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Genomic Medicine 2021: (Happy To) Turn The Page

Marty Chilberg profile picture
Marty Chilberg


  • 2021 was a painful year for genomic medicine investors. Investor enthusiasm waned as valuations were stripped of hype premiums.
  • Allogeneic cell therapy relapses, chromosome abnormalities and preliminary variable or ineffective data outweighed some positive announcements.
  • Delivery remains an obstacle - especially for CNS indications.
  • The promise of genomic medicines remains strong and within the Gartner Priority Matrix.

Genetic engineeering concept

PhonlamaiPhoto/iStock via Getty Images


Biotechnology (XBI) performance was terrible in 2021. Goldman Sachs determined (Exhibit 10 confidential analyst report) the 52% February-to-December drawdown compared to the S&P 500 was the longest and largest since inception. The nascent subsector of gene and cell

This article was written by

Marty Chilberg profile picture
Marty Chilberg is a seasoned financial professional with over 30 years of C-Suite, board, consulting and advisory experience. He began his career as a certified public accountant (CPA). He moved to Silicon Valley in 1981 to begin his career in the software industry, working for Atari, Daisy Systems, Symantec and Visio. He took Symantec and Visio through their initial public offerings as their Chief Accounting Officer and Chief Financial Officer, respectively. The past ten years have been focused on emerging macro investing themes including Cloud and Genomic Medicines.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of ALLO, PFE, SGMO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (40)

Marty Chilberg profile picture
Small cap gene therapy companies continue to get hammered by the inflation/Fed Funds rate cycle. Clearly investors want to participate in the upside of drug discovery but have rotated into Vertex and Regeneron to do so given their balance sheet and cash flows. While I continue to track the gene therapy space, I have been reluctant to publish anything given this backdrop. Hope everyone is conserving capital for when it ends. Remain modestly invested in a couple names but over 40% cash for over a year as I wait out this cycle.
@Marty Chilberg If by "cycle" you mean macro, I think we are close. For years I've been monitoring my own investment returns, and when I compare to previous cycles, this one seems close to the end. With everyone sitting on 40% cash, once FOMO kicks in, things are going to pop quickly. Question now is, what's worth buying?
Marty Chilberg profile picture
@tkarl Hope you are right. I've felt we were close a few times in past several months but not the case. Everyone wants to talk about inversion and Fed funds rate hike cycle in historical terms but we've never had the context of negative/zero bond interest rates, quantitative easing/tightening and worldwide imbalance in commodity supply/demand curves that has influenced the macro over the past 3 yrs.

When to buy continues to define my thesis which remains unclear. What to buy after the when is clearer will be a welcome change in perspective. I'll likely publish something once I start putting money back to work but today I remain focused on preservation of capital. The market hopium about Fed rate cuts beginning soon is not my view. The ISM numbers indicate a rapidly slowling economy and the likely Fed response will be to pause the hike cycle but cuts seem only a possible response to further negative shifts such as SVB.
charged profile picture
@Marty Chilberg i had forgotten about this article. Just read again. As usual had no idea how early we were on this tech. My first investment was crsp which i dumped and bought vrtx. Many may have done. My 2nd sgmo…waiting for update on base editor. They have a march poster presented at conference 3/20 not released to public. I went to 47% cash yesterday. Cut investments i could sell in tax free or deferred accounts. Not going to pay taxes until i need cash.
Marty Chilberg profile picture
Added some info on CGT trajectory in at tweet stream

Marty Chilberg profile picture
A few news tidbits so far in Jan:
- Allogene had their hold for all allogeneic CAR-T clinical programs lifted. No findings that that chromosome abnormality in patient was due to any AlloCAR T product, Mfg process or TALEN editing
- Pfizer updated clinical register for HemA to modify Primary Completion date to Sept 2023 from Jan 2023. No update on Hold but suggests filing to FDA has been made and impact determination made.
- Atara has sold their in house ATOM AAV vector manufacturing facility and staff To FujiFilm to reduce forward operating expenses and provide $100m cash infusion. Combination extends cash runway to CYE23
- Homology sold their in house AAV vector manufacturing facility and staff to Oxford Biomedica for $130m cash infusion.
itamarro profile picture
Thank you for the solid overview.
@Marty Chilberg - great update on what was a disappointing year. I remember reading your 2018 article several times.

What are your thoughts on Precision Bio [DTIL]? Despite the bad year, it seems their market cap of ~$400MM is still well below peers? Any thoughts on a target price?
Marty Chilberg profile picture
@olddompat I had them on my buy list but with the allo issues, I'm no longer a buyer. These editing platform companies either get valued based upon the technology/IP capabilities or the programs. Crispr and base editing get the benefit of belief in approach so the programs can be further out. Talens, ZFN and Arc are all not viewed as competitive so they need to have program progression today to get credit. Doesn't make it right but that's the market today IMO. When DTIL had allo issues it stripped that value down because of a higher risk of failure. Once the dust settles and bios are back in favor, I'll take another look but not until then
@Marty Chilberg thx for reply - hope bios are back in favor in 2022
Marty Chilberg profile picture
3 decades and counting for beta thal cell therapy

Marty Chilberg profile picture
Sanofi signs new AI drug discovery deal

Marty Chilberg profile picture
Intellia announced some program updates this morning. They called out an allogeneic program which may indicate allo is overcoming the challenges described in article. Look forward to hearing more


NTLA-3001 for AATD-associated lung disease: NTLA-3001 is Intellia’s wholly owned CRISPR-mediated in vivo targeted gene insertion development candidate. It is designed with the aim to precisely insert a healthy copy of the SERPINA1 gene, which encodes the alpha-1 antitrypsin (A1AT) protein, with the potential to restore permanent expression of functional A1AT protein to therapeutic levels after a single dose. This approach seeks to address alpha-1 antitrypsin deficiency (AATD)-associated lung disease and eliminate the need for sub-optimal weekly IV infusions of A1AT augmentation therapy or lung transplant in severe cases.
Intellia is conducting Investigational New Drug (IND)-enabling activities for NTLA-3001 with plans to file an IND or IND-equivalent in 2023. The Company also continues to explore additional editing strategies for AATD.

They also announced a new collaboration for allo

I really enjoy reading your work. Very insightful for me, as I generally am a value investor. I had a large percentage of my IRA in biotech for long-term growth. Only down 12% in 2021, so I should consider myself lucky.

I have followed Perceptive Advisors for many years. They have a good long-term track record. They got crushed in 2021. I think Cathy and the ARK funds got way too much money with retail and mo-mo investors riding her wave. Wondering if Perceptive got redemptions and have been forced to sell positions in 2022.

Question on SGMO? You have a price target of $14. Is that a 3-5-10 year target?
Marty Chilberg profile picture
@TarsTarkis Hi Tars-appreciate the comment and kind words. Can't say I follow Perceptive very closely. Not surprised with any results in C21 bio. Congrats on limiting losses to 12%.

My valuation is always current value not future. I use it for personal trade decision making. Today when SNY dropped SCD, my price dropped by $2.50 to $11.50 but the SCD haircut may be mitigated if they can find a way forward. Surprised but have to say that autologous is not the way forward in CT as has been seen with the plodding growth of approved therapies and the overall cost of treatment.
@Marty Chilberg Thank You. Any comments on XBI. My average cost is $114, but looking to add, just not sure where bottom is. Could the washout be this week? Any technical help would be appreciated.
Marty Chilberg profile picture
@TarsTarkis The 100 level was the top in 2018 and resistant until May 2020 when it broke free and ran.

The last rally was from 80 to around 160 (mth closes). The 50% retrace didn't hold. The 62% took it to 110 so I'm looking at 100 as stronger support.

The Q you have to have an opinion on is inflation. If the consensus is accurate that the rate will revert to around 2% in 2H then you should be a buyer. If you think the Fed waited too long and they will need to raise over 3x this year then 100 may not hold.
Marty Chilberg profile picture
SNY discontinuing the SCD program effective Jun 2022. Final patients to be dosed in 3Q. SGMO working to find a transition plan and new collab partner. SNY indicates this is an internal change of direction away from Auto CT to Allo going forward.

This program represented 17% of my SOTP valuation or $2.50 per share. New PT is $11.50. Milestone fcst for C22 was $10m. 1H opex no impact. 2H22 opex to be determined as SNY participation will end
MikeFromNZ profile picture
A veritable tour de force, as usual; I have no material disagreements.
What would you consider attractive valuation for BEAM? Their single base technology stands out and may be able to do what other editing companies cant. Maybe..
Marty Chilberg profile picture
@egga I put my own price target ($40) in Table 7. That was the price toward end of C20 before the buying craze hit all the editing stocks on virtually no data. Beam is my preferred Crispr play but not at these levels given the 5-8 years it will take to get a product to market. Will reassess based upon cash levels/raises and hopefully some collabs that offload some risk.
Marty, don't you think it's curious that SGMO hasn't raised (despite spikes to $18 and $11 in the last 12 months or so) and that they haven't secured any new partnerships (despite repeatedly noting they are approached all the time to do so)?

With 3 drugs going into Ph3 i don't see how this company doesn't get bought. Only impediment in my opinion is the depressed share price (the BOD isn't going to sell SGMO for $15 or what not)
Marty Chilberg profile picture
@mlnovillo Interesting Q. I do think they missed an opportunity on the spike at end of C20. The cash they brought in from collabs from BIIB and NVS may have convinced them to let the price ride but clearly was a missed opportunity. Perhaps the CFO departure and initial uncertainty about replacement impacted it. Fully expect to see a new collab in C22 for a Treg indication to increase the runway. This may be enough unless the HemA milestones are pushed out from hold.

M&A likely won't be triggered by HemA status given the exit from GT. Same for Fabry as the typical M&A premium is driven up by follow on pipeline following POC and there is none for GT. We may see Fabry get collaborated with a 50/50 split of commercial which could bring in some cash.

Hard to say about SCD triggering some M&A interest. I could see it but an interested party may want to wait for some Treg data first given that is the majority of CT pipeline preclinic. I'd bet they will eventually get acquired but tied to G/R or Treg interest which suggests a window in C23-4 after more is known about approach, allo editing and delivery. Definitely later than I thought a year ago, but I believed they would file IND for Alz last year per R&D day comments.
@Marty Chilberg

Thank you, that's very thorough.

I'm not sure how M&As work logistically, but maybe you can clarify something for me: I'd think that -- if a purchaser offered lets say 4-5B for the Company -- the BOD would be under a significant amount of pressure to sell, given the share price action over the last few years. What would be the BOD's fiduciary duties at that point? Could they just reject such an offer without any kind of disclosure to the shareholders or repercussions? Do they have free reign to reject offers like that (I understand this may be a question for a lawyer).

I agree about the partnership you foresee, I just hope it's not accompanied by a hugely dilutive equity grant a-la Biogen (17% or what not) given the share price.

Thank you for all your insight as always.
Marty Chilberg profile picture
@mlnovillo What a great Q in today's world. The BOD has various duties at which come into play in any review or exercise of an M&A transaction. The 3 primary ones are:
- Duty of care- to make decisions in good faith
- Duty of loyalty- which requires decisions to be in the best interests of the corporation ignoring personal economic conflict
- Duty of good faith-honesty in their conduct during the process

I read something a while back that said approx 97% of all transactions approved by the BOD trigger a lawsuit to try to get more. That and numerous other issues is one reason why the BOD and companies should always lay out long term strategy in specific enough detail to inform investors of long term intent. If a transaction fits that strategy it becomes evidence in favor of a deal. OTOH if a transaction goes against stated strategy it becomes evidence that the deal should/could be contrary to the stated interests of the company.

Just the tip of the iceberg and I'm no lawyer. Suffice it to say that if a compelling opportunity is presented the BOD will definitely seriously consider it weighing the interest of all stakeholders.

There is probably a line that once crossed in a negotiation/discussion would lead to disclosure Frequently early disclosure is a strategy to increase the valuation. That's why acquirers almost always expect a no shop clause.
charged profile picture
Great article as usual. Crispr crash was inevitable as so much hype. Interestingly it has still been a good investment. Technology just an infant. Btw my biomarin did ok. Sgmo hurting at moment. Brainstorm in als simple little tech about to file bla.
Marty Chilberg profile picture
@charged Thanks. It's a shame that Seeking Alpha doesn't encourage this type of article. I do the research for myself and publish occasionally but unless an author writes about a single stock, there really is no incentive to do so. Anyway, thx for read/comment and agree that we have a long road ahead. Hope BMRN works out for you. i can't get comfortable with Fuchs so avoid
i keep looking back at SGMO but just can't decide, the whole sector just feels too dicey right now. nice writeup, ty!
Marty Chilberg profile picture
@doctahJonez My concern is tied to inflation risk which is likely another primary catalyst for the selloff last year. With rising rates expected for at least this year, the market rotation is risk-off moving monies out of cash burn or high multiple stocks and into value/yield vehicles. Early stage bios need cash to fuel development for years which makes me focus on the cash runway. SGMO has a ton of potential but the HemA milestone nut is being questioned due to the durability and P3 hold. If the hold is quickly lifted and the P3 readout is good, I'm likely to add but not until then.
@Marty Chilberg now or not being questioned?
Marty Chilberg profile picture
@William Frey Sorry but I don't understand the Q
Well done ,thank you, however , wish it were better news for this holder of CRSP and EDIT ..!
Marty Chilberg profile picture
@Murphy2013 It was definitely a hard year. Wishing us all better luck this year but the real returns are still a ways off.
Nice overall summary of this biotech area. At this stage, hard to determine the winners and you make that clear. I will follow you.
Marty Chilberg profile picture
@charles1222 Thanks for follow. Personal view is that 10 yrs from now Crispr editors will dominate the global lab landscape, but any editor that has clinical success will lead to strong investment returns tied to fundamental traction.
thucydides123 profile picture
Long VRTX and REGN to play CRSP and NTLA indirectly.
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