In 2019, the art of fixing the troublesome gene mutations known to cause severe, life-threatening illnesses took some big steps forward. That helped investors who began 2019 with shares of Crispr Therapeutics (CRSP -3.45%) and Editas Medicine (EDIT -2.43%), two gene-editing pioneers, record some market-beating gains.
Which one has the best chance to beat the market again in 2020 and beyond? When it comes to gene-editing stocks, there are a lot of ins and outs to consider. Let's lay the most important ones side by side to see which is the better buy right now.
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The case for Crispr Therapeutics
In November, shares of Crispr Therapeutics shot up after the company presented results from the first two patients to receive a CRISPR-based treatment. Patients treated with a single infusion of CTX001 have been able to produce fetal hemoglobin on their own, and the benefits are already significant.
Investigators had nine-month observation data from a patient with beta thalassemia and four-month results from another patient with sickle-cell disease (SCD). At nine months, the patient with beta thalassemia was producing enough fetal hemoglobin on their own to get along just fine without any transfusions. This same person needed 33 transfusions during the 24-month period leading up to their first and only infusion of CTX001.
Sickle-shaped red blood cells get jammed up in tiny blood vessels that serve important organs and cause painful vaso-occlusive crises (VOCs) that usually require an overnight hospital visit, or worse. The SCD patient's annual VOC rate dropped from seven to zero at the four-month observation point.
An encouraging first look at human proof-of-concept data from a Crispr Therapeutics candidate helped push the stock 113% higher in 2019. The first look was so impressive the company's market cap has swelled to $3.4 billion at recent prices. Further success with CTX001, plus some preclinical stage candidates that should produce some clinical data in 2020 could help the stock thump the market again in 2020.
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The case for Editas Medicine
Shares of Editas Medicine rose 30% in 2019, which was enough to outperform the benchmark S&P 500 index by 1 percentage point. Unfortunately, the early success reported by Crispr Therapeutics was largely responsible for the market-beating gain Editas provided last year.
Only two patients have been treated with CTX001 and it's still much further along the development timeline than Editas Medicine's lead candidate, EDIT-101. The company began screening patients with a rare inherited cause of progressive vision loss called Leber Congenital Amaurosis (LCA) for a clinical trial that could begin dosing patients later this year.
The next candidate to enter clinical-stage testing will be EDIT-301, an experimental gene therapy for the treatment of sickle-cell disease and beta-thalassemia that performed well in studies with mice. By the time the FDA allows EDIT-301 to begin studies with people, though, CRISPR's lead program will probably be able to present results from more patients with the same disorders.
Editas Medicine's market cap has risen to $1.5 billion recently, which is less than half the size of Crispr Therapeutics. Without any human proof-of-concept data to back up its valuation, however, Editas stock is hardly a bargain at recent prices.
Help from their friends
Neither one of these CRISPR-focused companies is developing their lead candidate without help from deep-pocketed collaboration partners. Allergan (AGN) has agreed to co-develop EDIT-101 in return for a share of any potential profits it generates.
Editas has received $105 million so far from Allergan, which has helped offset operating expenses that reached $110 million during the first nine months of 2019. After losing $96 million during the same period, Editas finished September with $333 million in cash and securities.
Crispr has been developing CTX001 in partnership with Vertex Pharmaceuticals (VRTX -0.76%) for years and in 2019, their partnership agreement expanded to include potential treatments for Duchenne muscular dystrophy. A $175 million up-front payment that Crispr received from Vertex earlier in 2019 allowed the company to report a $35.8 million operating profit during the first nine months of 2019. As a result, the company's cash balance swelled to $630 million at the end of September.
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The better buy?
Despite its larger valuation, Crispr Therapeutics probably has a better chance to outperform than Editas Medicine. That said, it's important to remember there's still a lot we don't know about either company's future. A poor readout for Crispr or great results for Editas could force us to return to this debate. At the moment, though, Crispr Therapeutics looks like the better stock to buy.
