What happened

Shares of the gene-editing company Crispr Therapeutics (NASDAQ:CRSP) fell by more than 14% in pre-market trading today. The culprit?

Crispr and its development partner Vertex Pharmaceuticals (NASDAQ:VRTX) announced after the bell Wednesday that the Food and Drug Administration (FDA) has placed a clinical hold on the Investigational New Drug (IND) application for their sickle cell disease product candidate, CTX-001. Prior to this hold, CTX-001 was on track to become the first company sponsored CRISPR product candidate to enter human trials in the United States. 

CRISPR (clustered regularly interspaced short palindromic repeats) is a fairly new form of gene-editing that centers around a bacterial enzyme, known as Cas9 (CRISPR-associated protein-9), that modifies the DNA of attacking viruses in nature. 

Shocked young man looking at laptop computer anxious with open mouth.

Image source: Getty Images.

Shares of the two other publicly traded CRISPR companies -- Editas Medicines (NASDAQ:EDIT) and Intellia Therapeutics (NASDAQ:NTLA) -- are also both down in pre-market trading (less than 4%) in the wake of this regulatory setback. 

So what

While Crispr and Vertex didn't go into specifics, they did note in their joint press release that the hold stems from "certain questions that will be provided by the FDA as part of its review of the IND." If you've been following this story, however, this hold shouldn't be all that surprising.

Heading into this IND filing, the safety and applicability of current CRISPR gene-editing systems had already been called into question by leading researchers in the field. So the FDA seems to be simply doing its due diligence on this fairly novel technology. 

Now what

Crispr and Vertex are reportedly working with the FDA to obtain more information in order to get this hold lifted. The good news is that the two companies also announced in the same press release that the therapy's European trials for transfusion-dependent beta-thalassemia remain on track to kick off in the second half of 2018 as planned, despite this clinical hold in the United States. As such, Crispr should maintain its first-mover advantage over both Editas and Intellia. 

Is Crispr's stock worth buying on this double-digit pullback? Frankly, I think the answer is yes. The biotech's shares have more than quadrupled in value in the past twelve months in anticipation of this groundbreaking gene-editing trial, and this clinical hold is likely to be nothing more than a cautionary measure by the FDA. Crispr also has a decent chance of grabbing the lion's share of the market well before Editas and Intellia even get their respective platforms into late-stage trials. 

That being said, there is no guarantee this hold will get lifted. So it's probably not a good idea to go hog wild with any of these CRISPR stocks until this key regulatory issue is favorably resolved.

 

George Budwell has no position in any of the stocks mentioned. The Motley Fool owns shares of CRISPR Therapeutics. The Motley Fool recommends Editas Medicine and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.