The gene-editing virtuoso CRISPR Therapeutics (CRSP -2.97%) is one of the most-watched stocks in biotech, and it's no surprise why. CRISPR Therapeutics has a handful of different programs that could turn out to be low-risk cures for previously intractable hereditary diseases. And if that's not exciting enough, the business is always adding to its treasure trove of valuable biotechnology methods.
Despite the obvious appeal of curing diseases and pioneering new techniques, there's even more to this company than what meets the eye. Let's take a closer look at some of the finer points that skilled investors know about CRISPR.
1. Its revenue growth is extremely deceptive
Smart investors are likely to disregard the notion that the company's revenue is actually growing. Still, CRISPR's trailing revenue totals more than $901.7 million. As of Q2, its quarterly revenue grew at a rate of 2,046,947.66% year over year. That pace is worthy of a double-take, but it isn't a figure that indicates genuine rapid expansion.
After all, it doesn't have any medicines that have been approved for sale, which is relatively normal for biotechs. But thanks to its drug-development collaboration with Vertex Pharmaceuticals, CRISPR does get paid to work on a few different projects to the tune of $900 million. And that $900 million payment is what landed in June after the pair updated their collaboration agreement, thereby dwarfing the company's negligible income from the same quarter in 2020 and creating the impression of eye-popping growth.
Chief among the projects that the collaboration funding will pay for is CTX001. The biotech is developing CTX001 in a pair of programs to treat sickle cell disease and beta thalassemia, two hereditary blood disorders. So far, it looks like CTX001 is extremely effective and may eventually be able to cure both diseases. The key thing to remember is that CTX001 is still in phase 1/2 clinical trials for beta thalassemia and sickle cell disease, so it will be quite some time before shareholders see any revenue from sales of the drugs, assuming they ever get approved.
2. Off-the-shelf immunotherapies could be the goldmine of goldmines
Some advanced immunotherapies are comprised of genetically modified cells of the immune system. The active ingredient of these therapies are chimeric antigen receptor T-cells, or CAR-Ts for short.
Manufacturing CAR-Ts is a complicated process, as I've discovered from my laboratory experience. Traditionally, each run of CAR-T therapy requires the patient to donate some of their cells so that research scientists can alter them in ways that will have the intended disease-modifying effect. Then, the cells are infused back into the patient where hopefully they resolve the targeted condition. Because patients are receiving their own cells, their body won't reject the therapy.
There are myriad issues with this protocol, however. Manufacturing can take weeks, which very sick patients may not have. Immune cells donated by patients for therapy won't be available to protect against infections. Furthermore, using a patient's cells means working with highly variable source materials, which makes patient outcomes highly variable.
So, offering an off-the-shelf CAR-T immunotherapy which doesn't require processing a patient's cells would be a significant advance, and that's exactly what CRISPR is angling to do in a trio of its projects. CTX110, CTX120, and CTX130 are being developed in such a way that they are usable off the shelf. If they succeed in clinical trials, the drugs will be used to treat conditions like multiple myeloma, solid tumors, and hematological malignancies. Unfortunately, the drugs are still in early stage trials, so it'll be at least several years before they might yield new revenue.
As exciting as it would be to have more medicines to treat these diseases, the real coup would be making homogenous CAR-T therapies. If CRISPR can prove that its system is capable of turning any prospective CAR-T immunotherapy into an off-the-shelf solution, it'll be able to solve the manufacturing scaling problem that has plagued developers for the past decade.
It's hard to see how the validation of such a profit-enhancing platform would be anything other than pure gold for shareholders.
3. More big-impact programs will be announced soon
CRISPR's pipeline is on track to get an infusion of new phase 1 programs over the next couple of years, and that's likely to drive the stock higher as a result. The new programs are likely to be in vivo therapies, which means that the company's gene-editing technology will be used to alter the genomes of living patients.
Unlike approaches using CAR-Ts, in vivo therapies have the potential to cure certain illnesses. In terms of the actual diseases that these new programs will be targeting, liver abnormalities seem to be the most likely.
The company's four in vivo projects are now in preclinical development. It's feasible that the soon-to-be-announced in vivo programs will hit the clinic before the currently disclosed ones, shaking up the stock's value in the process. Either way, CRISPR doesn't have any shortage of early stage pipeline projects, and that could easily make the next decade extremely lucrative for people who invest now.