Gene editing is a relatively new technology that allows scientists to modify an organism's DNA. It holds the potential to help researchers develop therapies for diseases that have been extremely hard to treat.
Two companies that are hard at work in this field are Bluebird Bio (BLUE 1.13%) and CRISPR Therapeutics (CRSP 0.34%). Both focus on developing gene-editing treatments and continue to progress in their research even as their shares have lagged the market. But one of them, CRISPR Therapeutics, has held up substantially better than the other.
Of course, that doesn't guarantee how things could unfold in the future. So which company is more likely to multiply investors' capital more from here -- perhaps even by fivefold? Let's find out.
The case for Bluebird Bio
Bluebird Bio currently has two approved gene-editing therapies on the market. The first is Zynteglo, which treats transfusion-dependent beta-thalassemia (TDT), a rare blood disease. The second is Skysona, a therapy for cerebral adrenoleukodystrophy (CALD), a rare neurological disorder. However, the market opportunity for Zynteglo and Skysona is pretty small -- with a maximum of 1,540 combined patients eligible in the U.S. between the two.
Zynteglo and Skysona both earned the green light about a year ago. Bluebird Bio does not yet generate much revenue from them, and the company is consistently unprofitable. Bluebird recorded revenue of just $6.9 million in the second quarter, significantly improving from the $1.5 million in revenue reported in the year-ago period. Bluebird's net loss per share of $0.67 was much better than the $1.36 in the prior-year quarter.
It also had $291 million in cash, equivalents, and marketable securities as of the end of the second quarter.
The good news is that Bluebird hasn't treated many patients yet. Its top line should continue growing as it makes headway within its relatively small patient population. Zynteglo costs $2.8 million per treatment course, while Skysona is at $3 million. Even with its small target market, Bluebird's opportunity is well above $1 billion with these two medicines. That's not bad for a company whose market capitalization is just $406 million.
Here's an even better piece of news. Bluebird is currently awaiting approval for lovo-cel, a potential gene-editing therapy for sickle cell disease (SCD), another rare blood disorder. The company estimates a potential target market of about 20,000 patients in the U.S., so the opportunity is huge. Lovo-cel should command a hefty price like all other gene-editing therapies.
If Bluebird Bio can earn approval for lovo-cel -- which could happen by late December -- and treat even 20% of the 20,000 patient population in the next five years, its revenue, earnings, and stock price should soar.
The case for CRISPR Therapeutics
CRISPR Therapeutics also has a potential catalyst on the way. With its partner, Vertex Pharmaceuticals, it is awaiting approval in the U.S. and Europe for exa-cel, which targets TDT and SCD. The first green light in the U.S. could come by early December. Overall, CRISPR and Vertex plan to focus their initial launch on roughly 32,000 TDT and SCD patients.
They will split the profits and costs associated with it on a 60/40 basis, with CRISPR Therapeutics getting 40% of the profits.
The biotech currently has no product on the market and is also unprofitable. In the second quarter, it reported total revenue (from its collaboration agreement with Vertex) of $70 million, compared to just $158,000 in the second quarter of 2022. CRISPR Therapeutics also improved its net loss per share to $0.98, from $2.40 a year ago. It had $1.8 billion in cash, equivalents, and marketable securities, which is almost half of its market cap of $4 billion.
CRISPR Therapeutics' shares could soar on exa-cel's approval. The company has several other promising candidates in the pipeline. Once money from exa-cel starts coming in, the company should be able to push these programs faster. CRISPR Therapeutics could become a profitable commercial-stage biotech company in the next five years and deliver excellent returns. A fivefold increase in the stock price is not out of the question.
The verdict
Bluebird Bio has two advantages over CRISPR Therapeutics that could allow its stock to soar fivefold faster. First, Bluebird is much smaller -- small-cap stocks tend to be capable of more explosive gains and substantial losses. Second, The Institute for Clinical and Economic Review, a non-profit organization concerned with accurate and affordable medical care pricing, gave exa-cel a grade of C++ as a treatment for SCD.
The organization awarded lovo-cel a grade of B+, implying that it is more effective than its would-be competitor. Bluebird's smaller size alone could help it soar faster in the short term. However, CRISPR Therapeutics is the better buy for long-term investors. It has a deeper pipeline, more cash on hand, and the backing of a biotech giant to help it launch exa-cel on the market, something that would validate its gene-editing platform.
So, investors looking beyond the next 12 months should opt for CRISPR Therapeutics.
