This one, I’ll warn you right off the bat, is not new. Dylan Jovine has been using this “cut and paste disease” story to pitch his Behind the Markets ($39/yr) newsletter for about five years now, and the ad has not changed all that much since we started covering it in 2018… but it is still circulating very heavily, so it must be working (meaning it’s catching the eye of subscribers, it’s working for the publisher… not that the investment is “working” to make money for people).

Here’s a little taste of the ad, for those who haven’t seen it yet — it remains undated, and does not point at any specific dates or catalysts:

“Scientists Believe New Breakthrough Could…

“‘Cut & Paste’ Disease From Your Body

“The Wall Street Journal Reports: ‘It’s Transforming Medicine.’

“60 Minutes Reports: ‘It’s revolutionizing the search for new drugs.’

“The Nobel Prize Committee: ‘It’s the Holy Grail of Medicine.’

“And one small company owns the patent on it!”

And he uses a photo of a little vial as essentially a metaphor (no, there’s not a secret substance that cures all disease), here’s what he says about that “vial”:

“The Liquid in this Vial Can Treat All 6,000 Genetic Diseases…Combined!

“But what makes the liquid in this vial so unique is that scientists believe it can treat all 6,000 genetic diseases.

“If that sounds like science fiction, consider this –

“The largest drug companies have invested billions of dollars into this treatment.

• Juno Pharma just invested $700 million.
• Baxter Labs invested $62.5 million.
• Glaxo SmithKline invested $350 million.
• Johnson and Johnson invested $292 million.
• Allergan invested $90 million.
• Novartis invested $83.5 million.”

Those are all investments into a theme, really, not one specific stock — those companies did not all partner with or invest in the same firm, but they have all invested in various different gene-editing and gene-therapy projects and treatments, ranging from partnering on specific drugs to initial venture/R&D funding.

And though, again, we don’t get a date in this pitch, we’re told it’s a small company… and that it has the same huge potential as Amgen in the 1980s…

“This treatment will not just change medicine…

“It has the potential to eliminate genetic disease for our species.

“And because of that, it’s going to create more millionaires than any other single breakthrough in history. More than the internet, more than computers, more than cars.

“The current market capitalization is just $1.5 billion.

“But analysts like Keith Speights think it could be worth $1 Trillion, putting it in the same league as Facebook, Amazon and Google.

“That’s because Wall Street sees the potential of Amgen.

“Early investors in Amgen, a pioneer of biological medicine, earned as much as 46,751% on their money.”

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Jovine says there are three key ingredients for a biotech investment…

“Ingredient #1 – Strong Patent.

“Once you have a strong patent it’s like owning a toll bridge. Everyone who wants to pass by has to pay you a toll.

“Ingredient #2 – Strategic Partner.

“A partner who treats similar diseases or conditions. A partner who take your breakthrough global by turning a switch.”

(And he includes a slide with the names fo some big players, pretty much every Big Pharma stock you could name offhand, though doesn’t specifically say that this batch of companies has specifically partnered with his favorite stock)

And one final ingredient:

“Ingredient #3 – Survived Patent Challenge.

“If someone challenges your patent that means they consider it valuable. And if you win that’s a big deal.”

The ad also runs through the mechanics of the “cut and paste” operation to remove sick DNA and replace it with healthy DNA, which is essentially a simplification of the CRISPR/Cas9 gene editing technique that has gotten a lot of press over the past decade, following the breakthrough work of the labs led by Jennifer Doudna, Emmanuelle Charpentier and Feng Zhang. Our own Doc Gumshoe did a good overview of CRISPR and explained the gene therapy world pretty well in an article last year, if you’d like some background.

And some more FOMO language to get you revved up:

“With the stakes so high you can bet Big Pharma will keep their eyes on this company as more of their hotly anticipated results come in.

“Either way, we’re at the very beginning of this revolution.

“And this is just the beginning of what looks to be a very profitable ride for early investors.

“The market for this treatment will grow beyond anything we’re used to.

“CRISPR is to the drug industry what the iPhone was to the old cell phone: fasten your seatbelt because things are about to change very quickly.”

That’s about it, in terms of clues, but it’s enough to confirm that Jovine must still be teasing not just the idea of “CRISPR” gene editing in general, but the longtime perceived patent leader in that space, Editas (EDIT) specifically. That was our judgement when we first saw the different-but-similar versions of this ad circulating back in 2018 and 2019, and he hasn’t really changed the theme much… even though, yes, we should remind you that Editas is no longer a $1.5 billion company (it bounced around that level for much of 2018 and 2019, eventually spiking to $5 billion for a hot minute during the 2021 market mania, but was last above a $1 billion valuation back in January of 2022… the market cap is now around $500 million, bouncing around it’s all-time lows).

What has happened since? Well, CRISPR is still a great story, and the hope is still high, but the stocks who went public as very early stage R&D companies on the strength of that hopeful story have fizzled out…. with Editas fizzling out more than the other two early entrants, CRISPR Therapeutics (CRSP) and Intellia Therapeutics (NTLA), both of which are now MUCH larger companies… here’s what that looks like on a stock chart for Editas, which was the first company to go public in this space, to much fanfare, in early 2016:

And here’s what EDIT looks like compared to CRSP and NTLA… being first, and getting some early patent wins, doesn’t guarantee success:

Why the weakness? Probably mostly because though the first clinical trial from Editas did finally get underway, providing some hope for a while, that trial moved slow, and was halted last year after generating “lackluster” results. Some of their partners have also pulled away, or early-stage partnerships have run their course without producing anything notable, so investors have run low on reasons for optimism. Others have fared better, particularly CRISPR Therapeutics (CRSP), whose partnership with Vertex (VRTX) led to successful clinical trial progress in recent years and a FDA filing a few weeks ago for approval of their treatment, called Exa-cel, for Sickle Cell Disease and Beta Thalassemia. That’s the first filing for regulatory approval for a CRISPR therapy, and they’ll probably have an answer from the FDA within six months (it’s already got all kinds of “boosters” from the FDA, including Fast Track and Orphan Drug designations).

For me, this is an area where I know my understanding is limited… and where I also know that the stocks have mostly traded on the hope that their early patents and partnerships will make them foundational leaders of the gene editing revolution, which is inherently both risky and a very long-term bet. The first CRISPR companies were formed about a decade ago, and came public about seven years ago, and we’re just now at the point where there might be an approval later this year to use this technique in a commercial product. Gene editing is a frightening thing, as well as a fantastic reason for hope for those with genetic diseases, and I would imagine that we’ll continue to see the FDA be careful in green-lighting mass market projects… but we’ll see how it goes.

If I were to invest in this area in any meaningful way, as a distinct non-expert on all things DNA-related, I’d generally be more interested in the tool-makers and the service companies than the drug developers, and I’d spread my bets — either buying a handful of next-generation genetic R&D firms like those first three leaders and some who have come after, or, more likely, buying an ETF or mutual fund for exposure to the area. That would not have prevented you from suffering through the collapse of the bubble in all these stocks after the 2021 peak, but it at least keeps you from trying to bet on R&D programs, something that is probably better left to people who understand the research projects. Two of the funds that cover this area are the iShares Genomics Immunology and Healthcare ETF (IDNA), which tracks an index and is passive, and the actively managed Ark Genomic Revolution ETF (ARKG), and you can see that they, too, suffered through the bubble inflation and implosion that impacted most growth stocks during the pandemic, though Cathie Wood at Ark certainly rode the most explosive stocks more aggressively than the index did (I included Editas in the chart, too, in blue, just for some context — neither ETF includes EDIT shares as of their last updates):

And you know what else that chart indicates? Other than the fact that Editas, the first-mover and acclaimed leader of this space that was pitched by many newsletters from 2018-2020 or so, and the one with the strongest record in patent court, at least according to the headlines, has been among the worst stocks in the sector? It also indicates that maybe if there’s a revolution coming that’s going to create riches for early-stage companies working on genetic diseases and gene editing… you haven’t missed it, and there’s no big rush. Stories move a lot faster than real science.

Have you been following the CRISPR story over the past few years? Enjoyed some of the gains or losses from the early leaders in this space? Do let us know if you’ve got favorites, or if you’re sticking with Editas or any of the other CRISPR hopefuls (or if you think some other technology is going to leave CRISPR in the dust before it really even gets going). This is an area where my knowledge is very limited, so I look forward to hearing what you think… just use our happy little comment box below. Thanks for reading!