There was a lot of hype and excitement around gene-editing company CRISPR Therapeutics (CRSP -1.08%) last year after it obtained approval for its first product, Casgevy. But that excitement has largely waned, and investors appear to have moved on from the stock. Year to date, shares of CRISPR are down 24%, and it is nowhere near its 52-week high of more than $91.
Is there something wrong with the business, or could the decline in price make CRISPR a potential steal of a deal?
CRISPR is still in the early stages of rolling out Casgevy
Casgevy is a gene-editing therapy which could be a game changer for CRISPR’s business. The one-time treatment for sickle cell disease and beta thalassemia can generate billions in revenue, but the problem is that it could take a while for the rollout.
Analysts at Bloomberg don’t expect the treatment to top $1 billion until 2027 — and not all of that revenue will even flow into CRISPR’s top line. Rather, the company will share in the profits. CRISPR will take 40% with its development partner, Vertex Pharmaceuticals, taking the rest. Vertex will be the one to actually record the revenue from Casgevy.
Currently, CRISPR is still burning through cash and generating minimal revenue. Through the first six months of the year, the company has incurred a net loss of $243 million. And the reality is that its losses are likely to continue for the foreseeable future. But the good news for investors is that with a combined $2 billion in cash and cash equivalents and marketable securities, it’s well-funded and able to keep its operations afloat without needing to continually raise cash.
The company has other products in its pipeline
There is more for CRISPR investors to look forward to than just Casgevy. The company is in the early stages of testing CTX211, a treatment for type 1 diabetes. It’s also working on multiple cancer treatments, including CTX131 and CTX112 — preliminary data for this testing could be coming later this year.
CRISPR may not necessarily obtain approval for all of these treatments or even any of them, but the company is investing heavily into research and development, which could pay off in droves for not only the business but investors as well. The market for gene therapies remains modest at around $6 billion, but according to estimates from Grand View Research, it could be worth more than $18 billion by the end of the decade.
CRISPR is a long-term play which is going to require patience
CRISPR has a bright future with Casgevy, and if it obtains approval for other treatments, this has the potential to be a business worth tens of billions of dollars. Right now, however, its market capitalization is just over $4 billion.
The healthcare stock makes for an intriguing investment because, while there is some risk and uncertainty ahead, it already has an approved treatment and a ton of liquid resources which will put it in a good position to fund its operations; this isn’t a risky, biotech start-up where there may be concerns it will run out of money in the near future.
But at a time when many investors are focused on artificial intelligence stocks and tech-fueled hype, it’s perhaps a bit unsurprising to see that CRISPR has been largely forgotten these days. For investors who are willing to be patient with the stock, however, CRISPR can make for a good buy as the long-term returns could be massive.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
