This Stock Could Be the Tesla of Healthcare

Some farsighted (or just plain lucky) investors bought shares of Tesla Motors (NASDAQ: TSLA) early on. They took a huge risk, but that risk paid off. Tesla stock is up nearly 1,400% since the company went public in 2010.

Stocks like Tesla are a pretty rare species. And they're not always easy to spot early on. But some are still out there. One stock that is in its infancy right now that could be a huge winner in the next few years is gene-editing pioneer Editas Medicine (NASDAQ: EDIT). Could Editas be the Tesla of healthcare?

New and improved

Tesla wasn't the first automaker to create an electric car. The first electric car in the U.S. dates back to 1890. However, Tesla did introduce a new-and-improved version of the electric car that captured the attention of consumers.

Likewise, Editas isn't the first biotech to use gene editing -- the insertion, deletion, or replacement of DNA in a cell or organism. Others have been working on developing drugs using gene-editing techniques for a long time before Editas was formed. Sangamo Therapeutics (NASDAQ: SGMO), for example, got its start in 1995 and has been researching potential applications of gene-editing therapies ever since.

But like Tesla, Editas has a new-and-improved approach to an idea that's been around awhile. Sangamo uses a gene-editing method called zinc finger nuclease (ZFN) technology. ZFN was introduced in the early 1990s. Editas uses the CRISPR-Cas9 gene editing approach, which wasn't discovered until around five years ago.

CRISPR-Cas9 has several advantages over older gene-editing technologies. As was the case with Tesla's cars compared to previous electric cars, CRISPR-Cas9 is better and faster than the alternative methods for editing genes. It's easier to build, and it can modify DNA with greater precision. And CRISPR-Cas9 is cheaper as well (something Tesla hasn't been able to claim until recently).

Off-the-charts potential

Some think only of electric cars when they think about Tesla. The reality, though, is that Tesla's vision is much bigger than electric cars: Its plan is to promote sustainable energy sources in all areas of life.

It's also possible to look at Editas in a narrow way. The biotech's pipeline currently includes seven pre-clinical programs. One of those programs is a collaboration with Juno Therapeutics (NASDAQ: JUNO) to use gene editing in engineering T cells to fight cancer. Editas' lead program EDIT-101 targets treatment of rare genetic eye disease Leber Congenital Amaurosis type 10. The company plans to submit an Investigational New Drug (IND) application for EDIT-101 next year.

There's a much bigger potential for Editas than just those few programs, though. The company has licensed exclusive rights to patents for the use of CRISPR-Cas9 in editing eukaryotic cells (i.e., any cells with a nucleus, including all human and animal cells). Editas also licensed patents to another type of gene editing, CRISPR-Cpf1, that could be even better than CRISPR-Cas9 for some mutations.

What does this mean for Editas' potential? There are around 6,000 diseases caused by genetic mutations. Over 95% of them don't have an approved therapeutic alternative. Even where there are approved therapies, they often only treat the symptoms of the disease. CRISPR-Cas9 and CRISPR-Cpf1 hold the potential to be used to treat many of these genetic diseases, particularly those affecting bone marrow, eyes, liver, lung, and muscle. Editas will be a go-to partner for many biopharmaceutical companies wanting to target those diseases.

Allergan (NYSE: AGN) became the first big pharma company to join forces with Editas earlier this year. The two companies are working together to develop gene-editing drugs for several eye disorders. This deal also allows Allergan to license Editas' lead program, EDIT-101.

Future tense

It's not an exaggeration to speculate that Editas Medicine's potential could be greater than Tesla's if Editas' gene-editing technology helps cure a range of serious diseases. However, at this point, it would be only speculation. None of Editas' programs have even reached clinical trials yet. The odds of any program making it all the way to approval are low -- less than 10% based on the Food and Drug Administration's analysis of all experimental drugs.

There's also the possibility that even better gene-editing techniques will be discovered. That wouldn't derail Editas' efforts -- after all, Sangamo continues to move forward with ZFN even though the technology has been eclipsed by CRISPR. However, a gene-editing approach that proved to be better than CRISPR would probably drastically reduce the appeal of Editas as a partner for larger companies wanting to develop treatments for genetic diseases.

Editas could truly be the Tesla of healthcare. For now, though, the key word in that statement -- "could" -- is future tense.

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Keith Speights has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.