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Thematic ideas | Healthcare: Genome medicine

Investment outlooks / Q4 2020

The misunderstood opportunity and disruptiveness of genome medicine

In 2015, the US National Academy of Science summarised[1] its views on genome-editing. One key point was the differentiation of editing genes for the intent of one individual (i.e. curing a disease) vs the intent on passing/choosing specific traits to offspring. Hence, they divided this practice into three categories:

  1. Basic research on genome editing,
  2. The use of editing to treat diseases in living people,
  3. Its use to change the genomes of embryos to enhance future generations.

At full scale, genome editing will enable humans to effectively pick and choose their descendant’s characteristics as well as potentially extending the human mortality frontier. Editing germline cells – those cells involved in reproduction and responsible for passing trait to offspring – will require both extensive philosophical and ethical discussions. These are intrinsic in the nature of the healthcare sector itself and are crucial elements in the ESG investment analysis, which will be discussed more in depth in a dedicated section.

The opportunity currently lies within the first two points as the Academy’s statement legally opened the door to gene editing for the intent of research or curing a disease, whilst leaving the third point still open for debate. Regardless of that third point, gene medicine is already tangible with a first cancer treatment[2] as well as first AIDS[3] treatment using gene editing technologies.

Genome medicine applications in the healthcare sector have been scant due to the high sequencing costs of genes. But the recent rapid decrease in the sequencing cost per genome, as well as advances like the development of the CRISPR[4]-Cas9 gene editing system are expected to trigger a new era in genome medicine. Goldman Sachs[5]expects that genome medicine represents as much as a $4.8tn total addressable market, in addition to disrupting the existing $1tn annual biopharmaceutical market.

Click chart to expand. Source: National Human Genome Research Institute, DNA sequencing Costs, 2020.

Gene medicine and the CRISPR-Cas9 technology

Gene medicine can be distinguished into three, inter-related, technologies: gene therapy, genetically engineered cell therapy and gene editing.

Gene therapy is designed to correct many diseases such as heart failures and Parkinson’s disease at the source by inserting (or editing) a corrected DNA sequence. It uses the natural characteristics of a virus such as influenza, stripping and replacing the virus of its properties and leveraging its ability to replicate within the human body.

Genetically engineered cell therapy is a technology that inserts a desired gene into a cell, working at the cellular level to introduce enhanced cells into the body to fight a disease. Its main current applications is to fight cancer, therefore disrupting the lucrative and established cancer drug market. The two most advanced cell therapies are CAR6 T[6] and TCR[7] and both cell therapies leverage the body’s natural immune system “T cells” to attack cancer.]

Gene editing leverages specific enzyme/proteins to directly modify a cell’s DNA. Unlike gene therapy which can only insert a corrected sequence to override an errant or missing one, gene editing technology functions more like a “molecular” swiss army knife. Due to this, genome editing can potentially offer a “cure” to rare or chronic diseases. Currently, gene editing is used for monogenic diseases which represents 2% of all known 500,000 genetic diseases but scientists are confident that it has the potential to target polygenic diseases. This would open the door to the introduction of several gene edits simultaneously, disrupting billions of dollars of treatment programs.

Click chart to expand. Source: CRISPR — Market Opportunity and Key Players. Ark Investment Management LLC, 2020.

The CRISPR technology is a simple to use programmable genome-editing tool and has been announced as the precursor of a new era in biotechnology. The technology enables the edition, correction and modification of the genetic information of any cells in a fast, cheap and extremely precise way.  Experiments that would previously take years, now take less than a week thus enabling genetic editing at a mass scale. The Cornell Alliance for Science[8] argues that the newly discovered CRISPR technology has not only the potential to disrupt the existing landscape, but also has the potential to significantly expand the landscape itself. By substantially increasing the productivity of researchers and by lowering the cost per experiments, the platform is used not only for drug discovery but also in agriculture, diagnostics and environmental science. The sophistication of this technology is so simple that even high school students are now experimenting with it[9].

The adoption of this technology will enable fast growth in genomic sequencing. As such, the clinical adoption of next generation DNA sequencing is also set to drive volumes from 2.6 million in 2019 to over 100 million by 2024 as per below. Given the explosion of computing power that will be necessary to sequence, store and analyse genomic data, sequencing and software companies as well semiconductor chip companies and cloud storage firms are all set to benefit from the deployment of CRISPR technology. As such, via complementarity, investors may already have some form of indirect exposure to genome medicine via Alphabet and Amazon.

Click chart to expand. Source: ARK Investment Management LLC, 2020. Sequence volume is measured in whole human genome data equivalents which is defined as 96 giga-bases of genomic data (32GB genome at an average coverage of 30X).

Gene therapy innovater, Pfizer, currently has two haemophilia gene therapy candidates in phase 3 trials. BioMarin is also a key player in this segment and was positioned to be the first to market a treatment until the 19th August 2020 when the FDA blocked the company’s haemophilia therapy and delayed it for two years. BioMarin has responded and remains an interesting player.

Cell therapy can be tricky to navigate as the infrastructure for the administration is still under-developed and, in the US, the reimbursement does not incentivise the referral of patients. Nevertheless, major players in this segment are Bluebird Bio which have an advanced first-generation CAR T cell therapy as well as larger pharmaceutical groups Bristol-Myers and Johnson & Johnson.

With regards to gene editing, an interesting way of getting exposure to this technology would be via the CRISPR technology platform itself. Whilst the intellectual property of the platform is not expected to be owned by one company (implying a steady source of royalty revenue), Editas Medicine, Intellia Therapeutics and CRISPR Therapeutics have secured exclusive licences for CRISPR technology for human therapeutics.

For investors interested in gene editing applications in the Agriculture and Environmental Science industries, major players are Bayer (following the acquisition of Monsanto) as well as Dupont de Nemours.


[1] On Human Gene Editing: International Summit Statement. https://www.nationalacademies.org/news/2015/12/on-human-gene-editing-international-summit-statement

[2] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5335857/

[3] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6439341/

[4] CRISPR: Clustered Regularly Interspaced Short Palindromic Repeats.

[5] Profiles in Innovation: The Genome Revolution, Goldman Sachs, 10 April 2018

[6] Chimeric Antigen Receptor

[7] T-cell Receptors

[8] https://allianceforscience.cornell.edu/blog/2018/07/10-ways-crispr-will-revolutionize-environmental-science/

[9] https://www.sciencedaily.com/releases/2019/05/190507121419.htm


Past performance is not a reliable indicator of future returns. Forecasts are not a reliable indicator of future returns. If the information is not listed in your base currency, then the result may increase or decrease due to currency fluctuations.

If not otherwise indicated, all graphs are sourced from Dolfin research, October 2020.

For more information please read our disclaimer.

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