It’s been a few years since I last checked on up-and-coming growth stock CRISPR Therapeutics (NASDAQ:CRSP).
Back in 2021, shares of the biotech pioneer surged to $200 as investors got excited about its revolutionary potential in the gene-editing space. Since then, it’s slumped 76% to $47.
Yet the firm’s exciting potential remains. So, should I consider buying this fallen star? Let’s find out.
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Editing DNA
Despite the name, CRISPR Therapeutics has nothing to do with Doritos and Monster Munch — unless you’re dreaming of genetically engineering potatoes to make them crisper!
No, the firm is pioneering the future of medicine by advancing a type of gene editing. Mercifully shortened to just CRISPR, this technique stands for ‘clustered regularly interspaced short palindromic repeats’.
The goal is to edit faulty genes at their core to treat rare diseases. Indeed, by leveraging this revolutionary technology, the company aims to offer lifelong cures for patients.
A high price
In 2023, the UK approved the world’s first CRISPR-based gene-editing therapy (Casgevy), which aims to cure sickle cell disease and beta-thalassemia. These are genetic blood disorders causing abnormal red blood cells, leading to pain and often requiring regular blood transfusions.
This approval represented a major landmark for the company and its partner Vertex Pharmaceuticals. Further approvals for this breakthrough treatment have since followed worldwide.
But here’s the catch: this therapy was a decade in the making and costs a cool $2.2m per patient. This high price might pose challenges during the payer approval process, potentially leading to slower-than-expected uptake. That’s a risk to consider.
Moreover, each procedure takes months because the cells are collected, edited, then returned to the patient in qualified treatment centres. This isn’t like a new pill where revenue is booked straight away.
Large market opportunity
Still, the total addressable market is significant. It includes about 35,000 potential patients in the US and Europe, with a further 23,000 identified in Saudi Arabia and Bahrain, where Casgevy is also approved and faces no competition.
As of mid-July, only about 20 patients have had their cells collected across all regions. However, Vertex Pharmaceuticals predicts this is a “potential multi-billion opportunity”.
The ownership split between the two firms is 40% for CRISPR Therapeutics and 60% for Vertex. Yet the former also has other treatments, ranging from oncology to autoimmune diseases.
At the end of June, the company had approximately $2bn in cash on the balance sheet. So it’s well-funded to advance its leading pipeline candidates, though of course some (or all) of these could ultimately fail.
One to watch
The stock is down around 17% since Casgevy got the green light. That’s somewhat surprising given that the company is poised to share sales of this likely blockbuster drug.
Wall Street sees revenue growing from about $256m in 2025 to as much as $1bn by the end of 2027. Profits aren’t expected by then but the growth story here could support a much higher share price.
In fact, the consensus price target is $80, which is 70% higher than today’s level. Of course, that’s a target and not guaranteed.
Is this a bargain? It’s impossible to tell without regular sales or earnings. But this $4bn stock could have explosive potential at $47. I’m watching it like a hawk.
