Nobody could have possibly predicted what we all recently witnessed in awe. Some people reacted with hope and optimism, others with fear. Could things really have gotten to this point? Could anybody have predicted that society would be in the situation that it sits today? That a giant orange blob would be the focal point of nations around the world?

That’s right. We’re talking about none other than the recent article by technology pioneer Peter Diamandis titled “10 Tech Trends That Made the World Better in 2016“. In this article, he talks about all the amazing technological advancements that were made in 2016, how the big orange blob in the sky, the sun, is now providing electricity cheaper than coal. (BTW, anyone notice that the coal industry is pretty much bankrupt now?) He also made the remark that 99.999% of people “don’t know what’s coming“. This powerful remark is likely refering to the amazing potential of synthetic biology.

Out of all the emerging technologies we cover, synthetic biology is the one that really makes us reel in awe every time we remember just how powerful it really is. Now that we are able to perform gene editing (a technique referred to as CRISPR), in the future we can “grow” pretty much anything you can imagine. Who needs a sawmill when you can just grow the trees without bark and sized in exactly the dimensions you need? Actually, why not just grow the entire house from a single tree? Theoretically you should be able to “program” the DNA of a tree such that it grows into the shape of a house.

Think that’s far fetched? It’s not. We now have companies like Ginkgo Bioworks that are literally creating nanobots using gene editing combined with artificial intelligence, big data, and robotics. As people wait for the intellectual property battle behind CRISPR to reach a conclusion, the technology is moving full steam ahead. One startup in this space called Synthego is a “picks and shovels” play on the whole gene editing theme.

Founded in 2012 by SpaceX engineers, stealthy Silicon Valley startup Synthego has taken in almost $50 million in funding to develop genome engineering solutions or in other words, “picks and shovels” for gene editing. The Company is backed by all sort of heavy hitting visionaries including Founders Fund (Peter Thiel), OS Fund (Bryan Johnson of Kernel), and Jennifer Doudna (founder of Intellia Therapeutics). What Synthego has done is to build an automated manufacturing process that is capable of producing “synthetic guide RNAs” at an industrial scale. Since probably .0001% of people know what a “synthetic guide RNA” is, we’re going to expand on that a bit in order to fully understand Synthego’s value proposition.

As you can imagine, the topic of gene editing can get extremely boring complex in no time at all. We’re going to explain this simply because that’s the extent to which we understand this technology ourselves. If you’re looking for the technical specifications, Synthego’s website has a wealth of information for you to explore. If you’re like us and looking for the simplest explanation as possible so you can understand their business from an investor’s perspective, here’s the technology in a nutshell.

First, a refresher on the terminology:

Known as the “molecular scissor”, Cas9 is a nuclease that is responsible for the cutting of a sequence of DNA that has been identified by a CRISPR guide RNA. The “cutting”, which occurs through a biochemical interaction, allows the gene to be disabled, repaired or altogether replaced with a new strand of DNA.

When you perform gene editing, you’re just taking biological scissors and removing or replacing genetic information contained within a string of DNA. The tool that helps you know where to cut is called a “guide RNA”, just as the word “guide” implies. Guide RNAs program Cas9 nucleases to cut at a specific genomic location. They are a fundamental component of the entire gene editing process. There are generally two types of “guide RNAs”; biological and synthetic. Synthego has created “synthetic guide RNA” with performance that is orders of magnitude greater than biological RNA. They call this “CRISPRRevolution”. You don’t need to be a geneticist to see how superior it is compared to other methods:

Based on the above table we can see that avoiding a full day (or days) of labwork saves money. Since it is synthetic, it is consistent in terms of quality and boasts up to 90% efficiency. We’re not sure what that means but if you tell any C-level executive that you created something 90% more efficient, their ears perk up and they start throwing dollars at you. Most importantly, CRISPRevolution is accurate. At some point in the future, we’re going to be editing human DNA to eradicate diseases and you don’t really want to be making any mistakes. Here’s a look at the accuracy of “guide RNA” created synthetically using chemical synthesis and those created via biological manufacturing:

Again, we don’t need a medical degree here to see that the “synthetic guide RNA” is superior when it comes to accuracy. As you can guess, accuracy is pretty important when you’re mucking around with someone’s DNA. So why doesn’t everyone just use synthetic guide RNA? Mainly it’s because of the cost. However, Synthego has used engineering and automation to create CRISPRevolution at a cost up to 5 times lower than competitors. In addition, the CRISPRevolution Guide RNA is available within days instead of weeks compared to custom services developed providers. Maybe that’s why they’re now shipping to over 30 countires with 9 of the top-10 global biology institutions using CRISPRevolution.

Synthego came out of stealth mode in August of 2016 with the world’s first “synthetic guide RNA” for CRISPR. They then took in a $41 million funding round at the beginning of this month with the intention of scaling. They look like a prime takeover target for a company like Thermofisher (NYSE:TMO) which is also trying a player in gene editing “picks and shovels”. Let’s hope they choose to IPO instead so we can take a closer look at this very interesting business and maybe pick up some shares to round out the 3 pure-play gene editing stocks that have all had recent IPOs as well.

It was Steve Jobs who said that the “the biggest innovations of the twenty-first century will be at the intersection of biology and technology”. Here you have some rocket engineers from SpaceX who thought they’d go solve problems in the genetics world by applying automation and software in the laboratory. That’s exactly what Ginkgo Bioworks is doing and others like Zymergen and Emerald Therapeutics. Regardless of who wins the CRISPR patent war, Synthego still stands to benefit from the increasing usage of synthetic guide RNA for gene editing.

Here at Nanalyze, we complement our tech investments with a portfolio of 30 dividend growth stocks that pay us increasing income every year. Learn how to build your own dividend growth stock portfolio in our report on Quantigence - A Dividend Growth Investing Strategy - freely available to Nanalyze Premium subscribers.