The stock market rewards innovation, especially when it comes to new products and/or services that create or disrupt entire industries. Some of the best-performing stocks in the past two decades have been fueled by advances in cutting-edge areas such as artificial intelligence and genomic medicine. 

If you're interested in investing in growth stocks that are at the forefront of innovation, you might want to check out Caribou Biosciences (CRBU -6.22%) and CRISPR Therapeutics (CRSP -0.20%). These companies are already changing the game in their respective fields, which should lead to impressive returns for long-term investors. Read on to find out more. 

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Next-generation CRISPR tech

Caribou Biosciences is a small-cap biotech that utilizes CRISPR technology to create innovative treatments for various diseases. The company's core competency lies in its chRDNA (CRISPR hybrid RNA-DNA) gene-editing platform, which is engineered to enhance the accuracy of CRISPR-based products, thereby minimizing unwanted modifications.

The company went public in 2021, but its shares have declined by about 50% since then. However, its stock has surged this month (up 83% at the time of writing) following a $25 million equity investment from Pfizer. Pfizer's equity investment will reportedly support the clinical development of the immune-cloaked allogeneic CAR-T cell therapy, CB-011, in patients with relapsed or refractory multiple myeloma.

CB-011 is currently in early-stage development, but it has the potential to address a large and growing market. The multiple myeloma drug market currently generates over $20 billion a year in sales, and this figure is expected to increase to $53.2 billion by 2031, according to a report by Allied Market Research.

Caribou also has another early-stage candidate, CB-010, for B cell non-Hodgkin lymphoma, and it is conducting pre-clinical studies for gene-edited therapies indicated for acute myeloid leukemia and various solid tumors. Additionally, the biotech has an ongoing collaboration with biotech giant AbbVie for two undisclosed indications.

With a market cap of around $593 million, Caribou stock could be significantly undervalued at the moment. Most of its pipeline candidates, after all, are targeting markets worth tens of billions in annual sales.

The pacesetter in CRISPR

CRISPR Therapeutics is a pioneer in the field of CRISPR gene editing. The company has a strategic focus on hematological disorders, such as sickle cell disease and beta-thalassemia, as well as immuno-oncology and regenerative medicine.

The company is collaborating with Vertex Pharmaceuticals to develop exa-cel (formerly CTX001), a potential curative treatment for the rare blood disorders sickle cell disease and beta thalassemia. Exa-cel is the first CRISPR gene-edited therapy to be submitted for regulatory approval in multiple regions, including the United States.

Exa-cel could offer a significant improvement in the quality of life for patients with these rare blood diseases who currently have limited treatment options. The company also has a pipeline of other promising candidates in various stages of development, as well as a robust intellectual property position.

CRISPR Therapeutics is currently valued at $4.53 billion, which seems like an extremely conservative valuation for a company with cutting-edge technology, multiple potential blockbuster therapies under development, and an active collaboration with one of the industry's most successful rare disease specialists.

Speaking to this point, Wall Street analysts believe the company's shares could be undervalued by up to 47% at current levels, based on exa-cel's blockbuster sales potential. Longer-term, CRISPR's stock may prove to be a bona fide wealth escalator, given the biotech's other assets in high-value indications such as diabetes and various rare diseases.