We recently published a list The 10 Most Promising Gene Editing Stocks to Buy According to Hedge Funds. In this article we will look at where Editas Medicine, Inc. (NASDAQ:EDIT) stands out from the other most promising gene editing stocks to buy, according to hedge funds.
The pharmaceutical industry remains a center of patent innovation, driven by evolving treatment paradigms, unmet medical needs, and the growing influence of technologies such as pharmacogenomics, digital therapeutics, and artificial intelligence. At the forefront of modern biotechnology are gene therapy and gene editing. Gene therapy corrects genetic defects by introducing new genetic material at the cellular level, often by adding a functioning copy of a gene.
Genome editing began to be used in clinical trials in the mid-2000s. In 2014, CRISPR and CRISPR-associated (Cas) proteins were still primarily research tools generating excitement in academic circles. Their medical potential was obvious, although the path to real treatments seemed distant. Six years after the Nobel Prize, CRISPR technology is now being tested in more than 20 clinical trials.
READ ALSO: 10 Most Promising Biotech Stocks According to Hedge Funds.
The cell and gene therapy sector faces significant investment challenges following the boom of 2020 and 2021. However, signs of recovery are emerging, according to data presented by the Alliance for Regenerative Medicine at the 2024 Cell & Gene Meeting in Mesa. Investments in the first half of 2024 reached $10.9 billion, exceeding 2019’s total of $9.8 billion. However, these figures are still far below the $19.9 billion and $22.7 billion invested in 2020 and 2021 accordingly, the level of financing will fall to $12.6 billion in 2022 and $11.7 billion in 2023. ARM CEO Tim Hunt admitted the industry was proving to be “very challenging”. ” over the past few years. Hunt emphasized that most of the nearly $11 billion raised at the start of 2024 went to “later stage companies” with advanced clinical trials and human data. Morgan Stanley also noted that the Federal Reserve’s interest rate cut in September could have positive implications for riskier assets such as cell and gene therapy, consistent with broader trends in biotech.
However, Mizuho Securities analyst Jared Holtz warned that those expecting a quick surge in fundraising and IPOs due to lower rates may be disappointed, suggesting a gold rush is unlikely:
“I don’t think the floodgates will necessarily open because the last time we had 50 or more IPOs in a year, it had a negative impact on the broader sector.”
“Be careful what you wish for. I think too many IPOs in this space are actually a very, very significant negative for publicly traded stocks.”
However, the industry remains poised for significant growth. The global genome editing market, valued at $7.98 billion in 2023, is expected to grow to $9.33 billion in 2024 and reach approximately $38.19 billion by 2033, according to a Precedence Research report. This represents a sustained CAGR of 16.95% over the forecast period. from 2024 to 2033. The market expansion is driven by the growing prevalence of diseases such as Down syndrome and cystic fibrosis across the world. Moreover, the ex-vivo segment led the market in 2023, driven by the growing trend of gene harvesting for blood disorders and advances in CAR-T cell therapies. In addition to this, ongoing research into ex-vivo gene therapy for treating diseases such as fatty liver disease and obesity is further accelerating the growth of the market.
Our methodology
In compiling our list of the 10 most promising gene editing companies, we began by examining companies in the sector through ETF holdings and media reports. We then filtered out notable stocks that had an average analyst upside of at least 10% and positive analyst ratings. From this pool, we selected the top companies with the largest number of hedge fund investors based on Insider Monkey’s database of 912 hedge funds as of the end of the second quarter of 2024.
At Insider Monkey, we’re obsessed with the stocks that hedge funds are investing in. The reason is simple: Our research has shown that we can beat the market by emulating the top stocks of the top hedge funds. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, beating the benchmark by 150 percentage points (see more details here).
A scientist looks through a microscope in a clinical laboratory, symbolizing the cutting-edge research being carried out by a biotechnology company.
Published Medicine, Inc. (NASDAQ:EDIT)
Number of hedge fund owners: 26
Average growth potential: 227.38%
Editas Medicine, Inc. (NASDAQ:EDIT) is a clinical-stage biotechnology company developing gene editing techniques using CRISPR technology to treat genetic disorders by modifying patient genomes. The company’s lead drug, EDIT-301, is in late-stage clinical trials for the treatment of sickle cell disease (SCD) and beta thalassemia. In the RUBY study, the biotech firm showed encouraging results: 100% of patients did not experience vaso-occlusive crisis (VOC) and maintained stable hemoglobin levels during follow-up.
Leerink Partners affirmed Editas Medicine, Inc.’s market performance rating on October 4. (NASDAQ:EDIT), maintaining its target price at $8. This follows Editas’ financing agreement with DRI Healthcare Trust, under which Editas Medicine, Inc. (NASDAQ:EDIT) has secured an upfront payment of $57 million in exchange for future licensing fees and payments related to its existing licensing agreement with Vertex Pharmaceuticals. Under the agreement, DRI Healthcare Trust is entitled to receive up to 100% of annual licensing fees ranging from US$5 million to US$40 million, as well as a mid-double-digit percentage of Vertex’s contingent upfront payment of US$50 million.
Insider Monkey’s Q2 database shows 26 hedge funds are bullish on Editas Medicine, Inc. (NASDAQ:EDIT), up from 21 in the previous quarter.
Overall, EDIT ranks 6th on our list of the top gene editing stocks to buy according to hedge funds. While we recognize EDIT’s potential, we believe AI stocks are better positioned to deliver superior returns and do so in a shorter time frame. If you’re looking for an AI stock that has more promise than EDIT but is trading at less than 5 times its earnings, check out our report on cheapest AI stocks.
READ MORE: 8 Best Wide-Moat Stocks to Buy Now And BlackRock’s 30 Most Important AI Stocks.
Disclosure: none. This article was originally published on Insider monkey.
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