Revisiting the Three Biggest Gene Editing Stocks
The adage “rules are meant to be broken” doesn’t work well if you’re a disciplined investor. What’s the point of having an objective methodology if you don’t follow it? Breaking our own tech investing methodology is very uncomfortable, yet something we need to do when investing in gene editing and AI drug discovery. Both these themes have a similar thesis:
- AI drug discovery – a platform that churns out successful drugs on a consistent basis with higher success rates than traditional methods
- Gene editing – a platform that produces novel drugs starting with diseases that have no treatment
For both themes, companies make large platform investments up front in hopes of a payoff down the road. Sure, some big pharma partners may pony up some “let’s start collaborating” cash, but the milestones that will truly move the needle and prove the concept will be successful drugs being sold to the Americans who can’t seem to get enough of them. Since our simple valuation ratio looks at potential being realized today, it won’t work on companies where the lion’s share of revenue growth is expected down the road. Consequently, it’s very difficult to value these firms, especially when you consider the regulatory uncertainty inherent to drug development companies.
In contrast to AI drug discovery platforms, gene-editing companies have more “feel good” associated with them because they usually promise to cure diseases that presently have no cure. This means approval for these treatments can be accelerated because there are no alternatives. The f
