In this article, we will take a look at the 10 Most Promising Gene Editing Stocks to Buy According to Hedge Funds.
The pharmaceutical industry remains a hub of patent innovation, driven by evolving treatment paradigms, unmet medical needs, and the rising influence of technologies like pharmacogenomics, digital therapeutics, and artificial intelligence. At the forefront of modern biotechnology are gene therapy and gene editing. Gene therapies correct genetic defects by introducing new genetic material at the cellular level, often by adding a functioning copy of a gene.
Genome editing began making its way into 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 evident, though the path to real-world treatments seemed distant. Six years later, after a Nobel Prize, CRISPR technology is now being tested in over 20 clinical trials.
See also: 10 Most Promising Biotech Stocks According to Hedge Funds.
The cell and gene therapy sector has faced significant investment challenges since the boom years of 2020 and 2021. However, signs of recovery are emerging, according to data shared by the Alliance for Regenerative Medicine at the 2024 Cell & Gene Meeting on the Mesa. Investment in the first half of 2024 reached $10.9 billion, surpassing 2019’s total of $9.8 billion. Nevertheless, these figures are still far below the $19.9 billion and $22.7 billion invested in 2020 and 2021, respectively, with funding levels dropping to $12.6 billion in 2022 and $11.7 billion in 2023. ARM CEO Tim Hunt acknowledged that the industry has been “very challenging” for the past few years. Hunt highlighted that most of the nearly $11 billion raised in early 2024 went to “later-stage companies” with advanced clinical trials and human data. Morgan Stanley also noted that the Federal Reserve’s September interest rate cut could have positive implications for riskier assets, like cell and gene therapy, aligning with broader trends in biotech.
However, Mizuho Securities analyst Jared Holz cautioned that those expecting a rapid surge in fundraising and IPOs due to the rate cut might be disappointed, suggesting that a gold rush is unlikely:
“I don’t see the floodgates opening necessarily, because the last time that we were kicking out 50 or more IPOs a year, the broader sector was negatively impacted by that.”
“Be careful what you wish for. Too many IPOs in this space I think is actually a very, very meaningful negative for publicly traded equities.”
That said, the industry is still poised for significant growth. According to a report by Precedence Research, the global genome editing market, valued at $7.98 billion in 2023, is expected to grow to $9.33 billion in 2024 and reach around $38.19 billion by 2033. This represents a robust CAGR of 16.95% over the forecast period from 2024 to 2033. The market’s expansion is fueled by the increasing prevalence of conditions such as Down syndrome and cystic fibrosis globally. Moreover, the ex-vivo segment led the market in 2023, driven by the rising trend of gene harvesting for treating blood disorders and advancements in CAR-T cell therapies. Adding on to this, ongoing research into ex-vivo gene therapies for conditions like fatty liver disease and obesity is further accelerating market growth.
Pixabay/Public Domain
Our Methodology
For our list of the 10 most promising gene editing stocks, 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 highest number of hedge fund investors, based on Insider Monkey’s database of 912 hedge funds as of the end of Q2 2024.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Pacific Biosciences of California, Inc. (NASDAQ:PACB)
Number of Hedge Fund Holders: 18
Average Upside: 54.55%
Pacific Biosciences of California (NASDAQ:PACB) is a biotech company that specializes in advanced technologies crucial for various genomic applications, including RNA sequencing, epigenetics, target sequencing, and whole genome sequencing, among others. The company has also developed an innovative enrichment method for targeted SMRT Sequencing on the PacBio Sequel System, making use of the CRISPR-Cas9 system. This technique eliminates the need for PCR amplification, enabling more efficient sequencing. Combined with SMRT Sequencing’s long reads, high consensus accuracy, and even coverage, this method offers the sequencing of specific genomic regions with precision.
The company faced a tough first half of 2024, reporting second-quarter revenue of $36 million, which fell short of expectations. That said, its consumable revenue grew 24% year-over-year. As part of a strategic restructuring plan, Pacific Biosciences of California (NASDAQ:PACB) aims to cut non-GAAP operating expenses by over $75 million annually, steering the company toward the lower end of its full-year revenue target of $170 million to $200 million.
Earlier in late August, Scotiabank revised its outlook on PACB, lowering the price target from $8 to $7 while maintaining a Sector Outperform rating. The adjustment reflects more conservative revenue projections for 2024 and 2025, as the company faces slower recovery from market constraints on capital spending. Despite these short-term challenges, the bank remains optimistic about Pacific Biosciences’ future, driven by the potential of its HiFi sequencing technology and the growing adoption of its Revio system.
In the second quarter of 2024, 18 out of 912 hedge funds tracked by Insider Monkey held shares of Pacific Biosciences, with ARK Investment Management, led by Catherine D. Wood, being the largest shareholder with a $45.5 million stake.
9. bluebird bio, Inc. (NASDAQ:BLUE)
Number of Hedge Fund Holders: 18
Average Upside: 627.38%
Somerville, Massachusetts-based bluebird bio, Inc. (NASDAQ:BLUE) is a biotechnology company specializing in gene therapies for severe genetic disorders. The company already has three FDA-approved gene-editing therapies. Its Zynteglo therapy is used to treat transfusion-dependent thalassemia (TDT), while Skysona addresses cerebral adrenoleukodystrophy. Moreover, in December of last year, bluebird bio, Inc. (NASDAQ:BLUE) also received FDA approval for its gene-editing therapy, lovotibeglogene autotemcel (lovo-cel), for treating sickle cell disease in patients aged 12 and older with a history of vaso-occlusive events.
Baird reiterated its bullish outlook on bluebird bio, Inc. (NASDAQ:BLUE), maintaining an Outperform rating with a price target of $6 on October 10. This came after a safety update on Skysona was featured in an article by the New England Journal of Medicine (NEJM), which reported that seven out of 67 patients treated in Skysona trials developed hematologic cancers. Despite this, Baird believes the safety update will have minimal impact on Skysona’s use in treating cerebral adrenoleukodystrophy (CALD), with NEJM authors continuing to support its risk-benefit profile. Baird also noted that these safety concerns should not affect bluebird bio’s other gene therapy products, including Lyfgenia and Zynteglo.
While bluebird bio, Inc. (NASDAQ:BLUE) faced Nasdaq non-compliance notices due to delayed financial filings, the company’s Q2 2024 revenue surged to $16.1 million, and a strong rebound is expected in Q4.
As of Q2 2024, 18 hedge funds tracked by Insider Monkey held bluebird bio, Inc. (NASDAQ:BLUE) shares, with a total value of $16.49 million. Israel Englander’s Millennium Management was the largest shareholder, owning 5.14 million shares worth $5.06 million.
8. Beam Therapeutics Inc. (NASDAQ:BEAM)
Number of Hedge Fund Holders: 21
Average Upside: 112.53%
Beam Therapeutics Inc. (NASDAQ:BEAM) is a biotechnology firm specializing in precision genetic medicines through a technique called base editing. This approach allows precise DNA changes without cutting the strands, reducing potential side effects compared to traditional gene-editing methods. The company is also advancing several investigational therapies, including BEAM-101, a personalized treatment for sickle cell disease, and BEAM-201, targeting specific blood cancers.
For Q2, Beam Therapeutics Inc. (NASDAQ:BEAM) reported mixed results, with an EPS of -$1.11, beating the analyst estimate of -$1.13, though revenue fell short at $11.77 million versus the $13.73 million consensus. On the other hand, the company also received U.S. FDA clearance for the Investigational New Drug Application for BEAM-301 in GSDIa. Additionally, over 20 patients have enrolled, with six dosed, in the BEACON Phase 1/2 trial for BEAM-101 in severe sickle cell disease.
Analysts remain cautiously optimistic about Beam Therapeutics Inc. (NASDAQ:BEAM). Stifel’s Dae Gon Ha reaffirmed a Buy rating on the company’s stock and raised the price target to $69 in September, citing industry data that supports Beam’s DNA editing approach.
According to Insider Monkey’s second-quarter data, 21 hedge funds held positions in Beam Therapeutics, a slight decrease from 23 in the previous quarter.
7. Caribou Biosciences Inc. (NASDAQ:CRBU)
Number of Hedge Fund Holders: 21
Average Upside: 350%
Caribou Biosciences, Inc. (NASDAQ:CRBU) is a biotechnology company leading the way in developing cutting-edge therapies using its proprietary HLA-matching strategy. The company’s research focuses on several key areas, including Non-Hodgkin Lymphoma (NHL), multiple myeloma (MM), acute myeloid leukemia (AML), and autoimmune diseases like lupus nephritis. Moreover, the company has developed its proprietary chRDNA genome-editing technology, which Caribou Biosciences, Inc. (NASDAQ:CRBU) claims enhances CRISPR technology by enabling more precise genome edits.
Early in September, H.C. Wainwright reaffirmed its positive outlook on Caribou Biosciences, Inc. (NASDAQ:CRBU), maintaining a Buy rating with a $9 price target. This support followed the announcement that the U.S. Food and Drug Administration (FDA) granted Fast Track designations for two of the company’s therapies. CB-010 is designed to treat refractory systemic lupus erythematosus (SLE), while CB-012 targets relapsed or refractory acute myeloid leukemia (r/r AML), both addressing significant unmet medical needs.
Additionally, Caribou Biosciences (NASDAQ:CRBU) reported a second-quarter EPS of $-0.42, beating the analyst estimate of $-0.46 by $0.04, while its revenue for the quarter totaled $3.46 million, surpassing the consensus estimate of $3.05 million.
As of the second quarter, 21 hedge funds held positions in Caribou Biosciences, Inc. (NASDAQ:CRBU), with a total stake value of $24.6 million.
6. Editas Medicine, Inc. (NASDAQ:EDIT)
Number of Hedge Fund Holders: 26
Average Upside: 227.38%
Editas Medicine, Inc. (NASDAQ:EDIT) is a clinical-stage biotech company focused on developing gene-editing therapies using CRISPR technology to treat genetic disorders by modifying patients’ genomes. The company’s lead therapy, EDIT-301, is progressing through late-stage clinical trials for sickle cell disease (SCD) and beta-thalassemia. In its RUBY trial, the biotech firm showed encouraging results, with 100% of patients remaining free from vaso-occlusive crises (VOCs) and maintaining stable hemoglobin levels during follow-up.
On October 4, Leerink Partners reaffirmed its Market Perform rating on Editas Medicine, Inc. (NASDAQ:EDIT), maintaining a price target of $8. This follows Editas’ financing deal with DRI Healthcare Trust, in which the Editas Medicine, Inc. (NASDAQ:EDIT) secured a $57 million upfront payment in exchange for future license fees and payments related to an existing licensing agreement with Vertex Pharmaceuticals. Under the agreement, DRI Healthcare Trust is entitled to receive up to 100% of annual license fees, ranging from $5 million to $40 million, and a mid-double-digit percentage of Vertex’s $50 million contingent upfront payment.
Insider Monkey’s second quarter database shows that 26 hedge funds were bullish on Editas Medicine, Inc. (NASDAQ:EDIT), up from 21 in the previous quarter.
5. Silence Therapeutics plc (NASDAQ:SLN)
Number of Hedge Fund Holders: 27
Average Upside: 217.95%
Silence Therapeutics plc (NASDAQ:SLN) is a biotechnology company focused on developing innovative RNA-based therapeutics for hematology, cardiovascular diseases, and other rare and metabolic conditions. The company uses its proprietary mRNAi GOLD platform to address gene editing through a technique called gene silencing. This method utilizes the body’s natural ability to suppress gene expression to target and treat diseases. Silence’s pipeline includes two candidates currently in clinical trials and three additional candidates in the pre-clinical stage. In July, the company reported positive Phase 2 clinical trial results for its lead drug candidate, zerlasiran (SLN360), aimed at patients at high risk of atherosclerotic cardiovascular disease.
At the beginning of September, Jefferies initiated coverage on Silence Therapeutics plc (NASDAQ:SLN) with a Buy rating and a $40 price target, citing the strong potential of its lead siRNA candidate, which has demonstrated over 90% reduction in Lp(a), a key cardiovascular risk factor. The company’s second candidate, targeting Polycythemia Vera (PV), a blood disorder affecting roughly 100,000 people in the U.S., also showed promising results in Phase 1 trials. Continued progress in both the Lp(a)-lowering program and PV treatment is expected to serve as key growth drivers for the company in 2024.
At the end of Q2 2024, 27 elite hedge funds tracked by Insider Monkey held positions in Silence Therapeutics plc (NASDAQ:SLN), with total stakes exceeding $234 million.
4. Intellia Therapeutics, Inc. (NASDAQ:NTLA)
Number of Hedge Fund Holders: 29
Average Upside: 201.9%
Intellia Therapeutics, Inc. (NASDAQ:NTLA) is a clinical-stage biotech company focused on developing CRISPR-Cas9 gene-editing therapies for both in vivo and ex vivo applications. The company’s primary clinical program, NTLA-2001, targets transthyretin amyloidosis, a condition for which no cure currently exists. Additionally, its NTLA-2002 treatment for hereditary angioedema has shown encouraging results in early-stage clinical trials.
BMO Capital reaffirmed its positive outlook on Intellia Therapeutics, Inc. (NASDAQ:NTLA) on October 16, maintaining an Outperform rating and a $70 price target. This follows the successful results of the company’s NTLA-2002 product, which met all primary and secondary endpoints in its Phase II trials. BMO emphasized the significance of the attack-free rate and suggested that upcoming Phase II data could boost Intellia’s stock by 5-10%.
Intellia Therapeutics, Inc. (NASDAQ:NTLA) also reported a strong financial position, holding $939.9 million in cash reserves, sufficient to fund operations through late 2026. The company plans to launch a pivotal Phase III trial for hereditary angioedema (HAE) in 2024 and has already started a trial for transthyretin amyloid cardiomyopathy (TTR-CM) across 35 global sites.
As of Q2 2024, 29 of the 912 hedge funds tracked by Insider Monkey held positions in Intellia Therapeutics, Inc. (NASDAQ:NTLA), with ARK Investment Management, led by Catherine D. Wood, being the largest investor.
3. CRISPR Therapeutics AG (NASDAQ:CRSP)
Number of Hedge Fund Holders: 29
Average Upside: 46.28%
CRISPR Therapeutics AG (NASDAQ:CRSP) is a leader in gene-editing technology, developing groundbreaking treatments for serious diseases using its proprietary gene sequencing platform, enabling precise DNA modifications.
The company’s launch of Casgevy and its growing pipeline have garnered considerable interest from investors and analysts. Currently, more than 35 Authorized Treatment Centers (ATCs) have been activated worldwide, representing a notable increase from previous quarters.
Needham adjusted its price target for CRISPR Therapeutics AG (NASDAQ:CRSP) back in August, lowering it from $88 to $84 while maintaining a Buy rating. The revision followed the company’s report of no Casgevy sales in Q2 2024. Despite this, the biotech company seems to have made progress, with around 20 patients undergoing cell collection for treatment, signaling active patient engagement.
Insider Monkey’s Q2 2024 data shows that 29 of the 912 hedge funds tracked held positions in CRISPR Therapeutics AG (NASDAQ:CRSP). Cathie Wood’s ARK Investment Management was the largest shareholder, with holdings valued at $420.1 million.
2. Ginkgo Bioworks Holdings, Inc. (NSYE:DNA)
Number of Hedge Fund Holders: 32
Average Upside: 80.18%
Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) is a biotechnology company that develops a platform for cell programming, addressing challenges across various industries. The company has bolstered its capabilities in genetic diagnostics, AI-driven compounds, and drug discovery by acquiring three molecular medicine startups: Proof Diagnostics, Patch Biosciences, and Reverie Labs.
Earlier this February, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) acquired Proof Diagnostics, a biotech startup leveraging gene editing tools to develop diagnostic tests. A key asset in this acquisition is Proof’s library of DNA-cutting enzymes, known as OMEGAs, that can be used in gene editing experiments. This purchase aligns with Ginkgo’s strategy to build technology platforms that other biotech companies can use to create genetic medicines. Similarly, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) acquired StrideBio back in 2023, gaining access to technology for discovering and engineering capsids to deliver complex therapies. The company also collaborates with Arbor Biotechnologies on precise editing tools.
The company has had a not-so-stellar quarter, reporting a 20% year-over-year decline in cell engineering revenue to $36 million, while biosecurity revenue remained steady at $20 million. Nevertheless, Ginkgo Bioworks Holdings, Inc. (NYSE:DNA) maintained its full-year guidance, projecting cell engineering revenue between $120 million and $140 million.
Additionally, TD Cowen remains optimistic about Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), raising its price target from $3 to $10 and reaffirming a Buy rating. This upgrade follows the launch of Ginkgo’s new Datapoints portfolio, which aims to improve its model training capabilities, a crucial element in expanding its tools franchise.
As of Q2, 32 hedge funds held long positions in Ginkgo Bioworks Holdings, Inc. (NYSE:DNA), with total stakes valued at $114.2 million.
1. Moderna Inc. (NASDAQ:MRNA)
Number of Hedge Fund Holders: 39
Average Upside: 86.34%
Moderna, Inc. (NASDAQ:MRNA) is a pharmaceutical and biotechnology company specializing in RNA therapeutics, particularly mRNA vaccines. The company gained widespread recognition for its COVID-19 vaccine, which became one of the first mRNA vaccines to be developed and distributed globally.
Three years ago, Moderna, Inc. (NASDAQ:MRNA) entered the fast-growing field of gene editing by launching Moderna Genomics and partnering with Metagenomi. Although the collaboration with Metagenomi came to an end this year, Moderna, Inc. (NASDAQ:MRNA) remains active in gene editing through other partnerships, including a collaboration with Life Edit Therapeutics and a second genetic medicine agreement with Generation Bio.
The rollout of Moderna’s RSV vaccine and the positive opinion from the EMA have bolstered investor confidence, while the company’s broader product pipeline also demonstrates potential. This includes favorable Phase III results for the flu/COVID-19 combination vaccine and strategic partnerships with BARDA and Mitsubishi Tanabe Pharma. Despite this, Moderna’s revenue fell by 29.94% in Q2 2024, totaling $241 million. This decline was primarily driven by decreased sales volumes of the COVID-19 vaccine outside the U.S., heightened competition for respiratory vaccines in the U.S., and the possibility of revenue deferrals from 2024 to 2025.
Analyst sentiment on Moderna, Inc. (NASDAQ:MRNA) has been mixed. Piper Sandler lowered its price target for the company from $157 to $115 while maintaining an Overweight rating. In contrast, RBC Capital reduced its target from $90 to $75.
As of the end of the second quarter of 2024, 39 out of the 912 hedge funds monitored by Insider Monkey held stakes in Moderna, Inc. (NASDAQ:MRNA).
Baron Health Care Fund made the following comment about Moderna, Inc. (NASDAQ:MRNA) in its Q1 2023 investor letter:
“Moderna, Inc. (NASDAQ:MRNA) is a leader in the emerging field of mRNA-based vaccines and therapeutics and was one of the three main producers of the COVID vaccine. Shares fell during the quarter. We believe as COVID shifts away from pandemic status and becomes an increasingly commercial market (rather than government funded), there is increasing investor uncertainty around what a booster market could look like, which is pressuring shares. Looking beyond COVID, we think Moderna has the potential to disrupt the biopharmaceutical industry, from infectious disease vaccines to oncology, and we remain shareholders.”
While we acknowledge the potential of MRNA, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MRNA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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