Let's face it: Most stocks aren't going to make you a millionaire. Even a stock that delivered 15% annual growth over 30 years wouldn't turn a $10,000 investment into $1 million.
To make you a millionaire, a stock has to be in a field with phenomenal growth potential. Ideally, the company should be in its early stages to capitalize on a large portion of that growth. CRISPR Therapeutics (CRSP 11.59%) meets these criteria. But could the gene-editing biotech really be a millionaire-maker stock?
Image source: Getty Images.
Growth potential
There are at least 10,000 genetic diseases that impact humans, according to the World Health Organization. And that number only includes diseases caused by mutations in a single gene. Most of these genetic diseases have no approved treatment.
Gene editing presents an alternative for treating and even curing genetic diseases. The approach involves targeting a specific DNA sequence then deleting the sequence and sometimes inserting a replacement DNA sequence.
Of course, many genetic diseases are very rare and impact only small numbers of patients. This doesn't mean that there isn't a tremendous opportunity to make money, though. Alexion Pharmaceuticals, for example, made over $3 billion last year treating two ultra-rare diseases that affect only a few thousand people.
CRISPR Therapeutics' lead pipeline candidate targets rare blood disorders beta thalassemia and sickle cell disease, both of which are caused by mutations to the same gene. Neither disease has a cure. The biotech is also researching gene-editing therapies for other genetic diseases, including cystic fibrosis and glycogen storage disease type Ia (GSD Ia).
But gene editing has potential beyond just genetic diseases. CRISPR Therapeutics is developing cell therapies for treating various types of cancer. With these therapies, immune cells are genetically engineered to attack specific tumors. Gene-editing therapies could also possibly be used in the future to treat other non-genetic diseases as well.
Why CRISPR Therapeutics should grow dramatically
It's one thing for growth potential to exist. Actually achieving that growth is another thing altogether. But CRISPR Therapeutics should be able to grow tremendously in the future.
The biotech enjoys a head start in developing therapies using CRISPR gene editing for treating beta thalassemia and sickle cell disease. CRISPR Therapeutics started phase 1 clinical studies evaluating lead candidate CTX001 for both indications in 2018. No other clinical study has begun using CRISPR gene editing for treating any disease.
CRISPR Therapeutics will begin other clinical trials relatively soon. The company plans to initiate a phase 1 study of cell therapy CTX110 in treating CD19-positive malignancies such as lymphomas and leukemias in the first half of this year.
The beauty of CRISPR Therapeutics' strategy is that it can use the foundation laid by CTX001 to target other genetic diseases in addition to beta thalassemia and sickle cell disease. And it can use the approach taken with CTX110 to develop cell therapies for other types of cancer that aren't CD19-positive. Actually, the biotech is already doing so.
It's not an exaggeration to say that the sky is the limit for CRISPR Therapeutics if its initial gene-editing therapies are successful. The biotech's market cap currently stands at close to $1.9 billion. Regulatory approval for just one of the indications that CRISPR Therapeutics is targeting should make the company worth several times its current value. Multiply that by the number of diseases that CRISPR Therapeutics could target, and you'll see why this biotech stock could be a massive winner over the long term.
A millionaire maker?
Of course, CRISPR Therapeutics' fortunes hinge on the clinical studies for its pipeline candidates. There is a lot that can go wrong in the drug development process. That's especially true for a new, radically different approach like CRISPR gene editing.
Even if CRISPR Therapeutics is successful, there's still no guarantee that the stock will make current investors into millionaires. There are several other biotechs that are also developing gene-editing therapies targeting some of the same indications that CRISPR Therapeutics is pursuing.
I don't think that CRISPR Therapeutics will be a millionaire-maker stock -- but not because its products will stumble or that rivals will outshine it. Instead, my hunch is that the biotech will be acquired long before it can grow enough to make anyone a millionaire.
Two big drugmakers, Vertex Pharmaceuticals and Bayer, already own stakes in CRISPR Therapeutics and have partnered with the gene-editing pioneer. I expect that one of these companies will gobble up CRISPR Therapeutics within the next 10 years.
But while CRISPR Therapeutics might not make you a millionaire, it could make you a lot of money. You'll just need to find another stock or two to get to that magic $1 million mark.
Check out all our earnings call transcripts.
