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This morning's news:

Vertex gives $900m to CRSPR for a 60% stake in sickle cell tx.

Bluebird says commercialization is a tough landscape since payors won't cover it. Lays off a bunch of people.


Take home:
Gene therapy is a minefield.

This does not bode well for editas.
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Take home:
Gene therapy is a minefield.


That's one way of putting it. Nassim Nicholas Taleb of Black Swan fame put it differently, he calls biotech a "Good Black Swan" sector, translated to sportsSpeak it means they hit a lot of balls out of the park while striking out often but, on average, beating the competition (other sectors). With this in mind the strategy for biotech investing is to buy a lot of them since betting on just one or two is too uncertain.

Maybe the way to invest in biotech is via ETFs...

Biotechnology ETF List
https://etfdb.com/etfs/industry/biotechnology/

I'm working on a screen that lets me compare the performance of various stocks and ETFs. The six month performance of the Biotechnology ETF List

Ticker 6 M% Company

PBE 22.6 Invesco Dynamic Biotechnology & Genome ETF
ARKG 21.3 ARK Genomic Revolution ETF
BIB 20.0 ProShares Ultra Nasdaq Biotechnology
BBC 15.9 Virtus LifeSci Biotech Clinical Trials ETF
BBH 14.9 VanEck Vectors Biotech ETF
GNOM 14.5 Global X Genomics & Biotechnology ETF
BTEC 14.4 Principal Healthcare Innovators Index ETF
IDNA 13.1 iShares Genomics Immunology and Healthcare ETF
IEIH 12.5 iShares Evolved U.S. Innovative Healthcare ETF
IBBJ 12.3 Defiance Nasdaq Junior Biotechnology ETF
IBB 11.2 iShares Nasdaq Biotechnology ETF
XBI 10.1 SPDR S&P Biotech ETF
LABU 9.1 Direxion Daily S&P Biotech Bull 3x Shares
SBIO 8.0 ALPS Medical Breakthroughs ETF
BBP 6.6 Virtus LifeSci Biotech Products ETF
CNCR 3.1 Loncar Cancer Immunotherapy ETF
FBT 2.6 First Trust Amex Biotechnology Index
BIS -27.1 ProShares UltraShort Nasdaq Biotechnology
LABD -50.0 Direxion Daily S&P Biotech Bear 3x Shares
Copyright © 2021 Denny Schlesinger

Denny Schlesinger
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Whenever Crispr and BLUE's lentiviral vector for gene therapy comes up I wonder why Sangamo / SGMO with Zinc finger gene editing is not in the same conversation. It seems to be a more precise way of editing genes, less off-target changes. It may be that they have too much patented so there is not a large number of companies working with this?
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With this in mind the strategy for biotech investing is to buy a lot of them since betting on just one or two is too uncertain.

In general, I would agree. I dont think investing in biotech itself is impossible, but this segment of the market (gene therapy) is more of a blackbox than usual. In that ETF list those "genomics revolution" companies probably contain pick and shovel players (likely a more safe bet tbh) like GH, CDNA, NVTA, ILMN, and TXG. These have been fantastic plays over the last few years. Treatments? totally separate issue and difficult to pin down. Gene Therapy treatments? even harder.

-long timelines, often underestimated
-manufacturing woes for just about everyone at some point
-sales for many have been underwhelming, including bluebird in EU, Roche's Luxterna, and Onpattro & Tegsedi have been underwhelming. Zolgensma seems to be the only one that has done well - and its the most expensive and from Novartis!

... :/

-I suspect that right now, for a company going into rare disease, the juice isnt worth the squeeze. read: I dont see an easy path to profitability for companies focused on rare disease.
-companies that make the process easier may have a role - right now, that looks like Magenta. Magenta makes a few monoclonal antibodies that (hopefully) makes prepping for bone marrow transplant and gene therapy treatments faster and safer. Currently it seems like proof of concept would be first demonstrated in the transplant market- and Magenta has some P2 trials to be resulted in late 2021.
-I would like to think that if pricing came down, sales would increase, but Novartis is selling Zolgensma at 2.1 million and doing fine!

For now gene therapy I think is really tough sledding. I do own some bluebird, and *really* want to like the company, but the recent news is ominous. If I wanted to dip my toe in, Magenta & their products to make transplant a smoother process might be an intriguing back door play.
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Personally, I am a bit snake-bitten by Sangamo. Hell, I remember when they were trying to treat diabetic neuropathy.


I preferentially avoid companies that:
-change targets multiple times
-multiple failed attempts
-lingers for decades without meaningfully contributing
-lots of partnerships and spread thin across multiple irons in the fire


I will admit, I'll be watching for their hemophilia combo with Pfizer, though long term viability seems an issue:
https://www.evaluate.com/vantage/articles/events/conferences...

And the collaboration probably means <20% royalties to Sangamo:
https://www.pfizer.com/news/press-release/press-release-deta...


Seems pretty cyclical, so if you were able to buy around $5 and sell for over $10, I think that's probably folks could time... just not the game I'm good at playing.
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I dont see an easy path to profitability for companies focused on rare disease.

They might be good for humanity but not for investors. I'm a lot more familiar with retail than with healthcare. An off-price retailer like "Dress for Less" Ross Stores (ROST) is a much better investment than Tiffany's or Neiman Marcus (Chapter 11) simply because there are more poor people than rich. In healthcare you are better off with more common diseases for similar reasons.

Denny Schlesinger
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I suspect that right now, for a company going into rare disease, the juice isnt worth the squeeze. read: I dont see an easy path to profitability for companies focused on rare disease

While I agree in general, suggest you check out BCRX which got recent approval for their drug Orladeyo and seeing good results with their Factor D inhibitor. Also, Alexion (ALXN) was a company that did well with rare diseases for many years. Of course, these are not into gene therapy if that is what you meant.
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