I have long been a fan of pharmaceuticals, but my patience is being stretched. Maybe, though, not for much longer.
GSK results okay, but where’s CRISPR?
There is a healthcare revolution in the making. Genome sequencing brings with it the promise of personalised medicine. Advances in nanotechnology are remarkable. Big data combined with AI will create game changing insights. But the technology that is truly exciting is CRSPR/Cas 9.
CRISPR is another word for DNA editing. It occurs in the natural world and we have known about it for 20 or 30 years. But earlier this decade, Jennifer Doudna and Emmanuelle Charpentier made a breakthrough. The enzyme Cas9 acts like a pair of molecular scissors making it possible to cut a strand of DNA, removing a part of that DNA, or adding a new part.
It is stunning technology that could literally change the world. This morning I was reading how scientists have been looking at splicing a goat’s DNA, adding a part of a spider’s DNA to it, such the functions of a spider’s web are added to the goat’s skin making it bullet proof.
But it is in health tech that CRISPR has the most promise – it can theoretically be used to edit the DNA of cancer cells, for example. I read that research into using CRISPR to reduce or even reverse arthritis is gathering pace. The implications are many fold.
So, this begs the question, what are the big pharmaceuticals up to in this field?
Well, let me focus on GSK. Its latest results were out this week, and they were a little disappointing. Largely because of the effect of currency movements and generic competition to its asthma inhaler Advair, turnover fell two per cent to £7.2 billion and operating profits were down 15 per cent to £1.2 billion, but after they were adjusted, they were at £1.9 billion, up nine per cent.
GSK is seen as a defensive stock ‐ with dividends around five per cent at the current share price. It is just that when I look at the share price ‐ down over the last year, down over the last five years and half the price at the end of the last century, I get an uneasy feeling.
The company is investing a lot of hope in its shingles vaccine and is investing heavily in R&D. That is more like it.
Back to CRISPR
Meanwhile, last night I received one of those investment emails teasing me with a wonder product, with a view to getting me to subscribe in order to find out what companies are set to benefit. The email cited a press release from the NHS which talked about a new wonder treatment ‐ but the name of the treatment was deleted from the email, instead it was called virus hunter ‐ to get me to subscribe. Well, instead of subscribing, I found the NHS press release dated 2015. Here is the link if you are interested.
The NHS was talking about CRISPR‐Cas9. “The ranges of possible applications are huge, which is why Science magazine declared the technique its ‘Breakthrough of the Year,’” said the NHS. Well, for what it is worth, I think Science magazine understates this one. CRISPR‐Cas9 stands alongside the isolation of graphene as the breakthrough of this century so far.
Companies that are big in this arena include CRISPR Therapeutics, Intellia Therapeutics and Editas Medicine.
But investing in such companies is high risk.
You may be better‐off investing in large pharmaceuticals that are in this space.
Intellia Therapeutics has partnered Novartis, which you may know is being bought by GSK.
GSK and CRISPR
Sometimes, I want to shake someone. CRISPR‐Cas 9 really is a big deal. But I notice a dearth of coverage in the investing arena.
Yet, I read that GSK has also invested heavily in this area. It has been a lead investor in CRISPR Therapeutics, for example.
This piece at Seeking Alpha covers CRISPR from an investment point of view in some depth.
The giant pharmaceuticals are focused on earnings ‐ they are watching biotech with the plan to move in and make acquisitions when the time is right.
They are like biotech focused venture capital firms.
And that does make GSK interesting.
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.