Disruptive cell-based medicines are changing the world. Here’s where to invest for exposure.

Tej Kohli argues that 100 years from now when historians look at 2020 it won’t be COVID-19 that they are interested in but the award of the Nobel Prize in Chemistry to two scientists for inventing CRISPR.

Disruptive cell-based medicines are changing the world.  Here’s where to invest for exposure.

One hundred years from now when historians look back at 2020 it won’t be the COVID-19 crisis that they will be most interested in, but the award of the 2020 Nobel Prize in Chemistry to two scientists for their work on the 'CRISPR' technology of genome editing.  Their ‘“genetic scissors" discovery enables scientists to make precise changes to the DNA contained within living cells.  

The use of CRISPR is growing exponentially.  It is being licensed for development by companies for research, for medicine and even the development of new cancer therapies.  The CRISPR technology could, in the visible future, enable humans to treat or even to cure inherited diseases such as sickle cell anaemia.

CRISPR and other novel advances such as CAR T-cell therapies are part of a biotech revolution that will change life as we know it.  And so I often get asked where to invest for the best exposure to this revolution?  The problem is that a lot of the best-known companies have a lot of optimism priced in already, so stock market investors need to search deeper for the best value opportunities.

MaxCyte (LSE:MXCT), is a London-listed US-based company whose share price, at the time of writing, has grown five fold over the last year as investors have grasped the magnitude of the oncoming biotech revolution.  MaxCyte owns and licenses the proprietary cell-engineering platform technology upon which biopharmaceutical companies rely on to develop the technologies that they have licensed.

For example, in May 2020 MaxCyte entered a licence agreement with Caribou Biosciences that will enable Caribou to utilize the MaxCytre platform to develop its CRISPR gene-edited allogenic T cell therapy programs.  MaxCyte will receive development and approval milestone payments as well as other licencing fees.

Deals like this mean that MaxCyte now has 20 of the top 25 global pharma companies as its client, with licences granted to over 120 cell therapy programmes.  The aggregate potential value of pre-commercial milestones payments that Maxcyte could receive from current licence deals is over $800m.  I believe that MaxCyte could double this annually based on wider growth trends.

In October 2020 MaxCyte reported half year revenues 30% up on 2019, which were already 30% up on 2018.  MaxCyte grew the number of commercial deals that it has in place to 11, up from just 4 in the previous year.  The company also doubled the number of clinical products that it has under development, with over 90 products currently under licence.

MaxCyte revenues are driven by visible high margin recurring annual fees from its cell therapeutics business, as well as instrument sales and clinical milestone payments.  As companies continue to licence the CRISPR technology, it is MaxCyte that stands to benefit as it becomes the ‘platform of choice’ for the development of cell engineered projects.

Investors who feel that too much future growth is already priced in to MaxCyte to make it an interesting investment proposition would be well advised to look deeper into the wider ecosystem of licencing deals for cell and DNA engineering, which is booming.  The cell and DNA engineering revolution is only just beginning, and MaxCyte is well position to directly correlate its prosperity with the exponential growth of these new technologies.

Investors who are prepared to play the long game may well get to enjoy the ride from obscure AIM company to FTSE100 blue chip in less than ten years.  

You heard it here first!


Tej Kohli’s blog is #TejTalks and he is also the author of Rebuilding You: The Philanthropy Handbook.  Tej Kohli posts on Twitter as @MrTejKohli.