An important moment may be only a few months away for CRISPR Therapeutics (CRSP 0.34%). I'm talking about the potential approval of its very first product. The U.S. Food and Drug Administration (FDA) will decide on whether to approve exa-cel for sickle cell disease in December. It offered the company and partner Vertex Pharmaceuticals priority review for that indication.
Meanwhile, CRISPR shares have climbed nearly 40% so far this year. Investors have been closely watching exa-cel development -- and some of the optimism about a possible FDA nod could be baked into today's share price. Does this mean it's too late to get in on this innovative biotech company? Or is CRISPR still a buy now? Let's find out.
A one-time curative treatment
So, first a bit of background on exa-cel. It's being developed as a one-time curative treatment for two blood disorders, sickle cell disease and beta thalassemia. Regulators in the U.S., the U.K., and Europe are reviewing the candidate as we speak. The initial approvals would be for adult populations. But the companies continue to conduct phase 3 trials for exa-cel in kids, which could broaden the potential patient population.
In the U.S., exa-cel has won priority review for sickle cell disease -- but not for the second indication of beta thalassemia. The FDA grants the status to speed up the consideration of potential products that could perform significantly better than current treatments. The agency is set to issue a decision on exa-cel for beta thalassemia in March.
If all goes smoothly, by this time next year, CRISPR could be in the middle of launching its first product -- and, importantly, that product would also be based on its CRISPR gene editing technique. This is key for two reasons. First, a product will offer the company a source of recurring revenue and an opportunity for growth. Second, a regulatory nod would represent a vote of confidence in the company's technology.
CRISPR's gene editing technique involves cutting DNA at a particular spot and allowing a natural repair process to take place. The idea is to fix faulty genes responsible for certain diseases. CRISPR uses this technology throughout its pipeline. If the technique is successful, it could be a game changer. That's because it could offer a functional cure for certain diseases.
The exa-cel opportunity
Now let's look at the exa-cel opportunity. Today, treatment options for blood disorders are limited. They often involve blood transfusions and regular hospital stays. Both doctors and patients are likely eager to try a product that could change that hectic process. CRISPR and Vertex will start by addressing the most severely ill patients -- about 32,000 in the U.S. and Europe.
Exa-cel could reach global sales of $1.7 billion by 2028, making it a blockbuster, according to Evaluate Pharma. Though Vertex takes the lion's share of profit, at 60%, this still represents a big opportunity for CRISPR.
CRISPR is also approaching the finish line with an immuno-oncology candidate, CTX-110. It's currently involved in a phase 2 trial that could support a regulatory submission. The company has a handful of earlier-stage candidates in the pipeline -- and it's generating revenue through the licensing of its technology to others. For example, Vertex has licensed the gene-editing capabilities to advance its type 1 diabetes program.
Is the stock a buy?
Considering all of this and CRISPR's significant gains so far this year, is the stock a buy? To answer the question, it's important to look at this company through a long-term lens. CRISPR has climbed a lot this year -- and some of the excitement about exa-cel could be priced in. But I don't think gains have priced in the earnings growth potential over time -- or the possible launch of other products, such as CTX-110.
Meanwhile, the shares still are trading at a lower level than they were a few years ago -- when CRISPR was much farther away from commercializing a product. All of this means that today CRISPR still is a buy. We're at the start of a growth story that could deliver big over time.
