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Here's Why CRISPR Therapeutics Tanked 25.5% in December

By Cory Renauer – Updated Apr 14, 2019 at 8:57PM

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A rough year for expensive new treatments has investors less enthusiastic about this biotech's future.

What happened

Shares of CRISPR Therapeutics (CRSP -3.37%), a clinical-stage pioneer of the genome editing technology everyone's talking about, fell 25.5% in December, according to data from S&P Global Market Intelligence. A market meltdown that dragged the Nasdaq Biotechnology index 11.2% lower last month and a rough year for expensive new therapies were to blame.

So what 

In 2018, impressive new treatments similar to those CRISPR's developing disappointed investors with lower-than-expected sales. It turns out that really expensive treatments that only require a single dose aren't that easy to sell. 

Unhappy stock trader looking at his monitor.

Image source: Getty Images.

In late 2018, CRISPR began enrolling patients with sickle cell disease and beta-thalassemia into proof-of-concept studies with its first candidate, CTX001. This experimental therapy involves altering a patient's own hematopoietic stem cells outside the body, and then reinfusing them into the bone marrow, where they're supposed to produce fetal hemoglobin. CRISPR's lead candidate aims to reduce these patients' reliance on blood transfusions for life with a single administration, but it could have competition from a much simpler candidate that's closer to pharmacy shelves.

At the beginning of September, Celgene (CELG) and Acceleron (XLRN) announced successful pivotal trial results for luspatercept. Beta-thalassemia patients injected with the first-in-class erythroid maturation agent significantly reduced their dependence on blood transfusions. Although the reductions were relatively minor compared to those CRISPR aims to produce with CTX001, a simple injection is much easier to sell.

Now what

Luspatercept isn't the only potential competitor for CRISPR's lead candidate. CTX001 could also run into LentiGlobin from bluebird bio (BLUE -6.74%). LentiGlobin's another one-shot cellular therapy that involves removing, and then reinfusing a patients stem cells.

LentiGlobin uses a virus to inject a functional adult hemoglobin gene, and it's proving a tough act to follow. LentiGlobin's in late-stage development, while CTX001 didn't start enrolling patients in its first human proof-of-concept studies until late in 2018.

Recently, CRISPR stock recovered somewhat after the FDA agreed to fast-track CTX001. That will speed up development, but CTX001 will never have a chance to produce meaningful sales if it can't outperform the impressive results LentiGlobin's already produced.

Check out all our earnings call transcripts.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool owns shares of CRISPR Therapeutics. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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