CRISPR Therapeutics (NASDAQ:CRSP) stock has been falling over the past month. Without any milestone announcements since it gained its second U.S. regulatory approval for its CASGEVY program in January, investors might be running out of patience. However, investing in CRISPR Therapeutics is a long game. It’s still in its early stages, and it’s hard to use traditional financial metrics to determine CRSP’s fair value. However, given the revenue-generating potential of the CASGEVY program and the enormous potential of gene editing, I feel that the market is underestimating CRISPR Therapeutics.
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Therefore, I am bullish on CRSP stock.
Understanding Gene Editing
CRISPR is an acronym for “clustered regularly interspaced short palindromic repeats,” and it refers to a gene-editing technology utilized by the Swiss firm. It is also referred to as CRISPR-Cas9 — CRISPR-associated protein 9. The technology was adapted from naturally occurring genome editing systems found in bacteria and has been adapted to provide targeted guide sequences that attach to DNA.
The guide RNA attaches to the Cas9 enzyme, and when it is introduced to the cell, it recognizes the target DNA, and the Cas9 enzyme cuts it at the appropriate juncture. Once the DNA is cut, scientists add or delete pieces of genetic material and use the cell’s own mechanisms to repair it. Other enzymes can be used.
This technology is so exciting in the field of medicine, as well as other fields. It offers the opportunity to address the root cause of so many genetic disorders, including those previously considered incurable. It also offers the possibility for developing precise gene editing to correct mutations responsible for diseases, paving the way for more personalized, and hopefully effective, therapies.
Potential applications include the treatment of cancer, heart disease, mental illness, and human immunodeficiency virus (HIV) infection. In fact, new research in the Netherlands highlighted CRISPR’s capacity to eliminate HIV from infected cells in lab conditions.
CASGEVY
CRISPR Therapeutics owns 40% of the rights to revenues generated by CASGEVY, while 60% belongs to its launch partner Vertex (NASDAQ:VRTX). The gene editing therapy was developed for the treatment of sickle-cell disease (SCD) and transfusion‑dependent beta thalassemia. More than 100,000 people have transfusion-dependent thalassemia in the U.S., while it is estimated that, globally, about 60,000 symptomatic individuals are born annually — the majority in the developing world.
Meanwhile, SCD affects approximately 100,000 Americans, while there are estimated to be around 7.74 million sufferers globally. The majority of suffers are from black and African communities.
Predicting the exact size of the market for CASGEVY is challenging. Since the second U.S. approval in January, the treatment has also received the green light in the European Union, Saudi Arabia, and Bahrain. It was first approved in the UK. The Middle East is a potentially huge market, which I haven’t seen discussed widely. Couples across the region are often required to take genetic testing before marriage as part of a wider effort to reduce the prevalence of diseases like sickle cell.
The issue, however, is paying for the treatment, which is going to cost $2.2 million. This price tag puts it way out of the reach of many people. However, there is evidence that state support will be made available in the countries where regulatory approval has been granted, though this may only impact those with the most severe forms of illness.
Estimates suggest that there are 35,000 people with severe forms of SCD who may be in line to receive treatment. Still, CASGEVY is one of two CRISPR technologies on the market for treating the disease. One conservative estimate has suggested that the initial market could be 32,000 patients. At $2.2 million per treatment, that’s a $70.4 billion market.
The Pipeline
CRISPR Therapeutics has a significant pipeline of treatments that will hopefully prove successful. It’s speculative to invest in a company due to the strength of a pipeline and the potential of a particular technology, but it is worth noting that CRISPR Therapeutics has wholly-owned treatments in the sphere of oncology and regenerative medicines that are in the clinical trials phase.
Is CRISPR Therapeutics a Buy, According to Analysts?
CRISPR Therapeutics has a Moderate Buy rating according to analysts covering the stock in the past three months. There are 12 Buy ratings, six Hold ratings, and two Sell ratings. The average CRISPR Therapeutics stock price target is $86.22, inferring upside potential of 26.5% from the current position. The highest share price target is $199 and the lowest is $30.
The Takeaway
CRISPR Therapeutics is a leading company in a very exciting sector. The CASGEVY program has received numerous regulatory approvals from multiple countries, and reports suggest that funding mechanisms will make the treatment available to at least those with the most severe forms of SCD and beta thalassemia. While this remains a speculative investment, given that the firm is in its early stages, the size of the market leads me to believe we may be underestimating CRISPR Therapeutics.
