CRISPR Therapeutics (CRSP +5.16%) works in the cutting-edge space of gene editing. The biotech company uses the CRISPR/Cas9 technique, which involves cutting DNA at a certain point and letting a natural repair process take place. It's a way to "fix" faulty genes involved in disease.
The company doesn't yet have a product on the market, but that soon may be about to change. Is now the moment to get in on this gene editing specialist? Motley Fool contributors Adria Cimino and Keith Speights discuss the bull and bear cases.
Bull case: A big moment ahead
Adria Cimino: CRISPR has reached the most exciting moment in its story as a company so far. Along with partner Vertex Pharmaceuticals, CRISPR has completed regulatory submissions in the U.S., Europe, and the U.K. for what may become its first commercialized product.
Exa-cel is a gene editing treatment for blood disorders beta thalassemia and sickle cell disease. It's particularly exciting for two reasons. First, these illnesses don't have many treatment options at the moment, so the need is great.
Second, exa-cel is designed as a one-time curative treatment. That's likely to attract patients and doctors in a big way. In fact, exa-cel has what it takes to become a blockbuster. And that would be a fantastic way for CRISPR to start its new era as a commercial-stage company.
CRISPR and Vertex also are studying exa-cel in pediatric patients in phase 3 trials. If all goes well there, this represents an opportunity for an even wider audience.
But CRISPR probably won't depend on just one product for very long. The company has several other candidates in the pipeline, including one that could reach commercialization within the next few years. CRISPR's immuno-oncology candidate CTX-110 is in a phase 2 trial that could be used to support a regulatory submission.
CRISPR is trading at a much lower price than it was a few years ago, when there was a lot less visibility on potential products ahead. So one could argue that it's trading at a reasonable price right now.
NASDAQ: CRSP
Key Data Points
Bear case: Still a risky proposition
Keith Speights: Let me make a confession right out of the gate: I like CRISPR Therapeutics. I like the company's gene-editing technology. I like the prospects for what should be its first product on the market -- exa-cel.
So how can I make a bear case for the stock? I think there are a couple of possibilities that investors should consider.
First, the market cap of the gene editing stock already stands at $3.5 billion, even though CRISPR Therapeutics doesn't have any product revenue yet. This means that approval for exa-cel is already largely baked into the company's share price. But that approval isn't a done deal yet. If there are any delays or hitches in the approval process, CRISPR Therapeutics stock will sink.
Second, exa-cel isn't the only factor impacting CRISPR Therapeutics' share price. The company's pipeline progress also matters quite a bit. Clinical setbacks happen all of the time in the biotech world. Should CRISPR Therapeutics report any serious issues with its programs in development, the stock will fall.
These might seem like thin reasons to expect bad news for CRISPR Therapeutics. However, there's quite a bit of money being bet against the drugmaker.
As of March 15, 2023, 17.9% of CRISPR Therapeutics' float was sold short. This relatively high level indicates that there are plenty of bears out there willing to put big bucks on the line that the company will fail. And it underscores just how risky CRISPR Therapeutics is, despite its promising pipeline.
Should you buy the shares?
As Keith notes, CRISPR still involves a certain amount of risk. Anything can happen in clinical trials -- or in the regulatory review process. And investors are closely watching exa-cel. Any disappointment could greatly hurt CRISPR shares.
That said, if you have some tolerance for risk and aim to get in on one of today's most innovative biotech players, you may consider scooping up a few CRISPR shares now -- and potentially benefit if CRISPR delivers good news in the coming months.
