What happened

Verve Therapeutics (VERV -1.23%), a clinical-stage gene-editing company focusing on cardiovascular disease, saw its shares race higher this week by a healthy 17.1%, according to data from S&P Global Intelligence. The biotech's stock jumped this week for three key reasons:

  1. Verve's shares have been rocketing higher ever since Vertex Pharmaceuticals (VRTX -1.97%) entered into a strategic collaboration and license agreement with the biotech for an undisclosed liver disease on July 18, 2022. Vertex reportedly made a $25 million upfront cash payment and agreed to purchase 1,519,756 shares of Verve's common stock at a price of $23.03 per share as part of this liver disease collaboration.  
  2. On July 12, Verve announced that the first patient had been dosed in a phase 1 trial for its lead gene-editing candidate, VERVE-101, in patients with heterozygous familial hypercholesterolemia, an inherited disorder that leads to dangerously high "bad" levels of cholesterol. 
  3. On Thursday, the investment banking firm Stifel Nicolaus upgraded Verve's stock to buy from hold.  

So what 

Verve's shares have risen by an astounding 150% since July 1, 2022. As a result, the clinical-stage biotech now sports an eye-catching $2.35 billion market capitalization.

That's an exceptionally strong sign that Wall Street is a true believer in Verve's novel gene-editing platform. Most clinical-stage biotechs, after all, have lost a staggering amount of value this year, with scores of former mid-cap companies shrinking into small-cap entities in 2022. 

Now what

Can Verve's stock move even higher in the near term? Wall Street sure thinks so. The biotech's average 12 month forward-looking price target implies an upside potential of another 37% from current levels. That being said, growth investors shouldn't overlook the downside risk associated with this stock.

The bottom line is that Verve's gene-editing platform has yet to be validated in the clinic. Early shareholders, in turn, may want to keep their initial position on the small side until the first batch of safety and initial efficacy data become available sometime next year.