What happened
Shares of CRISPR Therapeutics (CRSP 1.08%) sank 50.5% in 2021, according to data from S&P Global Market Intelligence. After surging roughly 151% across 2020's trading, investors reassessed the gene-editing specialist's drug pipeline and moved out of the company's stock.
The stock's performance looks even more underwhelming in the context of the 26.9% growth that the S&P 500 index managed to post across the year's trading. While the benchmark index managed to post stellar performance last year, this was largely driven by a small selection of mega-cap stocks, and many smaller, more speculative growth plays saw significant sell-offs across the year's trading.
Image source: Getty Images.
So what
CRISPR Therapeutics' drug pipeline revolves around chimeric antigen receptor T-cells (CAR-T) that can be used to target malignant tumors. Rising research and development (R&D) expenses have led to expanding losses for CRISPR Therapeutics, and the relatively nascent state of the company's treatment catalog and pipeline means that the business is still posting minuscule revenue.
That's not unusual for a clinical stage biotech, and particularly one that's specializing in the gene-editing therapies category, but the lack of quicker progress appears to have led the market to reassess the company's valuation. Notably, CRISPR disclosed in a regulatory filing published Dec. 20 that it had parted ways with its head of R&D, Tony Ho.
2021 was generally a disappointing year for gene-editing stocks, with Editas Medicine and Bluebird Bio seeing their stocks fall 62.1% and 76.9%, respectively. Intellia Therapeutics was one of the few standout gainers in the space, managing to post gains of 117.4% across 2021's trading thanks to some very encouraging clinical trial data. Without trial data suggesting a major new treatment could be ready for market in the near future, investors opted to move out of CRISPR stock.
Now what
CRISPR stock has continued to lose ground early in 2022's trading. The company's share price is down roughly 11% in January's trading so far.
Even with the dramatic pullback across the last year of trading, CRISPR's stock is still up roughly 98% over the last three years. The company now has a market capitalization of roughly $5.2 billion and is valued at approximately 136.5 times this year's expected sales. That's an incredibly growth-dependent valuation, and the stock could continue to lose ground if the market continues to shy away from speculative growth plays.
Progress on the company's drug pipeline underwhelmed the market in 2021, but it's also not unusual to see biotech companies deliver new clinical trial data that radically reshapes their performance outlook. Despite mounting losses due to R&D expenses, CRISPR Therapeutics still has a cash position of roughly $2.5 billion, so it has plenty of resources for funding development and testing. CRISPR stock is probably a poor fit for most risk-averse investors, but it's still possible that the company will deliver strong CAR-T treatment results that help push its share price significantly above current levels.
