The correct option is "1 and 2 only".

Genetic medicines aim to correct or compensate for faulty genes that are responsible for various diseases, which aligns with statement 1. Furthermore, engineered viruses and lipid nanoparticles serve as delivery systems to transport therapeutic genes into target cells, supporting statement 2. However, statement 3 is incorrect because genetic medicines do not alter the entire DNA sequence; they specifically target and modify particular genes or regions of the genome to achieve therapeutic effects. This concept aligns with key principles of genetic therapy discussed in standard references like NCERT and other UPSC materials, emphasizing precision in genetic interventions.