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Is CRISPR Therapeutics a Buy?

By Mark Prvulovic - Sep 25, 2019 at 7:00AM

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With its head start in the emerging gene-editing market, does CRISPR deserve investors' money more than its rivals do?

In the volatile world of biotech, investors can find a number of promising markets that could see significant growth in the years to come. Gene editing is one of these markets that has tremendous potential for growth, with some research reports showing the sector could reach $9.66 billion by 2025. Considering that in 2018, the gene-editing market was worth only $3.7 billion; this works out to an impressive 14.7% annual growth rate.

While few biotech stocks are developing gene-editing therapies, the complexity of the subject matter can make it difficult for investors to categorize where an individual company stands in relation to its competition. CRISPR Therapeutics ( CRSP -8.80% ) has a head start. Having developed the CRISPR Cas9 gene-editing technology, CRISPR has quickly made a name for itself in the biotech world. Since then, CRISPR Therapeutics has earned a market cap of $2.65 billion despite only having a handful of early clinical trials to show at the moment.

Amid this wave of excitement, shares of CRISPR have risen by 61.8% so far in 2019. While CRISPR will have to clear a few hurdles before its gene-editing drugs can hit the markets, there's a strong case to be made for this stock becoming a leader in the space. Let's take a look at some of the main therapies CRISPR is developing at the moment and how exactly it compares to its competition.

Medical lab.

IMAGE SOURCE: GETTY IMAGES.

Potential breakthrough No. 1: Sickle cell and thalassemia treatments

CRISPR's main strategy with its gene-editing technology has been to target major genetically based disorders. Its flagship drug, an anti-sickle cell medication known as CTX001, is undergoing a phase 1 clinical trial that, if successful, would be highly lucrative for the company. Approximately 100,000 Americans are diagnosed with sickle cell disease currently, with children being especially vulnerable to the condition.

At the moment, there's no cure for the disease, and researchers are currently exploring the possibility of bone marrow transplants as a therapeutic option. A gene-editing drug that could treat sickle cell anemia would be a home run for CRISPR if it were approved for human use.

Earlier this year, CRISPR announced the first sickle-cell patient had been treated with CTX001 in its clinical trial, and the research team is waiting to see if there are any long-term effects of the treatment. Although CRISPR has said that the clinical trial could be concluded in 2022 and a potential rollout could quickly follow, in the world of clinical trials, that's still plenty of time for things to change.

Potential breakthrough No. 2: Cancer immunotherapies

CRISPR also has a number of early-stage clinical trials underway for its cancer immunotherapies. CTX110 is a drug that is being tested as a potential treatment against cancerous tumors, while CTX120 and CTX130 are other candidate drugs for various cancer types. Cancer immunology is an already-massive market that's estimated to grow to $126.9 billion by 2026, representing a 9.6% compound annual growth rate. However, there's already a fair bit of competition in this space.

Specifically, CTX110 is what's referred to as an allogeneic chimeric antigen receptor T-cell (CAR-T) therapy. Healthcare giants Gilead ( GILD -0.16% ) and Novartis ( NVS 0.06% ) have their own CAR-T therapies, but the problem they face is that this treatment is extremely expensive for patients, not to mention being quite slow.

CAR-T therapies require scientists to remove immune cells from a patient, teach those cells to better fight cancer cells, and then reintroduce them into the patient's system. Understandably, this is both time-consuming and expensive, with treatments costing hundreds of thousands of dollars per patient.

One solution to these problems is to develop CAR-T drugs from donor cells. This process, referred to as allogeneic, could lead to complications from patients whose immune systems react against or even reject the donor cells. This is where CRISPR comes in, as its gene-editing technology can significantly minimize the chance of rejection.

An analyst at Needham named Alan Carr said, "An off-the-shelf allogeneic product presents several advantages and we believe CRISPR is uniquely positioned to succeed in the space, given rights are wholly owned and the simplicity and flexibility of CRISPR technology to make multiple simultaneous edits."

Potential competition

While the market for gene-editing technology is excellent, the last question worth asking is where CRISPR Therapeutics stands in comparison to its rivals. CRISPR's potential competitors include Intellia Therapeutics ( NTLA -8.11% ) and Editas Medicine ( EDIT -7.69% ), both companies working in the gene-editing field. The latter is developing its own sickle cell treatment to rival CTX001. However, Editas is also working on a gene-editing drug called EDIT-101 that would help babies with protein deficiencies in their retinas leading to blindness. So while there is some overlap between the two companies, there are also areas in which the two aren't in direct competition.

CRISPR also enjoys a cushier financial position than the other two companies, with $427.9 million in cash reserves compared to Editas' $317.9 million and Intellia's $275.8 million. However, CRISPR Therapeutics doesn't have as strong an intellectual-property portfolio as some of its competitors; Editas owns more than 70 issued patents and 600 pending patent applications, not to mention the rights to technology owned by institutions such as MIT and Harvard.

Overall, it's hard to say which gene-editing company will end up reigning supreme in the years to come. I would take a shotgun approach, investing a little in most of the promising gene-editing biotech stocks in the market right now while acknowledging that many will likely fail. CRISPR Therapeutics definitely makes the list of gene-editing stocks worth buying, although only for investors willing to jump into a high-risk, high-reward type of investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
CRSP
$70.09 (-8.80%) $-6.76
Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$69.56 (-0.16%) $0.11
Novartis AG Stock Quote
Novartis AG
NVS
$80.00 (0.06%) $0.05
Editas Medicine, Inc. Stock Quote
Editas Medicine, Inc.
EDIT
$27.72 (-7.69%) $-2.31
Intellia Therapeutics Stock Quote
Intellia Therapeutics
NTLA
$101.03 (-8.11%) $-8.92

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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