Swiss biotech CRISPR Therapeutics (CRSP -3.45%) went public in 2016, using the capital markets to help fund its potentially groundbreaking gene-editing technology. Using the CRISPR/Cas9 process, scientists can add, delete, or replace specific sections of DNA. The potential to correct genetic defects and develop personalized medicine provides a multitude of options for the company to pursue.
The power and promise of CRISPR/Cas9 have swept the scientific community at large. Some speculate that it's only a matter of time until the Nobel Prize in Medicine is awarded to the scientists who unlocked its potential to replace or remove faulty sections of DNA, using a process they observed in our own bacteria (CRISPR stands for "clustered regularly interspaced short palindromic repeats," and Cas9 is the protein that makes it work). Several companies, like CRISPR Therapeutics, emerged to translate this powerful tool into a valuable therapy for humans.
Now, back to the question at hand. How much would a $100 investment into CRISPR Therapeutics be worth today for those investors who participated in the initial public offering (IPO)?
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How big would your gains have been?
CRISPR Therapeutics priced its IPO at $14 per share. The stock commenced trading at $15 on Oct. 19, 2016, and went as low as $14.01 and as high as $16.32 before closing its first day at $14.09.
An initial $100 investment into CRISPR would yield seven IPO shares (fractional shares excluded). That $100 would be worth $383.88 based on Wednesday's closing price of $54.84. For those savvy (or even just lucky) enough to get some IPO shares, the stock produced an attractive gain of 391%.
That price highlights the demand by investors and the potential power of the company's platform technology to treat diseases. CRISPR Therapeutics also has the advantage of having the most advanced drug candidate in clinical trials. Specifically, the company has a gene therapy product for the treatment of beta thalassemia and sickle cell disease. These genetic blood diseases impair the ability of hemoglobin to carry oxygen throughout the body. This can lead to a lifetime of anemia, blood transfusions, and pain, and even premature death.
Is CRISPR Therapeutics best in class?
2016 was the year for biotech IPOs focused on CRISPR-Cas9 technology. Editas Medicine led off the pack when it started trading on Feb. 3, 2016. Intellia Therapeutics followed with its public market debut on May 6. Finally, CRISPR offered shares to the public on Oct. 19. So which company made the best investment for investors?
CRISPR Therapeutics' 391% return bested Editas and Intellia. Editas gained a respectable 79% from its IPO, while Intellia lost 19% in value. These event-driven stocks can easily jump around in price, particularly in reaction to news on pipeline programs.
Is it too late for investors?
Enthusiasm for the field is high. CRISPR Therapeutics' valuation exceeds $3 billion, yet the company has reported data from only two patients. That's correct, two patients. Gene editing and gene therapy possess the ability to potentially cure a myriad of diseases, but we're still in the early stages of development. These companies are both encouraging and risky. Only investors with high tolerance for risk should invest in biotech companies, particularly those with cutting-edge, unproven technologies.
In 2020, CRISPR Therapeutics should continue to update investors on the trial for beta thalassemia and sickle cell disease. Also, the company expects to present data on its anti-cancer therapy, CTX-110. This approach modifies specific immune system components called T cells so they can recognize the cancer. Importantly, the T cells come from healthy donors, undergo editing, and are then given to patients with certain forms of cancer. The method has been tried using a patient's own T cells, but the long-term goal for the field is to produce a therapy from healthy donors.
Stay tuned to the CRISPR field and CRISPR Therapeutics. Volatile stock swings may be in store for biotech investors owning these stocks. However, the ability to edit disease-causing genes has the potential to redefine the treatment paradigm for genetic diseases.
