What happened

Shares of CRISPR Therapeutics (NASDAQ:CRSP) rose more than 13% last month, according to data provided by S&P Global Market Intelligence. While volatility is nothing new for the gene-editing pioneer, the company did provide some good news for shareholders in early January.

The U.S. Food and Drug Administration handed the company's lead drug candidate, CTX001, fast-track designation in sickle cell disease. The drug candidate, which is being developed with Vertex Pharmaceuticals, is also being evaluated as a potential treatment for beta thalassemia. In 2018, it became the first CRISPR-based therapy to enter clinical trials.

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So what

Earning fast-track designation for CTX001 in sickle cell disease provides the opportunity to earn an easier path to market. CRISPR Therapeutics could meet with the FDA more regularly throughout the drug's development, thereby speeding up development timelines, while the drug candidate could receive priority review if it successfully advances to the point of filing an application for marketing approval.

Also in January, CRISPR Therapeutics announced a collaboration and license agreement with ProBioGen to develop novel delivery systems for CRISPR-based medicines. That's an important, albeit overlooked, area for investors to keep an eye on. Researchers still aren't sure of the best method to deliver therapeutic payloads of gene-editing tools into target cells in a human body. It may seem unimportant, but the delivery system selected by each CRISPR pioneer will affect safety, cost, the dose of the therapeutic required, and how efficiently genes are edited, among other clinically relevant metrics.

Now what

CRISPR Therapeutics has managed to get its first drug candidate into clinical trials without any hiccups -- and the stock has been rewarded for that competence. Things get a little more difficult going forward, as success will be determined by the results of CTX001 in a clinical setting, which is something outside of the company's control.

That could come into focus sooner than later. There's mounting evidence suggesting cutting the genome -- the mechanism of all early CRISPR tools -- is not the path forward for gene editing. Researchers are already hard at work developing next-generation gene-editing tools that could avoid some of the risks of CRISPR-based tools, but there's a sizable gap between how CRISPR is portrayed in the media and the conversations going on in research labs. While some of the early CRISPR pioneers could still find success for specific indications, investors don't seem to be taking the enormous risk into consideration.

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