Investors who witnessed Moderna’s (Nasdaq: MRNA) meteoric rise in the course of the pandemic know just how profitable latest biotechnology corporations may be. As a pioneer in gene-editing medicines, CRISPR Therapeutics (Nasdaq: CRSP) could possibly be one other up-and-coming biotech stock that you must keep your eye on.

In December 2023, CRISPR received approval from the FDA to treat sickle cell disease (SCD) and beta-thalassemia with its landmark drug, CASGEVY. Nonetheless, despite this breakthrough, CRSP stock is down 15% in 2024. 

CRISPR’s Breakthrough Treatment

To start out, investors ought to be careful buying CRSP stock as its success depends almost entirely on CASGEVY over the short term. CRISPR currently has 5 other drugs in clinical programs. But, CASGEVY is its only FDA-approved therapy. For investors, which means CRISPR’s price will likely be very volatile within the short term. Any excellent news around CASGEVY will likely send the stock soaring, while bad news could do the other.

Despite its limited portfolio of approved drugs, CRISPR’s future seems very strong. Its approved drug, CASGEVY, is a possible cure for sickle cell, a debilitating and life-threatening disease. The corporate also has 15 more drugs in its pipeline including therapies for hemoglobinopathies, oncology, and regenerative medicine.

Moreover, the corporate is led (and co-founded) by Emmanuelle Charpentier. Emmanuelle received the Nobel Prize in Chemistry for her work on the CRISPR/Cas9 gene-editing system. This just goes to point out how cutting-edge CRISPR’s treatments are.

We can also’t discuss CRSP stock without also talking about Vertex Pharmaceuticals (Nasdaq: VRTX). 

CRISPR and Vertex Pharmaceuticals (Nasdaq: VRTX)

Vertex Pharmaceuticals owns 60% of CRISPR’s gene editing therapy for CASGEVY.

Without delay, CASGEVY is in a little bit of an exploratory phase. It has been approved by the FDA to be used within the United States and the United Kingdom. Within the US FDA trial, the drug was administered to 31 patients with 93.5% experiencing no major in poor health uncomfortable side effects. Now, it’s on doctors across the US and UK to recommend this treatment to their patients. When that happens, Vertex will own 60% of all sales and CRISPR will receive 40%.

On one hand, this may undoubtedly take a bite out of CRISPR’s potential profits. Nonetheless, Vertex and CRISPR plan to charge $2.2 million for CASGEVY treatments. CRISPR’s cut of any prescribed treatments would presumably be 40% of $2.2 million or $880,000 per treatment – still incredibly high for one product.

Moreover, from what I’ve read, Vertex has significantly higher commercialization abilities than CRISPR. It’s a much bigger company with a much wider influence which is able to help bring CASGEVY to market and make it more available for patients. So, this partnership may very well work out in CRISPR’s favor.

Crispr Technologies Most Recent Quarter

As a cutting-edge biotech company, Crispr Technologies’ income has been in every single place over the past three years.

1. 2023: Annual revenue of $371.2 million and a net lack of $153 million
2. 2022: Annual revenue of $1.2 million and net lack of $650 million
3. 2021: Annual revenue of $914.9 million a net income of $377 million

One of these variability just isn’t unusual for early-stage biotech corporations. These kind of corporations often spend years churning through investors’ money while they work to develop cures. Nonetheless, once they’ve developed a viable treatment, revenue and income can go parabolic. Could this be what’s in store for CRSP stock?

Should You Buy CRSP Stock?

Buying early-stage biotech corporations is a little bit of a chance.

On one hand, CRSP stock definitely seems poised for a breakout. The corporate received critical approval for a life-changing drug and yet the stock is down YTD. The corporate also has a Nobel Prize-winning CEO in charge, which is an incredible sign of things to come back. Crispr Technologies has the potential to do amazing things within the medicinal field over the approaching years. If its gene-editing treatments are successful then the stock will undoubtedly soar.

Red Flags to contemplate. 

For instance, how many individuals will actually buy CASGEVY? In keeping with the FDA, sickle cell impacts just 100,000 people within the US, or 0.0003% of the population. And, for individuals who have sickle cell, what number of will have the option to really afford CASGEVY given its immense price tag of $2.2 million dollars? These questions are difficult to estimate, especially given the US healthcare system’s convoluted use of insurance policies to pay for treatments.

Finally, it’s price mentioning that CRISPR already trades at a valuation of $4.75 billion. Some could argue that the corporate is immensely overvalued, considering its reported revenue of just $504,000 last quarter. On top of that, sickle cell affects a small portion of the US population. An excellent smaller percentage of those impacted will actually have the option to afford CASGEVY. Finally, when CASGEVY revenue starts coming in, CRISPR will only receive 40%.

CASGEVY approval could possibly be an indication of positive things to come back.

It’s essential to do not forget that CASGEVY is only one treatment for a handful of diseases. But, CASGEVY can be based on cutting-edge gene-editing technology. If CRISPR can use its gene-editing therapies to treat more common diseases – cancer, heart disease, etc – then the corporate’s $4.75 billion valuation might sound incredibly low-cost. Who knows how long the sort of diversification might take. But, it’s a really positive sign that CRSP stock has upward potential over the long term.

In case you’re all for buying CRSP stock, it is likely to be sensible to contemplate doing so slowly over time. This will help protect you from dramatic swings within the stock’s price. 

I hope that you just’ve found this text helpful in terms of learning about CRSP stock. In case you’re all for learning about other gene editing stocks click here, or please subscribe below to get alerted of recent investment opportunities from InvestmentU.

Disclaimer: This text is for general informational and academic purposes only. It mustn’t be construed as financial advice because the creator, Ted Stavetski, just isn’t a financial advisor. Ted also didn’t own CRSP stock on the time of writing.

Ted Stavetski is the owner of Do Not Save Money, a financial blog that encourages readers to speculate money as an alternative of saving it. He has five years of experience as a business author and has written for corporations like SoFi, StockGPT, Benzinga, and more.