What happened
CRISPR Therapeutics (CRSP -1.01%) stock sank by 15.9% in January, according to data from S&P Global Market Intelligence, amid a surge of bearish momentum impacting the broader market.
An assortment of risk factors last month led investors to sell stocks lower. Macroeconomic concerns, including high inflation, the Federal Reserve's plan to raise interest rates in response, and climbing yields for Treasury bonds, made investors more cautious. Worrying guidance from some high-profile companies and a tense geopolitical situation between Ukraine and Russia only added to the mounting bearish sentiment.
With so many general headwinds to consider and the absence of positive, business-specific news for the biotech company, it's not surprising that CRISPR shares lost ground last month.
Image source: Getty Images.
So what
The S&P 500 ended January down 5.3%, and the Nasdaq Composite sank by 9%. Both indexes entered correction territory as investors surveyed mounting risk factors and took money off the table.
CRISPR stock now trades down roughly 70% from the all-time high that it hit in January 2021. While the company's gene-editing-based therapies could have a potentially revolutionary impact on the healthcare space, investors have generally become much more risk-averse since the beginning of last year, and many stocks in the biotech industry have seen dramatic valuation pullbacks due to the shift.
Now what
Thus far in February, CRISPR stock has headed even lower -- it's down by another 6.9%. But there was a bit of good news for shareholders recently.
On Feb. 2, CRISPR Therapeutics announced that the first patient had been dosed in its phase 1 clinical trial for VCTX210, a candidate treatment it developed in a collaboration with ViaCyte. The investigational type 1 diabetes treatment uses CRISPR's gene-editing technology in conjunction with ViaCyte's stem-cell replacement therapy. The hope is that VCTX210 will produce healthy new pancreatic cells that can avoid immune system detection and allow patients to produce their own insulin.
CRISPR Therapeutics now has a market capitalization of roughly $4.7 billion and is valued at approximately 16 times this year's expected sales and 117 times expected earnings. That growth-dependent valuation puts the stock at more risk of high volatility if turbulence in the broader market continues, and investors should approach it with the understanding that visibility is somewhat limited when it comes to the company's near-term outlook. However, for risk-tolerant investors seeking exposure to the gene-editing niche of the healthcare sector, CRISPR Therapeutics stock could have big upside, and is worth a close look.
