Is It Too Late to Buy CRISPR Stock?

CRISPR Therapeutics (CRSP 0.34%) has been a volatile stock over the past couple of years. Lately, the gene-editing company's shares have been trading for under $51 a share, but I believe they could go much higher, considering the company's long-term potential.

CRISPR is one of just a handful of clinical-stage biotech companies (like Editas Medicine, Intellia Therapeutics, Beam Therapeutics and Verve Therapeutics) that use CRISPR editing to find new therapies. However, CRISPR's lead therapy may be the first to get approval from the Food and Drug Administration (FDA). 

Here are five reasons why it's not too late to buy CRISPR stock. 

1. Exa-cel could soon get the green light

The company's lead therapy, exa-cel, which it has collaborated on with Vertex Pharmaceuticals, has a strong shot to be approved this year. In clinical trials, the therapy has been effective in ending the need for transfusions for beta thalassemia (TDT) and severe sickle cell disease (SCD), two genetic blood disorders. 

Exa-cel could be worth $1.9 million per treatment, according to the Institute for Clinical and Economic Review, because it would end patients' lifelong need for blood transfusions. 

CRISPR and Vertex recently completed their biologics license application for exa-cel to treat SCD and TDT,  and it has received four key designations from the FDA: Regenerative Medicine Advanced Therapy, Fast Track, Orphan Drug, and Rare Pediatric Disease. 

2. The rest of its platform also looks promising

While exa-cel is CRISPR's lead therapy, the company has a large pipeline of drugs behind it, most of which are in early trials. However, an approval for exa-cel would validate the company's CRISPR/Cas9 editing platform. 

The next drug candidate that could move ahead is CTX110 to treat various B-cell cancers, such as B-cell lymphomas, acute lymphoblastic leukemia, and chronic lymphocytic leukemia. The therapy did well in a phase 1 trial to treat large B-cell lymphoma, showing an objective response rate of 67% and a complete response rate of 41% in heavily pre-treated patients. 

CTX130 is another promising therapy in the pipeline. The chimeric T-cell (CAR-T) therapy targets the protein CD70 to treat solid tumors and certain T-cell lymphomas. In two current phase 1 trials, CTX130 has shown promising results to treat liver cancer and B-cell blood cancers.

3. Next-gen therapies are building on earlier successes

CRISPR has two next-gen CAR-T therapies, CTX112 and CTX131, that are learning from and building upon some of the company's earlier oncology therapies. 

CTX112 targets CD19 B-cell tumors and is expected to begin clinical trials in the first half of this year. The therapy uses the edits in CTX110 but adds additional edits of the genes for Regnase-1 and transforming growth factor beta receptor 2 (TGFBRII), protein expressions that help regulate immune responses, increasing the potency of the therapy. CTX131 builds on the edits in CTX130, but also edits for Regnase-1 and TGFBRII. 

What's exciting about that building block process is that it should allow the company to branch out into other areas of oncology and other more complicated disorders that involve more than one genetic mutation.

4. CRISPR has the funds needed for a long runway

As of the fourth quarter, CRISPR had $1.8 billion in cash, enough to fund operations for at least three years at its current burn rate. The company's collaboration revenue slowed to $436 million last year, but if exa-cel is approved, CRISPR will receive 40% of the drug's profits.

On top of that, Vertex agreed on March 27 to pay $100 million upfront for a licensing agreement to use CRISPR's gene-editing technology to speed Vertex's hypoimmune cell therapies to treat type 1 diabetes. In addition, CRISPR will be eligible for as much as $230 million in research and development milestones from the deal, and will get royalties from any future products that result from the agreement.

5. Its expertise makes it a valuable buyout candidate

Large pharmaceutical companies looking to replace drugs that are facing upcoming patent cliffs could see CRISPR as a way to broaden their portfolios into gene-editing therapies, and buy CRISPR's science. 

CRISPR's early success is attractive, and so is its strong cash position and only $244.02 million of debt. If a big pharma company came calling, CRISPR's shares would likely jump.

While CRISPR stock has risen more than 23% this year, it's still well below its 52-week high of $86.95. While the enthusiasm that drove the stock to that price may have been premature, the company's future looks bright.