There's nothing in biopharma that's quite like CRISPR, the mysterious and powerful gene-editing system that has long captured the imaginations of serious researchers and fantastical hype purveyors alike. It's a truism to say that it'll be a major area of drug development for years to come as a result of its ability to precisely remodel genetic code.
Right now, it's not anywhere near being too late for investors to position themselves for a massive gain over time. Even amid a sharp drawdown in gene-editing biotechs over the last year, nearly all of CRISPR's tremendous potential to help people (and make a lot of money along the way) remains untapped. Here's why.
There's money to be made for whoever gets there first
The strongest tailwind for CRISPR stocks is that the market for CRISPR-based medicines is projected to multiply in value by nearly 13-fold between 2019 and 2030, as depicted below:
For that market size to go from point A to point B, a group of cutting-edge biotechs will need to finish developing the first generation of CRISPR medicines.
Among the leaders in the nascent CRISPR space are biotech stocks like CRISPR Therapeutics, (CRSP 0.81%) Editas Medicine, and Intellia Therapeutics. These companies have pipelines that are jam-packed with extremely innovative, potential cures to previously intractable genetic conditions like beta-thalassemia and sickle cell disease. The CRISPR projects are the most advanced in the field, though most of those programs are still in the very early phases.
Even if one company experiences clinical trial failures or hiccups with regulators, it won't stop the other projects from marching on. There's a very high chance that a CRISPR medicine will eventually make it to the market. And when it does, it'll likely make the entire group of CRISPR stocks surge like never before.
Any progress will be big progress
If you're still a skeptic about CRISPR stocks getting bigger in the next eight years, think about the implications of this chart:
None of the three leading CRISPR biotechs I've discussed so far have posted any significant growth in their trailing 12-month revenue over the last year. The reason for this, of course, is that they don't have any products on the market and instead get their only income from drug development collaborations, typically with big pharma players.
For instance, CRISPR Therapeutics' ongoing collaboration with Vertex Pharmaceuticals was worth a $900 million payment in the middle of last year, but it won't yield anything else until the biotech hits certain pre-ordained development milestones.
So these businesses stand to gain a huge amount of value if they can realize even a small amount of recurring revenue from actual sales of any CRISPR-based medicines that they manage to commercialize throughout the rest of the decade. That means investors shouldn't sweat the fact that rare genetic diseases with relatively niche markets are being targeted most commonly for therapy development.
It also means that the bar for success is fairly low -- unlike drugs that treat conditions that existing therapies made by competitors already address. After all, in the absence of a CRISPR-based gene editing intervention, it's hard to see how patients with hereditary diseases today could ever get treated with anything that addresses the root causes of their illnesses: their genes.
In short, the heyday of CRISPR isn't even here yet, so it's reasonable to believe that CRISPR stocks will be massive by 2030.