CRISPR Therapeutics (CRSP -5.16%) focuses on modifying DNA. Twist Bioscience (TWST -2.18%) focuses on making DNA. Both companies' technologies appear to have tremendous potential. But which is the better biotech stock to buy? That's the question that Motley Fool contributors Keith Speights and Brian Orelli address in this Motley Fool Live video recorded on Jan. 19.
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Keith Speights: Hey, Brian. We talked a good bit last year about CRISPR Therapeutics. It's one of the top CRISPR gene editing stocks. We've also frequently discussed Twist Bioscience. It's a pioneer in synthetic DNA.
For our Motley Fool members who are considering buying only one of these two biotech stocks, which do you think is the better pick and why?
Brian Orelli: I own Twist and not CRISPR Therapeutics. That's the preview of how you think my answer is going to go. Part of the reason that I don't own CRISPR Therapeutics, and frankly, the rest of the CRISPR stocks is that they've just been completely overvalued, in my opinion. That is, I don't think the valuation justifies the risk you're taking by buying an unproven technology.
That said, the technology has been largely successful over the last couple of years. Companies have shown that technology actually works in patients. Three-year returns totally beating the S&P 500 until recently, and they've come down substantially. I think that right now, the companies are a lot better value to, CRISPR stocks are a lot better valued than they were a couple of years ago.
But I'm still going to go with Twist. The stock price has also gotten knocked down substantially off its highs in early 2021. I like the company's ability to generate revenue right now by selling DNA sequences to pieces of DNA to researchers. But I'm also excited about the long-term potential.
Twist is using its DNA generating technology to create antibody libraries and helping drugmakers discover antibodies if they can use as drugs that should create milestone payments and eventually royalties on down the line. Then the big potential is to use DNA to store data. They have leased a beta project that has shown that they can do that. I think that's another big opportunity for the company.
Speights: I agree with you 100 percent there, Brian. I read a book, it was in December, called Expectations Investing. It actually was recommended by John Rotonti. For anyone who likes to read about investing, it's a great book. I think that -- the book's premise, by the way, is that it's expectations of future cash flows that really dictate what the stock does.
I think that between these two, Twist certainly has a greater potential of changing investors' expectations of future cash flows dramatically to the upside compared to CRISPR Therapeutics. I think there's just a lot more potential. I agree with you there.
