Once considered a niche sector of the market, biotechnology companies have grown 400% in the past decade and have been thrust to the forefront of investors’ minds as the COVID-19 pandemic continues. With mRNA vaccines reviving vaccine innovation from a stunted investment to an essential part of any biotech portfolio, investors are seeking the next cutting-edge innovation to invest in. Often known as the home for biotech innovators, Nasdaq contains 95% of public biotech companies and has a consistent eye toward the next revolutionary biotechnology. Today, Kelly ETF’s is launching a new exchange-traded fund (ETF), The Kelly CRISPR & Gene Editing Technology ETF (XDNA), focused solely on gene-editing technology.
When biotech first entered the market, it required specialized scientific knowledge to determine the potential in a company. Now, general investors, and healthcare specialists, see the benefit of complex science in their everyday lives. As a result, Pfizer and Moderna are seeing record growth while the market is seeing increasing interest from a broader range of investors. Recently, Pfizer paid $1.35 billion to partner with Beam Therapeutics Inc. on developing drugs for rare genetic diseases using base editing, a technology for manipulating DNA.
Gene editing is the process by which DNA strands are edited to remove and/or replace damaged or mutated parts of human genomes that cause diseases like diabetes, cystic fibrosis, sickle cell disease, cancer and more.
The most common gene-editing technology is CRISPR, which acts like a cut-and-paste tool within cells. Kevin Kelly, Chief Executive Officer of Kelly Intelligence and co-founder of XDNA, summed up CRISPR’s potential, “CRISPR, put simply, is a pair of biological scissors that can cut and replace genes in cells and living organisms, opening up the potential to permanently cure genetic disease, and perform DNA-based diagnostics.”
In Nasdaq’s recent biotechnology forum, experts noted the rising popularity of biotechnology due to COVID-19, suggesting ETF investment as a way for new investors to get familiar with the market.
ETFs are a bundle of securities that track a specific asset and are traded like a stock. For biotechnology, ETFs can track specific subsectors of the market like cancer immunotherapy or—in the case of XDNA—CRISPR and gene-editing technology. These bundles show new investors the performance of these subsectors so they can educate themselves on the market.
Biotech has seen a growing number of ETFs in recent years that follow certain themes. They range from mRNA technology to cancer immunotherapy and more. Nasdaq lists a myriad of these ETFs, such as the Invesco Nasdaq Biotechnology ETF (IBBQ), the Proshares Ultra Nasdaq Biotechnology ETF (BIB) and Proshares UltraShort Nasdsaq Biotechnology ETF (BIS), each with its own interest in the wide range of biotechnologies.
XDNA will be comprised of 23 companies in its initial release, leading the CRISPR and gene editing revolution with the best-in-class gene-editing platforms, the broadest intellectual property, flexible and robust manufacturing capabilities and seasoned executive teams supported by leading scientists.
It will encompass three main subsectors:
- CRISPR & Gene-Editing Technology, which includes companies that specialize in DNA modification systems and technologies.
- Gene-Editing Development Solutions, which includes companies that have deep scientific, technical and clinical experience needed to support CRISPR and gene-editing technology companies through the product development process.
- Gene-Editing Sequencing Solutions, which include companies specializing in next-generation sequencing that may be used at various stages of a genome editing workflow.
The promises of gene-editing technology are limitless, with the potential to completely revolutionize the healthcare industry. Instead of the current profit system where continual research and development lead to a patented drug that derives profits before the patent expires, gene editing involves a one-time treatment that solves the problem outright.
For example, there are about 100,000 Americans suffering from sickle cell disease. Around 4,000 children are born each year with this genetic disorder with one-time treatment at upwards of $1.6 million.
While gene editing continues to show promise in its capabilities, it is still a few years away from initial FDA approvals. As of 2021, there are minimal FDA-approved gene therapies. But more approvals are likely to come in two to three years, with even more in the future.
Despite the wait time, the market value of CRISPR technology continues to grow. CRISPR Therapeutics (CRSP), co-founded by the scientist who discovered CRISPR itself, Emmanuelle Charpentier—who won the Nobel prize in chemistry along with Jennifer Doudna
—has a $5.96 billion market cap. The company is currently in trials to inject cancer patients with tumor-fighting immune cells, plans for trials to treat diabetes patients and are the furthest in trials to treat sickle cell disease.
CRISPR Technology is just one of the many companies that XDNA evaluates and includes in its ETF to bring investors some of the leading innovators in gene-editing technology. While approvals are a few years away, already new technologies like prime editing—a new CRISPR-based gene-editing technology—are increasing value to the market. With the new XDNA gene-editing ETF, investors can gain exposure to a technology that can revolutionize healthcare as we know it.
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