Inside)
When Moderna Inc. (MRNA) announced it was partnering with a gene-editing company, our team picked up on this as more than just news.
Gene-editing technology is something that we've been following for a while at TradeSmith, and for good reason: The global gene-editing market was valued at $5.06 billion in 2021 and is expected to be worth $21.36 billion by 2030, a 322.13% increase in less than 10 years.
While Moderna did not pass the test as a company to own according to our Health Indicator, there is another company using CRISPR gene-editing technology that could be considered a more favorable investment. We shared this company at the end of 2022, but we thought that now would be a good time to revisit it.
Cancer, blood disorders, blindness, AIDS, cystic fibrosis, muscular dystrophy — those are just some of the first diseases CRISPR could cure.
It's a complicated technology, but investors can think of CRISPR as a genetic engineering tool that allows scientists to replace disease-causing mutations.
Source: InnovativeGenomics.org
The potential for how this can help people throughout the world can't be understated:
Muscular dystrophy would no longer sentence children to a life of limited mobility.
The 43 million people living with blindness could have their sight restored.
Sickle cell anemia could be cured, allowing people with the disorder to no longer worry about organ damage, strokes, and chronic pain.
And there are use cases that haven't even been dreamed up yet for how this new technology can help us in the battle against disease and illness.
But all of this won't happen overnight; CRISPR-based treatments are still a few years away from being broadly available.
In a Sept. 12 story in The Atlantic, Jennifer Doudna, the Noble Prize-winning co-inventor of CRISPR gene-editing technology, said much more work needs to be done to get the technology to a point where it can be widely used:
“I think back to the advent of the cellphone—another groundbreaking technology in our shared memory. For those of us lucky enough to have experienced it, the untethering of communication from a landline was a seminal moment. But who could have predicted that this once niche and luxury technology would become so ubiquitous as to outnumber the human population, creating new economies and changing the way we live?”
“CRISPR may well be on a similar precipice. But for this technology to be widely adopted, it needs a push, just like mobile phones did. Fueling the proliferation of those devices was a host of other technologies and infrastructure systems—voicemail, cell towers, and processing power far exceeding the system that guided the Apollo to the moon. Ensuring that CRISPR reaches its full potential for clinical applications and beyond will require an even higher level of intentional building with diverse and dedicated collaborators.”
Biotech companies are risky investments, as it can take 10 to 15 years and millions of dollars to get a new therapy from preclinical research to approval, and there is no guarantee that a new therapy will ever be approved.
You need to know your risk tolerance, financial situation, and long-term goals before considering spending a single dollar on a biotech investment.
However, if you expected a “but” was about to arrive… you're right.
While you always want to account for what's currently happening in the market and have a plan of attack to make money in the here and now, it also pays to be informed, prepared, and ready to pounce on upcoming opportunities.
Like the folks who invested in an unassuming online bookseller run by a 33-year-old CEO on May 15, 1997.
Amazon.com Inc. (AMZN) started out selling just one type of product, but in 2019, it surpassed Walmart as the world's largest retailer.
It lit the fuse for the e-commerce boom and established the now ubiquitous expectation of two-day shipping. As of 2019, 44% of people go directly to Amazon to start searching for products, bypassing search engines.
And the retail investors who recognized Amazon's potential and invested early became millionaires.
That's right.
One thousand dollars invested in Amazon's IPO would have been worth over $2 million by July 2, 2021.
What's even more mind-boggling is that the wealth Amazon created for shareholders came from online shopping.
Imagine how much money could be made by investing in companies that could provide lifelong cures to genetic conditions.
With this company, you may not have to imagine.
Meet Beam Therapeutics Inc. (BEAM)
Founded: 2007 IPO: Feb. 5, 2020 Health Indicator: Yellow Zone
Beam has a portfolio of gene-editing technologies that include base editing, prime editing, nuclease editing, and RNA editing.
One area of Beam's business that's worth focusing on is base editing.
Beam's Chief Scientific Officer Giuseppe Ciaramella did a great job easily explaining the difference between base editing and other gene editing approaches, saying, “Many existing gene editing approaches are like 'scissors' that cut the genome. Base editors are like 'pencils' that enable erasing and rewriting one letter of the genome at a time.”
Beam believes that its work in base editing has three distinct advantages over existing gene editing approaches:
Source: BeamTX.com
And Beam's base editing has attracted the attention of a $225 billion pharmaceutical giant.
Pfizer Inc. (PFE) signed a four-year deal with Beam for a research collaboration in base-editing programs for rare genetic diseases of the liver, muscle, and central nervous system.
Pfizer said in a January 2022 press release that it would make a $300 million payment to Beam as part of the deal. Beam is also eligible to receive another $1.05 billion in milestone payments, as well as royalties on global net sales.
In its most recent investor presentation, Beam highlighted several other notable deals it had made:
You can also see in the image below the progress of Beam's programs, with BEAM-101 being the nearest to clinical trials:
Source: BeamTX.com
Now, as was mentioned earlier, biotech investing does require you to know your risk tolerance and your goals, and we can share a few metrics to keep in mind.
What stocks should you sell, continue to hold, or buy more of? Thanks to the discovery of a 4-digit code assigned to every publicly traded stock, these "Cash Out Codes" can help you decide. By knowing the "Cash Out Code" of any stock – you have the information you need to decide if you should hold that stock, buy it, or sell it.
"Cash Out Codes" warned of an imminent downturn for many stocks on February 27, 2020 – just before the Covid-19 crash.
Using them would've allowed you to outperfrom Warren Buffett over a 20-year span according to backtests – +697% vs +655%.
Using them could've made you five times richer than being a client of famous hedge fund Greenlight Capital, known for its 26% average annual return.
And documented backtests show gains of +3,024% HIVE... +3,713% RIOT... +1,429% MARA... +569% PACB... and so many more.
Our Volatility Quotient (VQ) says that BEAM is a sky-high-risk investment. Beam Therapeutics also receives a Business Quality Score of 39 out of 100, so it is on the lower side of things.
Insiders have also sold $6.7 million worth of stock in the first quarter of this year.
The selling does make sense to a certain extent; BEAM went public in 2020, and during the first few years of a company being publicly traded, it is common for high-level executives to sell some of the shares they have been holding on to for a while. However, it is always better to see insider buying because it signals that those who are most familiar with the company believe the share price will go up.
With all of that in mind, there are also a few encouraging metrics and outlooks to share for BEAM.
The first is that, since July 2022, BEAM has been identified by our Health Indicator as an investment to make or to consider with caution, as it has alternated between the Green Zone and the Yellow Zone during that time.
The second is that the Relative Strength Index (RSI) of BEAM is 38.40.
When the RSI is below 30, a stock is considered oversold, and when it is above 70, it is considered overbought.
Keep in mind that RSI is not an infallible metric, but when the RSI has neared 30 in the past, the stock has gone on to rally significantly, as you can see on the chart below. If BEAM's RSI continues to drop, that could indicate a buying opportunity.
Finally, something to consider is the expectation for the stock price.
Obviously, no one has a crystal ball to see into the future, but the consensus one-year price target of a stock is just another piece of information that can help you make an informed investing decision.
According to The Wall Street Journal, the average price target for BEAM over the next 12 months is $71.86; the low target is $45, while the high target is $105.
With the stock currently trading under $40, this indicates that even by the most conservative estimates, BEAM is projected to trade higher over the next 12 months.
If it reaches that average price prediction of $71.86, it would be a gain of 92.96%.
If it reaches the high price of $105, it would be a gain of 181.95%.
Bottom line: Gene-editing technology will help not only the people with the diseases it aims to treat, but also the investors who recognize the potential in the companies driving its development. There are a lot of factors to consider before investing in BEAM, but we hope that this deep dive with our tools and indicators can serve as a launchpad for your own research into the world of gene-editing and biotech stocks.
Take care,
Team TradeSmith
The Secret to Success: Biotech companies like Beam Therapeutics thrive on one simple principle: Always be evolving.
Their business model is built on innovation. The companies that never stop moving forward, the ones that respond to new data and push the boundaries of what's possible, are the ones that will make legendary breakthroughs — and if they're lucky, legendary profits for their shareholders.
And if you want “breakthrough”-magnitude profits, you would do well to learn from their approach.
In the fast-moving market we're navigating today, standing still — sticking with the old buy-and-hold investing strategy — can cause you to fall behind. You need a nimbler strategy, one that allows you to adapt to the mood swings of the market and actually use them to your advantage.
A strategy where you can get paid right now instead of waiting months or even years for a profit that may never come.
We've fine-tuned one such strategy here at TradeSmith. This particular method has boasted a 100% win rate on every trade rec we've closed out in 2023.
Once you discover the freedom and control you gain with this new way to trade, you may never return to your old ways again.
TradeSmith is not registered as an investment adviser and operates under the publishers' exemption of the Investment Advisers Act of 1940. The investments and strategies discussed in TradeSmith's content do not constitute personalized investment advice. Any trading or investment decisions you take are in reliance on your own analysis and judgment and not in reliance on TradeSmith. There are risks inherent in investing and past investment performance is not indicative of future results.
Post a Comment
Post a Comment