The last 12 months haven't been kind to the likes of gene editing stocks like CRISPR Therapeutics (CRSP 1.11%) and Bluebird Bio (BLUE -6.51%). Whereas CRISPR's shares fell by 31%, Bluebird's are down by 33%. But now, both businesses have major catalysts in sight, and there's a good chance that by this time next year, they'll be competing in at least two of the same markets.
That means people who buy the dip today could well make out like bandits down the line. So let's evaluate which of the pair might be more appealing for investors.
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The case for CRISPR Therapeutics
CRISPR Therapeutics is on track to have a transformative 2023, but its biggest risk is that regulators will stymie its efforts to commercialize its gene therapy candidate exa-cel, which aims to treat beta thalassemia and sickle cell disease.
It's already submitted its regulatory approval packet for the therapy to regulators in the European Union, and it should be finishing up its submission to the U.S. Food and Drug Administration (FDA) any day now. If all goes well, it could be starting to collect revenue from sales as soon as early 2024, and it estimates that more than 30,000 people in the U.S. and the EU would benefit from treatment.
Even if there's a delay because regulators need more information, the company can continue its research and development (R&D) activities full-bore in the meantime. In 2022, it spent only about $511 million, and it still has more than $1.8 billion in cash and equivalents ready to go. So it has more than enough money to defer becoming profitable for at least three years -- and it probably won't need anywhere near that long if it can get exa-cel out the door.
CRISPR Therapeutics has one other big advantage: its collaboration with Vertex Pharmaceuticals. As one of the most powerful players in the rare disease space, Vertex is also an elder pharma company that likely has an advantage in communicating with regulators and setting up the global clinical infrastructure necessary to commercialize therapies like exa-cel that are complex to manufacture and administer.
When you're trying to figure out if a stock is going to rebound, the fact that the company has a powerful ally is a key consideration and a positive sign, to say the least.
Bluebird is a riskier bet
Bluebird Bio is a less attractive investment to buy the dip on than CRISPR Therapeutics, and there are two reasons why.
First, it's openly musing about only having enough cash on hand to pay its bills through the end of 2024. It expects to burn more than $270 million this year, and before it raised $131 million from a public stock offering in January and $93 million from the sale of a priority regulatory review voucher, it only had $227 million in cash and equivalents.
And $45 million of that cash balance is restricted from being used at present despite management's plans to use it within the next year and a half. So money is quite tight, and it might not be enough.
That leads me directly to the second reason why it's riskier to buy the dip with Bluebird. Despite having two gene therapies newly commercialized on the U.S. market -- Zynteglo for beta thalassemia and Skysona for cerebral adrenoleukodystrophy (CALD) -- management's fretting about cash implies that it doesn't know whether the company will be profitable in the near term or not.
For what it's worth, Wall Street analysts are predicting, on average, that the company won't become profitable in 2023 or 2024 even as its revenue is expected to ramp up to around $171 million.
So Bluebird is running low on money, and approximately nobody is predicting that it'll be able to bring in more than it spends before it runs out of money to keep the lights on. And while it might soon also commercialize a gene therapy for sickle cell disease, that probably won't make it immediately profitable either.
That makes Bluebird very risky to invest in, to say the least. CRISPR Therapeutics doesn't have either of those problems, which makes it the better bet for buying the dip.
