We recently compiled a list of the 9 Best Gene Therapy Stocks to Buy Now and in this article, we discuss whether Krystal Biotech, Inc. (NASDAQ:KRYS) is the premier gene therapy stock for your portfolio.
Gene therapy involves treating illnesses by modifying, replacing, or supplementing faulty or missing genes responsible for a disease. This approach has become a research focus area in fighting degenerative illnesses. The growing incidence of cancer and other chronic diseases worldwide is increasing the demand for gene therapy.
In 2023, the global gene therapy market reached a valuation of $7.74 billion. The market is expected to expand at a compound annual growth rate (CAGR) of 19.6% to reach a value of $38.76 billion by 2032. In 2022, North America led the global gene therapy market in terms of revenue and is expected to maintain this dominance throughout the forecast period. This leadership can be credited to the strong regulatory framework for developing cellular treatments and the presence of many biopharmaceutical companies in the region.
Meanwhile, Europe is expected to offer the most opportunities for growth in the gene therapy market in the coming years. Some factors driving this growth include advanced healthcare infrastructure and the availability of reimbursements across the continent.
As far as the vector types are concerned, the viral vector segment dominated the market in 2022 by capturing over 85% of the revenue share. This was due to advancements in physiochemical methods for gene therapies during preclinical and clinical trials aimed at treating various diseases. As these developments continue, the viral vector segment is projected to experience rapid growth in the following years.
Cathie Wood’s Confidence in Gene Therapy
The gene editing market has now gained mainstream attention and is attracting many famous investors. A prominent hedge fund investor, Cathie Wood, has shown strong confidence in this industry. Wood has been actively investing in innovative gene editing companies for many years.
Investors are becoming increasingly familiar with the term “CRISPR” – Clustered Regularly Interspaced Short Palindromic Repeats – as the industry sees an increase in companies using CRISPR-based technologies. According to a report by Cathie Wood’s ARK Invest, CRISPR can be considered the “breakthrough of the century.”
ARK Invest expects that CRISPR technology will soon show its potential in the agriculture sector and offer opportunities to improve the food supply. Meanwhile, in the field of medicine, CRISPR technology’s potential market for treating monogenic diseases is estimated at over $75 billion annually.
A researcher handling a vial of adeno-associated virus gene therapy for a preclinical program.
Our Methodology
To shortlist the best gene therapy stocks, we analyzed Insider Monkey’s database of 919 hedge funds as of Q1 2024. From this extensive dataset, we selected gene therapy companies that received significant interest from hedge fund investors. Our aim was to identify gene therapy stocks that hedge funds are particularly optimistic about. Furthermore, we looked at companies with strong product pipelines, positive analyst ratings, and high price targets to shortlist the most promising gene therapy stocks. The best gene therapy stocks have been ranked in ascending order of the number of hedge fund investors as of the first quarter of 2024.
“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).”
Is Krystal Biotech, Inc. (NASDAQ:KRYS) the Premier Gene Therapy Stock for Your Portfolio?
Krystal Biotech, Inc. (NASDAQ:KRYS)
Number of Hedge Fund Holders: 34
Krystal Biotech, Inc. (NASDAQ:KRYS) is a biotechnology firm that is working on developing genetic medicines to treat rare diseases. Leveraging its proprietary redosable HSV vector, the company has a wide pipeline of potential treatments.
At the close of the first quarter, Krystal Biotech, Inc.’s (NASDAQ:KRYS) cash reserves stood at $359 million, with total cash and investments amounting to $622 million. This reflects a $28 million increase from the year-end cash and investments.
Meanwhile, the net product revenue for the company’s first FDA-approved gene therapy treatment for dystrophic epidermolysis bullosa reached $45.3 million during Q1. The cost of goods sold amounted to $2.4 million, representing approximately 5% of net product revenue. This resulted in a healthy gross margin of 95%.
Overall, 34 hedge funds are bullish on the company. Here’s what TimesSquare Capital Management said about Krystal Biotech, Inc. (NASDAQ:KRYS) in its Q3 2023 investor letter:
“New to the strategy was Krystal Biotech, Inc. (NASDAQ:KRYS), a commercial-stage biotechnology developer of topical therapies for skin diseases. Its current treatment, Vyjuvek, was recently approved for dystrophic epidermolysis bullosa, a genetic condition often appearing at early ages that causes severe blistering in the middle skin layers. From our research, we expect the commercial launch to be successful, especially given the lack of other therapies.”
Overall, Krystal Biotech, Inc. (NASDAQ:KRYS) ranks 6th among the 9 best gene therapy stocks to buy now. You can visit 9 Best Gene Therapy Stocks to Buy Now to see the other gene therapy companies that are on the hedge fund radar.
While we acknowledge the potential of gene editing companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure. None. This article is originally published on Insider Monkey.