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Genome editing is a technique to alter or modify the DNA of a cell or organism. It uses an enzyme to cut the DNA at a particular sequence and then is repaired by the cell, making a change to the sequence, per the verified sources. As a result, the characteristics of a cell or organism are changed. Given the growing applications of gene-editing, it is a rising market which offers endless opportunities.
The genomic-editing space has come under the spotlight with the release of encouraging data from the first-ever human study assessing an in vivo CRISPR-based gene editing therapy candidate, NTLA-2001. Notably, CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats)/Cas9 is a very efficient and fast technique to edit genomes. It is also worth noting here that the CRISPR/Cas9 segment delivered robust performance and accounted for the largest revenue share of 40.2% in 2020, as mentioned in a Grand View Research report. A rise in the utilization of CRISPR genome editing technology is being observed in the diagnostics space.
Let’s take a look at some big genomics earnings releases to see if these will impact ETFs exposed to the space.
Earnings in Focus
On Jul 29, CRISPR Therapeutics AG (CRSP - Free Report) delivered second-quarter 2021 earnings per share of $9.44, outpacing the Zacks Consensus Estimate of $4.19. The company had reported a loss of $1.30 per share in the year-ago period. CRISPR Therapeutics' total revenues, which comprise grants and collaboration revenues, came in at $901 million in the reported quarter compared with less than $0.1 million reported in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $678 million.
On Aug 5, Intellia Therapeutics, Inc. (NTLA - Free Report) saw a quarterly loss of $1.01 per share, wider than the Zacks Consensus Estimate of a loss of 61 cents. The metric also compares unfavorably to loss of 61 cents per share in the year-ago quarter. The company recorded revenues of $6.6 million for the quarter ended June 2021, lagging the Zacks Consensus Estimate by 45.5% and declining from the year-ago revenues of $16.3 million.
On Aug 4, Editas Medicine, Inc. (EDIT - Free Report) incurred a loss of 81 cents per share in the second quarter of 2021, which was narrower than the Zacks Consensus Estimate of a loss of 85 cents per share. However, the metric compared unfavorably with a loss of 43 cents in the year-ago quarter. Collaboration, and other research and development revenues comprising the company’s top line, came in at $0.4 million in the reported quarter, substantially missing the Zacks Consensus Estimate of $7 million. The metric also compared unfavorably with $10.7 million reported in the year-ago quarter.
According to Editas Medicine, the major year-over-year decline in revenues was largely due to revenues recognized pursuant to an out-license agreement entered in second-quarter 2020 as well as revenues recognized under the strategic alliance with Allergan [now part of AbbVie (ABBV)]. No such revenues were recorded in second-quarter 2021.
On Aug 10, Beam Therapeutics Inc. (BEAM - Free Report) reported a loss of 95 cents per share in second-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 58 cents per share. This metric compares unfavorably with a loss of 69 cents per share in the year-ago period. The company recorded revenues of $0.01 million for the quarter ended June 2021, lagging the Zacks Consensus Estimate by 99.9% and staying flat year over year.
Genomics ETFs in Focus
In the current scenario, we believe it is prudent to discuss a few ETFs with exposure to the companies discussed above:
This fund follows the Dynamic Biotech & Genome Intellidex Index. The index comprises companies that are majorly engaged in the research, development, manufacturing and marketing plus distribution of various biotechnological products, services and processes and companies that gain significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund holds 31 stocks in its basket. It has managed $295.6 million in its asset base. Expense ratio is at 0.58%. The fund has returned about 1.3% since Jul 29 (as of Aug 12) (read: Biotech ETFs Surge on Biogen's Alzheimer Drug Approval).
This is an actively-managed ETF focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business. The fund typically holds 30-50 stocks in its basket. The fund charges 0.75% in expense ratio. It has accumulated $8.51 billion in its asset base. The fund has lost about 1.6% since Jul 29 (as of Aug 12) (read: A Comprehensive Guide to Genomic ETFs).
This is a new entrant in the space, having accumulated $252.1 million since its inception on Apr 5, 2019. It seeks to invest in companies that stand to benefit from advancements in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. The product follows the Solactive Genomics Index, charging 50 bps in annual fees. It holds 39 stocks in its basket. The fund has returned about 1.9% since Jul 29 (as of Aug 12) (read: 4 ETF Areas Surged Last Week).
iShares Genomics Immunology and Healthcare ETF (IDNA - Free Report)
This is another new entrant, which was launched in June 2019. Tracking the NYSE FactSet Global Genomics and Immuno Biopharma Index, the fund provides exposure to developed and emerging market companies that could gain from long-term growth and innovation in genomics, immunology and bioengineering. It holds a basket of 48 securities. The fund has AUM of $342.2 million and charges a fee of 47 basis points. The fund has returned about 6.2% since Jul 29 (as of Aug 12) (read: Moderna ETFs to Rise on Positive COVID-19 Vaccine Updates).
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How Are Genomics ETFs Responding to Q2 Earnings?
Genome editing is a technique to alter or modify the DNA of a cell or organism. It uses an enzyme to cut the DNA at a particular sequence and then is repaired by the cell, making a change to the sequence, per the verified sources. As a result, the characteristics of a cell or organism are changed. Given the growing applications of gene-editing, it is a rising market which offers endless opportunities.
The genomic-editing space has come under the spotlight with the release of encouraging data from the first-ever human study assessing an in vivo CRISPR-based gene editing therapy candidate, NTLA-2001. Notably, CRISPR (Clustered Regularly Interspaced Short Palindromic Repeats)/Cas9 is a very efficient and fast technique to edit genomes. It is also worth noting here that the CRISPR/Cas9 segment delivered robust performance and accounted for the largest revenue share of 40.2% in 2020, as mentioned in a Grand View Research report. A rise in the utilization of CRISPR genome editing technology is being observed in the diagnostics space.
Let’s take a look at some big genomics earnings releases to see if these will impact ETFs exposed to the space.
Earnings in Focus
On Jul 29, CRISPR Therapeutics AG (CRSP - Free Report) delivered second-quarter 2021 earnings per share of $9.44, outpacing the Zacks Consensus Estimate of $4.19. The company had reported a loss of $1.30 per share in the year-ago period. CRISPR Therapeutics' total revenues, which comprise grants and collaboration revenues, came in at $901 million in the reported quarter compared with less than $0.1 million reported in the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate of $678 million.
On Aug 5, Intellia Therapeutics, Inc. (NTLA - Free Report) saw a quarterly loss of $1.01 per share, wider than the Zacks Consensus Estimate of a loss of 61 cents. The metric also compares unfavorably to loss of 61 cents per share in the year-ago quarter. The company recorded revenues of $6.6 million for the quarter ended June 2021, lagging the Zacks Consensus Estimate by 45.5% and declining from the year-ago revenues of $16.3 million.
On Aug 4, Editas Medicine, Inc. (EDIT - Free Report) incurred a loss of 81 cents per share in the second quarter of 2021, which was narrower than the Zacks Consensus Estimate of a loss of 85 cents per share. However, the metric compared unfavorably with a loss of 43 cents in the year-ago quarter. Collaboration, and other research and development revenues comprising the company’s top line, came in at $0.4 million in the reported quarter, substantially missing the Zacks Consensus Estimate of $7 million. The metric also compared unfavorably with $10.7 million reported in the year-ago quarter.
According to Editas Medicine, the major year-over-year decline in revenues was largely due to revenues recognized pursuant to an out-license agreement entered in second-quarter 2020 as well as revenues recognized under the strategic alliance with Allergan [now part of AbbVie (ABBV)]. No such revenues were recorded in second-quarter 2021.
On Aug 10, Beam Therapeutics Inc. (BEAM - Free Report) reported a loss of 95 cents per share in second-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 58 cents per share. This metric compares unfavorably with a loss of 69 cents per share in the year-ago period. The company recorded revenues of $0.01 million for the quarter ended June 2021, lagging the Zacks Consensus Estimate by 99.9% and staying flat year over year.
Genomics ETFs in Focus
In the current scenario, we believe it is prudent to discuss a few ETFs with exposure to the companies discussed above:
Invesco Dynamic Biotechnology & Genome ETF (PBE - Free Report)
This fund follows the Dynamic Biotech & Genome Intellidex Index. The index comprises companies that are majorly engaged in the research, development, manufacturing and marketing plus distribution of various biotechnological products, services and processes and companies that gain significantly from scientific and technological advances in biotechnology and genetic engineering and research. The fund holds 31 stocks in its basket. It has managed $295.6 million in its asset base. Expense ratio is at 0.58%. The fund has returned about 1.3% since Jul 29 (as of Aug 12) (read: Biotech ETFs Surge on Biogen's Alzheimer Drug Approval).
ARK Genomic Revolution ETF (ARKG - Free Report)
This is an actively-managed ETF focusing on companies likely to benefit from the extension and enhancement of the quality of human and other life by incorporating technological and scientific developments plus improvements and advancements in genomics into their business. The fund typically holds 30-50 stocks in its basket. The fund charges 0.75% in expense ratio. It has accumulated $8.51 billion in its asset base. The fund has lost about 1.6% since Jul 29 (as of Aug 12) (read: A Comprehensive Guide to Genomic ETFs).
Global X Genomics & Biotechnology ETF (GNOM - Free Report)
This is a new entrant in the space, having accumulated $252.1 million since its inception on Apr 5, 2019. It seeks to invest in companies that stand to benefit from advancements in the field of genomic science, such as companies involved in gene editing, genomic sequencing, genetic medicine/therapy, computational genomics and biotechnology. The product follows the Solactive Genomics Index, charging 50 bps in annual fees. It holds 39 stocks in its basket. The fund has returned about 1.9% since Jul 29 (as of Aug 12) (read: 4 ETF Areas Surged Last Week).
iShares Genomics Immunology and Healthcare ETF (IDNA - Free Report)
This is another new entrant, which was launched in June 2019. Tracking the NYSE FactSet Global Genomics and Immuno Biopharma Index, the fund provides exposure to developed and emerging market companies that could gain from long-term growth and innovation in genomics, immunology and bioengineering. It holds a basket of 48 securities. The fund has AUM of $342.2 million and charges a fee of 47 basis points. The fund has returned about 6.2% since Jul 29 (as of Aug 12) (read: Moderna ETFs to Rise on Positive COVID-19 Vaccine Updates).