Crispr Therapeutics (CRSP -3.21%) may be about to prove the strength of its gene-editing technology. The biotech company is submitting its candidate to treat blood disorders to regulators in the U.S., Europe, and the U.K. this month. If regulators give Crispr the nod, it may soon reach the major milestone of product commercialization. And that will equal product revenue.
But is now really the moment to buy shares of this innovative company? Motley Fool contributors Adria Cimino and George Budwell present the bull and bear cases.
A potential product on the horizon
Adria Cimino: Crispr Therapeutics is heading for its big moment. The gene-editing specialist and its partner Vertex Pharmaceuticals are submitting exagamglogene autotemcel (aka exa-cel) to regulators as of this month. They expect to complete the U.S. submission in the first quarter of next year -- and submissions in the U.K. and Europe should be complete by the end of this year.
Exa-cel is a gene-editing candidate for adults with beta-thalassemia or sickle cell disease. These are blood disorders with limited treatment options today, and blood transfusions are a common manner of managing the illnesses.
Here's why exa-cel could represent a big breakthrough and eventually blockbuster revenue. It's designed as a one-time curative treatment for both disorders. So if regulators approve it, doctors and patients could flock to exa-cel.
That would represent Crispr's first commercialized gene-editing treatment. That's important because it demonstrates the efficacy of Crispr's technology. It also would result in product revenue for Crispr -- to fund the rest of the company's pipeline.
The pipeline is another reason to be excited about Crispr. Exa-cel is involved in a phase 3 trial for children. If all goes well, Crispr and Vertex could submit the candidate to regulators for use in this patient group.
Crispr also continues to enroll patients in a pivotal trial for immuno-oncology treatment CTX110. The company aims to report more data from this trial before the end of the year, which could represent another near-to-commercialization opportunity for Crispr.
Shares of Crispr have dropped about 20% this year. And they're trading around their lowest point in the past three years.
Too many unanswered questions
George Budwell: As a pure gene-editing play for severe genetic diseases, Crispr Therapeutics stands out as a highly intriguing growth stock. Wall Street, in fact, thinks this mid-cap biotech equity could appreciate by as much as 97% over the next 12 months. Crispr's shares have earned this stately price target primarily in response to the promise of its lead clinical candidate exa-cel as a potential functional cure for sickle cell disease.
Crispr and partner Vertex are on track to have this one-and-done gene therapy submitted for regulatory review. If approved, Crispr and Vertex will split the drug's profits on a 60/40 basis, with Vertex receiving the larger share of exa-cel's revenue stream. Apart from exa-cel, Crispr also sports a wide array of gene-based therapies for numerous high-value indications such as immuno-oncology, diabetes, and Duchenne muscular dystrophy, among many others. So it's easy to see why analysts have high expectations for this cutting-edge biotech company.
Crispr's value proposition is far from straightforward, however. What's important to understand is that it took Crispr and Vertex nearly seven long years to shepherd exa-cel to this critical point in its life cycle. A similar timeline likely awaits the biotech's second wave of assets in oncology and diabetes. By then, there is a better-than-average chance that the field of genome editing will evolve well beyond the company's current approaches. That's not a knock against Crispr specifically, but a hard truth facing any pioneers currently operating in this rapidly developing space.
All told, Crispr's long-term investing thesis is simply too murky to warrant a position right now.
Time to buy?
Cautious investors may hold off on investing in Crispr today. As mentioned, it's taken Crispr many years to reach this point with exa-cel. And as Crispr continues developing earlier-stage candidates, other technologies could gain ground -- and represent competition.
That said, investors who are comfortable with some risk may consider buying the shares today. Crispr is closer than ever to generating product revenue. So if there's a time to be bullish about Crispr stock, it may be right now.
