Gene Therapy The Next Best Thing: Here's Why (Revised)

Gene therapy has been growing by leaps and bounds in recent times. This shows on Global X Genomics & Biotechnology ETF’s (GNOM) gain of 16.1% compared with the broader S&P 500 Index’s rally of 10.3% in the past six months. Notably, genomics primarily comprises gene therapy and gene editing. Mergers and acquisitions, collaborative operations, and a broad and intriguing pipeline of research programs have been driving the gene therapy industry.

Given such positive developments, we have shortlisted five companies involved in gene therapy that can be valuable additions to your portfolio.

Recent Activities Spurring Growth

Although the gene therapy space is impacted negligibly by geopolitical or economic factors, mergers and acquisitions, collaboration and success of R&D programs have a significant bearing on the stocks.

The broader Biomedical and Genetics industry has been in spotlight since the beginning of this year with a bigwig like Bristol-Myers Squibb Company (NYSE:BMY) acquiring Celgene Corporation (NASDAQ:CELG). Moreover, in the gene therapy space, major mergers like Roche’s acquisition of Spark Therapeutics, Inc. is pending due to regulatory snags but is expected to close in 2019.

In June, Biogen Inc (NASDAQ:BIIB). acquired Nightstar Therapeutics for approximately $800 million in an effort to establish clinical pipeline of gene therapy candidates in ophthalmology. On Dec 2, Tokyo-based Astellas Pharma also disclosed plans to acquire Audentes Therapeutics for about $3 billion, or $60 per share.

Audentes Therapeutics, an early startup in the gene therapy area, which develops single shot carrying the correct copy of a gene to cure patients of genetic diseases. This deal will enable Audentes to operate as an independent subsidiary and access Astellas’ scientific and development resources.

Apart from massive mergers and acquisition that benefit this space, its broad and intriguing project pipeline attracts investors, as successful execution will lead to higher revenues. For example, Applied Genetic Technologies Corporation in September announced positive results from its leading pipeline program, X-linked retinitis pigmentosa (XLRP).

Almost 8,000 Americans suffer from this rare ophthalmologic disorder and a breakthrough will benefit the company financially as treatment would cost $500,000 per patient. This also provides the company an edge over competitors like Biogen and MeiraGTX.

Additionally, collaborative activities have been driving the gene therapy. On Dec 3, Seattle Genetics, Inc. and Astellas Pharma announced a deal to collaborate with Merck & Co., Inc to commence a phase III study, that would allow combination of their antibody-drug conjugate Enfortumab Vedotin and PD-1/L1 inhibitor Keytruda (pembrolizumab) to address patients with previously untreated metastatic urothelial cancer.

Earlier in September, Seattle Genetics and Astellas had released encouraging results for the phase I EV-103 study on Enfortumab Vedotin. Such developments indicate growth in the gene therapy space.

In fact, major biotech ETFs and indexes have exhibited a strong performance year to date as the SPDR S&P Biotech ETF (NYSE:XBI) gained 28.6% compared with the S&P 500 index’s rally of 23.2% so far this year. While the ProShares Ultra Nasdaq Biotechnology (BIB) rose 40.5% surpassing the Nasdaq Composite’s growth of 27.8% on a year-to-date basis.

In fact, the size of the biotechnology market was valued at $399.4 billion in 2017 and is expected to see a CAGR of 9.9% during the forecast period 2018-2024, according to Global Market Insights.

5 Biotech Stocks to Buy Now

Gene therapy falls under Zacks Zacks Investment Research

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Written By: Zacks Investment Research