Has the time come for these stocks?

Alsalamu Alaykum, I hope you are doing well. So today we're going to talk about, sorry, I forgot my mic there. Today we're going to talk about a investing idea that I spoken about a long time ago. I haven't spoken about in a while, but we're going to revisit it and see if now is the time to act. So every day when I start thinking about investing ideas and while managing my PIF portfolios, I ask the question, what is out of favor right now? Because therein lies typically the most upside potential. The things that investors aren't really talking about and yet have a lot of potential. So today we're going to talk about gene editing. Gene editing has been something that a technology that many at one point were very excited about. Investors were extremely excited about, especially in the bull round of 2021. A lot of these gene editing stocks appreciated substantially. A lot of people made a lot of money, but have since really gone out of favor for a lot of investors. So perhaps their time has come, perhaps there is a lot of upside upcoming 40 stocks. So let's talk about them, familiarize ourselves with the topic and see which names intrigue us the most. So without further ado, let's get started. Not financial advice. Be sure to do your own due diligence before making any investing decisions. All right. So gene editing. So in terms of therapeutic strategies for treating life threatening diseases, there's been an evolution from small molecular drugs to biologics to RNAi gene therapy and then finally gene editing. Now what's unique about gene editing is how precise and specific it is and how few unwanted impact unwanted impacts this type of therapy has. So starting from the left and moving to the right of the potential therapies, we've basically started off with pretty generic and very limited targeting. And we've reached a point where targeting can be extremely precise and have very limited unwanted results and side effects. And the way that the CRISPR or gene editing technology works is that it disrupts or deletes or corrects or inserts parts of the DNA that are causing problems. So this makes a lot of sense in terms of treating a lot of gene related illnesses. So if we have part of our blueprints as species, sometimes the blueprint for our bodies has a defect in them and correcting that defect has typically been or historically been through therapy, which is constant and you can't. And without actually addressing the root cause, which is, which are the blueprint instructions, but now we have the ability to change those instructions, correct them, delete problematic portions of those instructions. And so this could bring with it enormous relief for a large number of people. And since we do want to be doing well for ourselves, but also doing good, this is a area of investing that is especially of interest to me and PIRs. So what's unique about the gene therapies is that they're really cures. That's what they target cures rather than constant treatments. And we'll actually see an example of this, something that was already FDA approved and is providing relief for people. So rather than just treating the results of a particular disease, we're actually now treating the root cause of their of the disease. And it's often a single dose treatment with lifelong benefit. And this is obviously advantageous for patients, but it's also advantageous for the healthcare system and relieves a lot of burden on that system. The total addressable market for a gene editing is expected to double versus where it was in 2023 and reach close to 10 billion by 2028. And this is obviously a global market. So really, there is no geography on earth that cannot benefit from these treatments and isn't the potential market for them. The major players here, we've identified to be CRISPR, Intellia, and BEAM. And you have their ticker symbols below their names here. There are other players, obviously. I try when I do comparisons not to have more than three because then it becomes kind of difficult to choose a winner. But with three, that's kind of, and if you're able to first note down the universe of players to three and then choose the winner out of those three, I think that's a pretty promising approach. So that's typically what we do. And now how do these three compare? Well, actually, the first row here is cut off, but I have it memorized. So the first row actually refers to CRISPR therapeutics. And in CRISPR therapeutics, I'm sorry, the first column to our left, it has 10 preclinical and five clinical and one approved treatment in its pipeline. So it has by far the most robust pipeline. This middle column is Intellia therapeutics and the one to the right is BEAM therapeutics. So their pipeline is smaller. Now, all three companies have partnerships that are noteworthy. If you look at CRISPR's cash runway, it definitely has more cash on hand in terms of number of years that they can stay in operations without having to raise additional money. Their current ratio is 17.8. So if you compare the current assets to the current liabilities, their current assets are around 18 times their current liabilities. And if you look at shared dilution for CRISPR, it was around 4%. Since 2020 versus 12% for Intellia and 11% for BEAM therapeutics. So these biotechnology companies tend to have a lot of shared dilution because they're constantly raising money to do more research and oftentimes the approval process for these drugs takes a lot of time. And there's extended periods of time where these companies aren't really selling much of anything. They're just in the research phase. And so they need to dilute shareholders, they're constantly raising money. In the case of CRISPR, they haven't had to dilute shareholders as much as Intellia and BEAM therapeutics. And that's partly a function of the fact that CRISPR already has a drug that is approved. And we'll talk about that in a second. So Alhamdulillah, the gene editing therapy, has actually gotten its first approval in Cascivi, which is a CRISPR therapy in partnership with Vertex Pharmaceuticals. This was the first FDA approval, FDA approved gene editing drug for sickle cell disease. And as it relates to CRISPR's evaluation, so this is a treatment for sickle cell disease and something called beta thalassemia. And both diseases previously required consistent blood transfusions. With this new treatment, it can effectively cure these diseases, ending the lifelong pain of these patients. Now, what is the evaluation of this? As I mentioned, this is in partnership. So the actual treatment and administration of it is in partnership with the Vertex Pharmaceuticals. So not all of the revenue goes to CRISPR. The estimated treatment cost is around 2.2 million per patient. So the estimated revenue is approximately 1.65 billion annually. Now if we were to, now CRISPR has 40% share in this revenue, the rest goes to Vertex Pharmaceuticals. Applying the industry average of price to sales ratio of 7 for biotech companies, CRISPR evaluation would be around 4.6 billion. Not too far off from where it is right now. So what we can see, and perhaps the reason why a lot of these companies can be said to be out of favor right now in the investing world, is that for CRISPR, for example, their entire pipeline of drugs is really not being valued at much of anything, even though I think given their track record of having the first FDA approved drug already, it's probably worth more than that. So they have proven competence in actually getting a drug related to gene editing to market and actually monetizing it, so it's likely that they'll be able to do this again. They certainly have a strong balance sheet and with the proven competence of their management, they should be able to pull this off again, and therefore their pipeline is probably not worth nothing. So this is at least a compelling investment opportunity. The question is, is it the best investment opportunity in this space? If you look at the average analyst price targets for these three companies, or whether it's CRISPR, Intelli or Beam, you can see that CRISPR actually has, if we go off of these analyst price targets, CRISPR has the least upside potential, but this is a logical considering, as we mentioned, it's probably the least risky of these three companies considering its balance sheet and the traction that it already has. Intelli has the most upside potential, but it's likely the most risky and Beam is somewhere in between. So what we're going to do is we're going to be doing deep dives on these three companies in the coming week, obviously we'll be sharing them with PIF members, and it's very likely that we pull the trigger on one of these companies, unless we're like something else more, but I do believe that gene editing makes a lot of sense, and there's a lot of potential diseases that could be cured for good with this technology, and it's only a matter of time before additional approval come start to trickle in for these different pipeline projects related to gene editing, and a lot of the companies that are in the space stand to benefit tremendously and their shareholders as well. So this is an area that I think it may be a good time to revisit considering as I mentioned, they're not really talked about that much, they're under people's radar. If you'd like to follow our portfolios to become a PIF member, a link to do so is in the description, and with that let's take some questions. Have you ever had any success at PIF in overall bear market? Any examples? Well, we started in 2021, and I would say 2022 was not really a good year for the stock market. I think if you look at our returns since we started, we definitely done better than the major indexes, so I guess you could consider that a success. So I'm Rashad, I'm a fan of biotech, but got burned a few times in the past hoping PIF membership will change my luck. Yeah, thanks Rashad. Biotech is now investing in general, requires a lot of patients. Biotech specifically requires even more patients. There's prolonged periods where nothing is happening, and then very short windows where a lot happens. And by the way, it's very important that when that a lot happens that you take profits because it's not for long, typically with biotech. So when you look at their evaluations, they can often be extremely attractive because there's so much potential there, and none of that potential is being appreciated. All of a sudden, it starts getting reflected in the stock price, and you can get some pretty steep returns in a very short period of time. Thanks so much, Muhammad. I really appreciate it. Yeah, do like and subscribe. The issue I can see here is that people might not be comfortable with these therapies. Little is known about their long term safety, this is from Abdullah Slam. And I agree that there could be long term side effects for these therapies. The issue is, and I hope no one has to deal with this. And you all benefit from the health that you want to have. But for people who are suffering, like for the Betta telesemia or sickle cell disease where constant blood transfusions are required, I'm pretty sure if you asked people who are suffering from those things, they're willing to take the risk. If a treatment presents itself that could potentially be a one and done treatment, I think a lot of them would be willing to take the risk. And so, so long as they're being informed of the potential side effects and they understand what they're getting into, I think they should have that option. Obviously, we don't know what the potential side effects are, but I'm in favor of giving people options to decide whether they want to do treatment or not. And so far, so far, Abdullah so good for the treatment that CRISPR has presented. It's been a life changer for many of the people who have benefited from it. So, so far, so good. And then shall a lot more to come. Also, those that get approved tend to have an extremely high price, which makes insurance companies more reluctant to cover them. Yeah, so as we saw like the treatment for one person is like 2.2 million. So yes, it is a very high price. As I mentioned, considering it's one and done, and if you were to compare it with the constant treatment that other therapies require, it actually may turn out to be less expensive. Dr. Abud Becker's Twitter post may be useful in understanding and following the progress of gene editing therapy. Okay, I'll have to check him out. Thanks for the mention. What do you think about investing in pharma companies seeking gene therapeutics versus biotech companies? I think you have to look at them on a case by case trying to find solutions to chronic diseases fits quite nicely with the purpose of a halal conscious investor who is seeking to put his dollars behind a cause that is going to make people's lives easier. So it does seem like it's certainly on brand. I am concerned about the drugs are for very rare diseases. What's your take on this? So I always say with regards to investing, you want to find companies that are either going to make a small impact on a large number of people, ideally a large impact on a large number of people, or a large impact on a small number of people. And I think that with regards to what we've seen so far, this is this ladder option is applicable for these potential drugs. So a large impact on a small number of people, life changing impact on these people. So you can still do very well if the market is a few people so long as you're providing life changing value for the small number of people. Thanks Hamad. What is your outlook on residential real estate in the US without the market being so unaffordable nowadays for average American? Do you think they might be a price correction? Well, I can tell you this that a very big portion of the inflation number that we're getting part of the problem of inflation, the biggest part of the problem is housing. And so if we're able to solve this housing problem, the inflation number would go down substantially, it would hit our two percent target, the Fed's target at least. So this is something that I think needs to be solved. Obviously, there's a lot of talk about larger companies buying up residential real estate in the United States and bringing up prices artificially. And that needs to be solved. What actually happens is tough to say. But in terms of affordability, like I have the Zillow app on my phone, I get notifications all the time about different properties. I do like to just keep in touch with the market and anecdotes from Zillow helped me do that. Prices are insanely high. Like an average home now is 500,600,000. If you want a nice home, it's easily over a million. And that's in many places across the United States. I remember a million dollar home just 10 years ago was something that was only for the ultra wealthy. So things have gone out of hand in terms of residential real estate in the United States. I doubt that it's sustainable, but we'll see. I do have a video on Forex, so check that out on my channel. Thank you so much for tuning in, do leave a like, subscribe, hit the notification bell so you know when we go live. And if you have specific topics on your mind that you'd like us to perhaps do a live on or do a video on, then leave those in the comments. Make sure to enjoy your Friday. Until next time, take care of yourself. Assalamu alaikum and peace be upon you all.