What happened
Shares of CRISPR Therapeutics (CRSP -3.45%) posted strong gains this week despite the challenges currently facing growth-dependent stocks. The biotech stock ended the week up 24.6% from the previous week's market close, according to data from S&P Global Market Intelligence.
A multitude of pressures pushed valuations for relatively high-risk and speculative stocks lower over the last week of trading. Amid those, CRISPR's share price made big gains on the heels of an interview CEO Sam Kulkarni gave at Cowen's 42nd Annual Health Care Conference. The executive provided updates on clinical-testing progress and the gene-editing specialist's general business outlook, and his comments suggested a favorable outlook for key drugs in the company's product pipeline.
Image source: Getty Images.
So what
In addition to providing general updates on the company's clinical-testing progress, Kulkarni said that the trial results for its CTX001 drug, as a treatment for beta thalassemia and sickle cell disease, would "speak for themselves." While not necessarily a clear indication that the treatment will receive approval from the Food and Drug Administration, his choice of words was encouraging and suggests CRISPR Therapeutics is optimistic about CTX001's viability. The CEO also said that the company remained very confident in its CTX110 treatment for B-cell malignancies, and saw potential for it to be a billion-dollar drug.
Now what
CRISPR Therapeutics stock could soar in the not-too-distant future if the company's CTX001 treatment is approved as a treatment for sickle cell disease or beta thalassemia, and the outlook on those fronts appears increasingly promising following Kulkarni's recent comments. Clinical testing and potential approval for CTX110 will take longer to pan out, but approval for the cancer drug would likely be a massive positive catalyst for the company's stock. And despite the recent surge in the share price, it's still down roughly 51% over the last year of trading.
CRISPR Therapeutics now has a market capitalization of roughly $4.7 billion and is valued at approximately 393 times this year's expected sales. Because it's a clinical-stage biotech working on potentially revolutionary treatments, the company's lack of significant revenue right now isn't particularly worrying. But investors should proceed with the understanding that the stock's explosive upside also comes with a high degree of risk.
