The past year has been challenging for gene-editing specialist CRISPR Therapeutics (CRSP -1.18%). The company lagged the market as economic worries such as inflation spooked investors. Clinical-stage biotechs like CRISPR Therapeutics that aren't consistently profitable were hit especially hard. However, the biotech boasts some promising pipeline candidates, and it is looking at major catalysts that could send its stock price soaring by the end of the year. What will the next 12 months have in store for CRISPR Therapeutics?
This collaboration is about to pay off
CRISPR Therapeutics' leading pipeline candidate is exa-cel (formally known as CTX001), a potential gene-editing therapy for two rare blood disorders called transfusion-dependent beta-thalassemia (TDT) and sickle-cell disease (SCD). CRISPR Therapeutics is collaborating with biotech giant Vertex Pharmaceuticals on these programs. This longtime partnership looks about ready to bear fruit as the two entities have announced that they expect regulatory submissions for exa-cel in treating both SCD and TDT in the U.S. and Europe by the end of the year.
Once CRISPR Therapeutics officially announces these submissions, expect its stock to jump on the news. But there is more. Exa-cel has received various designations from health regulatory authorities both in the U.S. and Europe that are designed to expedite and facilitate the therapy's development and review process. The U.S. Food and Drug Administration (FDA) granted exa-cel the Fast Track and Regenerative Medicine Advanced Therapy in treating SCD and TDT.
The FDA typically takes six to 10 months to complete a drug's application review. Expect exa-cel's review process to come on the lower end of that estimate. In other words, by this time next year, exa-cel could have already received the green light from regulators in the U.S. Based on the results exa-cel has produced so far, it looks likely to earn approval. In a clinical trial, 42 of 44 patients with TDT were transfusion-free after treatment with exa-cel. Follow-ups for these patients ranged from 1.2 months to 37.2 months.
The two patients that were not transfusion-free yet experienced a 75% and 89% decline in transfusion volume.
Meanwhile, all 31 SCD patients treated with exa-cel were free of vaso-occlusive crises (VOCs, a side effect of the illness that causes acute pain) with follow-up between two months and 32.3 months. These patients experienced an average of 3.9 VOCs per year based on data collected during the two years before they started treatment. Both TDT and SCD are rare illnesses, but they cost a small fortune to manage.
A recent study found that SCD patients with private health insurance spend about $1.7 million in disease-related medical expenses throughout their lives. Despite all this spending, SCD cannot be cured, and neither can TDT, at least not yet. Exa-cel would be a one-time curative treatment that would help decrease the economic burden of both SCD and TDT. As such, the price tag on the medicine could be pretty high.
Those factors make it even more likely that exa-cel will earn approval in the U.S. and Europe within the next year. That would send CRISPR Therapeutics' stock soaring. The biotech does have other pipeline candidates, including three potential cancer therapies, CTX110, CTX120, and CTX130. The company expects to release updates from clinical trials for these three programs by the end of the year.
Expect more data from ongoing clinical studies from CRISPR Therapeutics in the next 12 months.
Is CRISPR Therapeutics a buy?
CRISPR Therapeutics' collaboration with Vertex Pharmaceuticals was a great move. The latter has proven its ability to navigate the tricky and highly regulated pharmaceutical industry, valuable experience that smaller clinical-stage biotechs sometimes lack. The partnership makes it less likely that exa-cel will encounter unforeseen regulatory headwinds before it hits the market.
Of course, the collaboration isn't free. Vertex Pharmaceuticals now leads the development and commercialization efforts of the therapy, and the two companies will split the profits and costs associated with it, with CRISPR Therapeutics receiving 40% of the profits and incurring 40% of the costs. Vertex has had to submit various upfront payments to CRISPR Therapeutics in the past for the rights to exa-cel it now owns.
These payments have allowed CRISPR Therapeutics to pour more money into research and development and advance its other candidates. I foresee exa-cel achieving blockbuster status, even with potential competition from other gene-editing therapies. For instance, Bluebird Bio seems to be on the verge of earning regulatory approval in the U.S. for beti-cel, a potential TDT treatment (not all TDT patients are eligible for this therapy).
Exa-cel's approval would help validate CRISPR Therapeutics as the company continues to tackle difficult-to-treat illnesses with its gene-editing technology. I expect the company to record more important regulatory milestones in the next five years. Naturally, CRISPR Therapeutics could encounter clinical and regulatory headwinds. Even with this caveat, the long-term opportunity of this innovative company looks attractive.
That's why it looks like a buy, especially after the beating its shares took over the past year.
