A Special Note from Michael: Before we get started with today’s chat, I just wanted to take a moment to talk to you about a bold prediction made by a colleague of mine, Tom Gentile. He predicted that Bitcoin would hit a price of $13,000 before the election, and it made it there almost overnight. But Tom isn’t done yet. He has plenty more cryptocurrency trade recommendations to maximize your profit potential. Just click here to check it out.
When it comes to scientific breakthroughs, the only thing better than a Nobel Prize is a Nobel Prize with its own hidden way to beat the market.
And that’s exactly the opportunity I’m presenting to you today.
It comes to us from the field of gene editing, which actually allows doctors to edit material in human DNA to combat disease.
As a biotech investor, I have followed this field for many years.
While it stretches back to the 1970s, two women recently shared a Nobel Prize in Chemistry for turning the field on its head.
They developed what’s known as Crispr-Cas9, which allows genomic editing at the embryonic level. The Nobel committee described the science as “rewriting the code of life.”
The market for direct use of this platform is growing at 16% per year and will soon be worth roughly $10 billion.
A DNA Discovery
Now then, the Royal Swedish Academy of Sciences just awarded the Nobel Prize in Chemistry to American biochemist Jennifer Doudna of the University of California, Berkeley.
She shares the top award given in science with French microbiologist Emmanuelle Charpentier of the Max Planck Institute for Infection Biology.
Together, the two developed Crispr-Cas9 in 2012 and had been thought to be good candidates for a Nobel Prize almost from the start.
What they discovered was a way to harness a bacterial defense mechanism against viruses to easily and quickly edit genes.
Crispr is the name for special, short bits of DNA in bacteria. This DNA comes from past virus infections. Because of that, bacteria don’t use this DNA directly. After all, they have no interest in making more viruses.
But these Crispr DNA sequences serve as an example of what other virus DNA may look like. So bacteria use Crispr as a primer when they make an enzyme called Cas9.
This enzyme looks for any DNA that looks like the Crispr sequence it was primed with. When it finds something similar, it attaches to the new DNA and cuts it apart, rendering it inert.
In effect, Doudna and Charpentier discovered that bacteria have an immune system. With Crispr, they “remember” past virus infections, and with Cas9 they use that “memory” to attack new viruses.
But the two scientists did more than just that.
They also developed a way to manipulate the Crispr sequence so that the Cas9 enzyme could be made to cut open any piece of DNA they wanted.
Once that’s done, it’s a simple thing to add a different piece of DNA in its place.
All of a sudden, Doudna and Charpentier created an easy and quick way to cut-and-paste DNA in cells at will.
Behind the Biotech
As you can imagine, the potential here is huge. With Crispr Cas 9 we could potentially replace disease-causing genes on the fly, curing or preventing many unhealthy conditions.
No wonder Global Market Insights expects the worldwide market for gene editing to grow from $3.8 billion last year to $10 billion by 2026. That’s an average growth rate of 14.9% per year.
Even that may be conservative because gene editing is just one part of a much larger field called “precision medicine.” Estimates on the size of this market vary from $84.6 billion by 2024 to $216 billion by 2028.
Thermo Fisher Scientific Inc. (TMO) is a great way to play this, even though it’s not a biotech firm per se.
Based just outside Boston, MA, the firm makes scientific instruments, reagents, and software for pharmaceutical and biotech companies.
In short, it’s a backend supply firm for the life science sector. That means it supplies all the hardware and consumables the industry needs to discover, develop, and use new treatments, as well as the technical expertise on how to use all that equipment.
This includes a suite of Crisps tools. For example, Thermo Fisher’s Invitrogen TrueDesign Genome Editor software allows researchers to simply select what gene they want changed, type in the new gene they want it to be replaced by, and get the full sequence to feed to the Cas9 enzyme.
Thermo Fisher also offers two kinds of Cas9 enzymes ready for priming, one for research purposes and an even more accurate one for use in pre-clinical research.
The company even offers a library of engineered viruses and other mechanisms to deliver the Crispr-Cas9 system to cells that are otherwise hard to reach, and a training course on how to use all these things.
Of course, Thermo Fisher does much more just Crispr-Cas9, so it’s not a pure play. But that’s a good thing, as the company doesn’t depend on any one drug or technique getting approved.
Instead, with Thermo Fisher, you get many shots on goal and several chances to score big.
In fact, the company’s total addressable market is much larger anyway. Expert Market Research forecasts that the global scientific instruments market will reach $45.6 billion in just five years.
To take just one example, Thermo Fisher is a key provider of lab equipment and reagents to the global COVID testing effort, as well as to the many COVID vaccines under development right now, giving the firm $1.5 billion in extra revenue in the first half of the year.
In other words, with Thermo Fisher you get exposure to a Nobel Prize-winning breakthrough, but with a nice life science safety play.
Let’s be clear. Safe doesn’t have to mean boring.
Since the market rebounded on March 23, Thermo Fisher has beat the S&P 500 by 45.6%.
And I still see plenty of upside ahead.
Right now, the company is on pace to double per-share earnings again in less than five years.
That makes this company a great way to play a cutting-edge field with appreciation and safety of principle that you can count on for the long haul.
Cheers and good investing,