In the past three years, CRISPR Therapeutics (NASDAQ: CRSP) has made tremendous progress. It was still a clinical-stage biotech in 2021, but it now has a gene-editing therapy that is approved in multiple countries. However, this regulatory milestone hasn't been accompanied by a strong stock market performance. CRISPR Therapeutics has significantly lagged the market since 2021.
What is going on with this gene-editing specialist? Let's find out why it's still worth buying the company's shares, especially at current levels.
CRSP data by YCharts
Beyond Casgevy's slow rollout
CRISPR Therapeutics developed a gene-editing medicine called Casgevy in collaboration with Vertex Pharmaceuticals . This therapy treats two blood-related disorders: sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT). Casgevy is approved in several regions: the U.S., the U.K., the European Union, Saudi Arabia, and Bahrain. It could also earn the green light in Canada and Switzerland. The U.K. was the first to approve Casgevy in November.
Yet, Casgevy isn't helping CRISPR Therapeutics generate much sales, at least for now. In the second quarter, the biotech reported revenue of $517,000, all of which it classified as grant revenue. In other words, Casgevy has contributed nothing in sales for CRISPR since it was approved almost a year ago.
It's not that surprising. Gene-editing therapies of the ex vivo variety Casgevy belongs to are complex to administer. Physicians must collect patients' cells, edit them to create personalized treatments, and reinsert them back into the patient. These therapies require specialized equipment in authorized treatment centers (ATCs). CRISPR Therapeutics reports that it has activated over 35 ATCs and collected cells from 20 patients as of mid-July.
The progress is slow. But there's a silver lining once you look at Casgevy's full potential. CRISPR and Vertex estimate there is an addressable market of 35,000 patients in the U.S. and Europe and another 23,000 in Saudi Arabia and Bahrain. Casgevy costs $2.2 million in the U.S., a pretty average price for a gene-editing medicine. For now, the two partners have no competition in the SCD and TDT gene-editing field in Saudi Arabia, Bahrain, and Europe.
Even in the U.S., their lone competitor is Bluebird Bio , a micro-cap biotech company that doesn't have the funds and the reach Vertex has. Further, Bluebird's SCD treatment, Lyfgenia, comes with a warning for a higher risk of blood cancer and costs $3.1 million. Other gene-editing treatments are in development for SCD and TDT; however, between jumping through clinical and regulatory hoops, activating ATCs, and getting third-party payers on board, Vertex and CRISPR's would-be competitors will have much catching up to do.
Given all these factors, it seems reasonable to assume that Casgevy could grab at least a decent share, perhaps 20% of its addressable market. At a price above $1 million, this is undoubtedly a multibillion-dollar opportunity for CRISPR Therapeutics.
There is more where that came from
CRISPR Therapeutics will eventually start racking up solid revenue from Casgevy. But is the biotech a one-hit wonder? Investors will want to know whether it can develop other breakthrough therapies. First, funding shouldn't be too much of a problem moving forward. CRISPR Therapeutics ended the second quarter with $2 billion in cash, equivalents, and marketable securities, higher than the $1.7 billion it had as of the end of 2023. It increased its funding by selling shares to select institutional investors.
Once Casgevy gains traction, things will get even better on the funding front. Further, CRISPR has five clinical trial programs. The biotech also has several products in the pre-clinical phase. It only needs a modest 20% success rate in its ongoing studies to launch another product. Though still unproven just a year ago, the company's gene-editing platform has now shown that it can lead to approved breakthrough therapies.
And Casgevy is the first gene-editing treatment that uses the CRISPR technique, famous for its accuracy, that earned its creators a Nobel prize in chemistry. What does all this mean for investors? In my view, CRISPR Therapeutics is well-positioned to make steady clinical and regulatory progress in the next five years. That's in addition to Casgevy's potential becoming reality. The stock could deliver outsize returns to patient investors.
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Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool recommends Bluebird Bio. The Motley Fool has a disclosure policy .
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