In the current market situation, an opportunity has arisen to build in your portfolio – a diverse and large corner of dreams at the price of one “dream” in 2021: we had an acquaintance in the US who, after the collapse of the 2000 bubble, during the second half of 2001 and the end of 2002, began to collect shares of Dream Technologies, Those whose dream, in 1999-2000, led them to crazy values. “These days,” he said, “I can buy ten such dream shares and more for the price of one share before the crash.”
Examples? Qualcomm (NYSE: QCOM), which at the end of 1999 touched 100 dollars, landed, in July 2002, at 11 dollars. NVDA, which reached $6 found itself at $0.65, Micron (NYSE: MU) deteriorated from $98 to $6.5, Cisco (NYSE: CSCO), which in early 2000 touched $80, reached $9 in the summer of 2002. And look what happened to Amazon – at the end of 1999 it crossed the $6 mark (from $0.6 a year and a half earlier) and found itself, in April 2001, at 0.28 cents.
So the acquaintance we knew as a solid investor during the end of the 20th century claimed, at the end of the century and when he witnessed the crazy increases at that time, that he actually thought of allocating a “technology corner” in the portfolio back in the mid-90s, “but”, he said, “at the end of 1996 Greenspan came (say the central bank in those days), which, like everyone else, I admired, with his ‘excessive inflation’ regarding the technology sector and I decided to shelve the idea. I, as a lawyer and conservative investor, did not join the celebrations at Nasdaq between 1996 and 2000, why? Because I was sure you would come An avalanche and then I stayed, like other baby boomers, with Pfizer, T&AT, GE, PG, C and Comcast Corp (NYSE:CMCSA) which every Philadelphian is invested in. But in 2001 and especially in 2002 I saw that you could get into these dreams at a tenth of the price without that something fundamental had changed and I decided to try, what’s more, at that time, in the midst of the crash, they had already seen positive changes in industry and commerce because of technology. I invested a small part of my money in the matter.”
He invested about $100,000, less than 5% of the value of his investment portfolio, in the aforementioned shares. He made a big profit. The big falls in the technology sector created, starting in the beginning of the summer of 2022, a situation similar to that after the bubble crash with one “small” difference, Almost all the dreams of 2000 have come true and the various technologies are proving to be world-changing in all fields. The same companies that in 2021 were very profitable and loaded with cash and whose shares soared into space “because of the expectations for the continuation”, are priced since the summer of 2022, at half or even less than their valuation then. True, you can’t buy 10 NVDA or QCOM at the price of one share at the end of 2021 but then it was a pure dream and today it is no longer just a dream but companies with disruptive products, revenues, balance sheets loaded with cash and that still radiate a big dream.
Today we will talk about those technology companies that got into the current crisis in exactly the same situation that companies like NVDA, QCOM or MU got into the bubble crisis. Today we will use as an example the companies of the new industry that is growing rapidly in the field of genetic editing (Genome editing) or genomic engineering. This is an industry in which, during the bubble period, investors believed, due to the publication of the human genome map at the time, that some of the companies involved in the matter, especially Dr. Craig Wanter’s Celera (symbol: CRA at the time), were facing a huge business breakthrough.
But it didn’t happen as it happened with their technological sisters and the dream of 2000 is only now beginning to come true, 12 years after the remains of the bankrupt Celera were bought by the diagnostic equipment company Quest Diagnostics (NYSE:DGX). The genomic dream of 2000 had to wait two decades for it to become The technology will bring it closer to commercial maturity. The realization that genetic editing is beginning to approach industrial maturity has brought a long line of young companies in the field, towards the end of 2021, to space prices, to crazy valuations, and these shares have since crashed to more sane values, and this is when the industry, which in 2000 was a net dream as mentioned, is beginning to show markers of commercial success.
This dream field is an example of an opportunity created to buy a dream at a reasonable price. As mentioned, this is not the only niche whose shares have gone through crazy ups and downs, but it undoubtedly has tremendous potential for investors.
CRSP CRISPR Therapeutics as an example: In November 2021, the CRSP share crossed the $220 mark, after a 500% increase in 13 months. The increases throughout 2021, which brought the company to an estimate of 17.4 billion, really imaginary, were partly the result of the technological tide but not only. There was the Nobel Prize awarded to the company’s founder, Professor Emmanuel Charpentier, and there was Kathy Wood, founder and director of the ARK Group, who in 2017 “discovered” the stock and began collecting it really wildly, and today owns 7.8 million shares, which she mainly purchased in 2020-21 and was the “wild push” of the buy recommendations of the analysts who fell in love with the company and the enthusiastic articles alongside them.
However, during 2022 the stock dropped 82% of its value and is currently trading at 49 dollars or an estimate of 3.87 billion (still very expensive). The company is still losing and will continue to lose. Should we ask why such a correction came about? What happened to this stock also happened to all its companies except that the situation on Main Street in 2021 should not be compared to the situation today. The technology is advancing rapidly, the companies are loaded with cash, the government support is increasing and the valuation of the company is therefore expensive, although it is accounting, but much more realistic because the net dream of 2021 has been added several proofs of the potential. Analysts are more relaxed though.
7 of them updated their estimates during February, 5 recommend BUY and 2 HOLD but the estimates should not be compared to those given by the same analysts during 2021-2.
What potential is it about? At the end of 2020, the “technological disruption guru” Kathy Wood, founder and director of ARK Invest, said that in her opinion, Genome stocks are going to be the next FANG stocks. “The potential of genomic stocks may be tremendous, even more so than FANG,” said Wood, “especially in light of the combination of artificial intelligence and gene editing. The process will make it possible to predict and cure incurable diseases.” Wood holds many shares of CRSP-type companies in her baskets. She said this after the 2020 Nobel Prize in Chemistry was awarded to Professor Emmanuel Charpentier (founder of CRISPR Therapeutics) and Professor Jennifer Dodna for “rewriting the code of life”, for the development of Crispr-Cas9, a kind of molecular scissors that can find and edit almost any sequence in DNA of the cell and after in 2020 the genomic array of 3 cancer patients was modified using the CRISPR, which led to the conclusion that the realization of the editing dream is approaching,
We note that like any industrial niche that is helped by technological progress (today it is already all niches), so too the genomic engineering/editing industry is divided into two groups: the first consists of established companies from the technology and health field, the “oligopoly group” which is led in this case by the laboratory equipment and testing giant Thermo-Fisher ( Symbol: TMO) which the readers of the column are already familiar with, along with companies such as Agilent (NYSE: A), PerkinElmer (NYSE: PKI) or Regeneron Pharmaceuticals (NYSE: REGN) from the USA, Merck KGaA (NYSE: MRK.DE) from Germany, GenScript (NYSE: 1548 .HK) of China, the Swiss Lonza Group (LONN.SW) and the like.
The second group consists of young companies (and countless startups) that try, whether through disruptive technology or any other relative advantage, to compete. This group is led by the analyst favorite CRISPR Therapeutics (NYSE:CRSP) from Switzerland and alongside it companies such as INTELLIA (NYSE:NTLA), BEAM THERAPEUTICS (NYSE:BEAM) and EDITAS MEDICINE (NYSE:EDIT) from the USA. This group suffered a heavy blow in the current amendment (mainly due to the levels of increases in 2021) and we cited CRISPR as an example.
But before we get to the investment options, we will tell you about a private start-up called Photys Therapeutics, the details of which reached us recently, and which operates at the forefront of technological progress that helps the industry progress, with the aim of trying to understand the potential and the dream for the investor.
Photys, was founded at the end of 2021 with the aim of developing a technology invented by Professor Amit Choudhary (Amit Choudhary), a chemist-biophysicist from the BROAD Institute of Sciences, which belongs to MIT and Harvard. Choudhary is considered an open pioneer of precision control tools for genome editing. In August 2020, Chaudhary published a paper describing the creation of small dumbbell-shaped molecules that can be used to connect two specific proteins. The company’s scientist, Edward Holson, described the development as “a kind of switch that controls proteins. That turns a protein on or off, it’s more like a shipping label that tells the protein where it should go in the cell, it really gives us more levers to control the protein’s function.” The company’s goal, “to develop a new type of drugs that can change the chemical structure of proteins in order to change their function. We will not pretend to try and explain details because it will immediately become clear to the reader that our understanding does not exceed his, but if the professor’s open is successful (the drugs, at this stage, are even years away from clinical tests not to mention FDA approval) the impact on many diseases will be enormous.
This was actually the dream of Dr. Craig Wanter when he founded Celera in 1998. It is important to note that the supply of funds to raise was more than 100 times the demand. Brian Fenton, CEO of Photys, said that cancer is a key initial focus for the company, as well as diseases Immune, metabolic and rarity. But he added that it is “too early to say” when his startup will have a drug ready for clinical testing. But Photys, one can assume, would not have come to Wall Street for fundraising and certainly would not have found such respectable investors (such as the medical giants Eli Lilly and Merck and some of the leading capital funds) if, at the current stage of the progress of the technological revolution, they did not believe that the revolution created the possibility to “dominate in protein function”. We would like to add that the Israeli Arkin Holdings Group, which was founded by Mori Arkin, former director and director of Agis, which was sold, in 2005, to Parigo (NYSE:PRGO), is one of the investors, while Dr. Alon Lazarus, the group’s director of biotechnological investments, is a director of Photys. For your understanding The subject is recommended to read Yelin Lapidot’s article by Yelin-Lapidod from 2021 on the subject of genomic editing, “On CRISPR’s gene editing technology”
What, in my opinion, should an investor do: First, and as usual in such cases, we would not try to bet on the young companies. There are baskets like XDNA (Kelly CRISPR & Gene Editing Technology) or ARKG (ARK Genomic Revolution) or GNOM (Global X Genomics & Biotechnology) that contain, more or less, every gene editing company. ARKG is the biggest among them and all of them have undergone a CRSP version correction. Such a basket is suitable for a corner of dreams. But regarding a normal investment, the investor should understand that the first group of the industry, the oligopoly, led by TMO, MRK.DE or REGN will lead and not give up (as is the case in most industries). My opinion is therefore that the way to be exposed to the field is through the large medicine baskets (such as XLV as an example), bio technology (such as XBI) and medical equipment (such as IHI) and alongside them to introduce one of the small and focused baskets to the corner of dreams because quite a few of the companies in these baskets will be acquired in the future.