CRISPR Therapeutics (CRSP 0.34%) is a healthcare company that makes gene-editing therapies that can transform the lives of patients. While it doesn't have an approved product today, that could change by the end of the year.
The company has come a long way in establishing itself. But just how well has the stock done over the years, and would it have proven to be a good investment if you bought shares at its initial public offering?
A 240% return in less than a decade
Oct. 19, 2016 was officially CRISPR Therapeutics' first day of trading. It opened at a price of $15, so if you invested $30,000 into the business at the time, you'd have been able to buy 2,000 shares. Today, with the stock trading at around $51, your investment would be worth approximately $102,000. That's a return of 240% in a little less than seven years, which averages out to a compounded annual growth rate of 19%.
By comparison, a $30,000 investment in the S&P 500 over the same period would now be worth close to $63,000. Even if you include dividends, which would get your investment in the broad market index to a value of over $71,000, you'd still fall well short of CRISPR Therapeutics' returns since then.
For investors brave enough to take a chance on this up-and-coming healthcare stock, returns have been great. More important, however, is whether the business is still a good buy today.
Why CRISPR Therapeutics' stock can still go a lot higher
The allure of investing in a gene-editing company such as CRISPR Therapeutics is its long-term potential. According to data from Markets and Markets, the gene-editing market is worth a fairly modest $5.3 billion this year. But by 2028, it will double in value to $10.6 billion. And in the long run, there will be even more potential for these therapies, particularly if they prove effective in difficult-to-treat diseases.
Even though CRISPR doesn't generate much revenue and its losses totaled nearly $416 million over the trailing 12 months, investors remain optimistic about its opportunities in the long run.
It needs approval of exa-cel, first
The date CRISPR Therapeutics investors likely have circled on their calendars is Dec. 8, 2023. That's the PDUFA date for exa-cel, when investors will know whether the Food and Drug Administration (FDA) has approved the gene-editing therapy as a treatment for sickle cell disease. CRISPR has been working on exa-cel with Vertex Pharmaceuticals to treat the rare blood disorders sickle cell disease and transfusion-dependent beta thalassemia.
The therapy could be pricey. The Institute for Clinical and Economic Review believes that even at more than $2 million, it could be cost-effective. That's because exa-cel can save patients and the healthcare industry a tremendous amount of money: It can potentially cure people with sickle cell disease with just a single dose.
CRISPR has other gene-editing therapies in its pipeline, but exa-cel is the furthest along. If it obtains approval, that could be a game changer for the business.
Should you buy CRISPR Therapeutics stock today?
CRISPR Therapeutics is a much safer business now than it was in 2016. Although it still lacks an approved product, that could change in just a few months. The consensus analyst price target for the stock is just under $71, which suggests that CRISPR has an upside of close to 40% right now. And if exa-cel obtains approval, Wall Street analysts will likely upgrade their price targets.
However, it's important to remember that while formal approval may look probable for exa-cel, it's not a done deal. If the FDA chooses not to approve the therapy, a huge sell-off could follow, so this may not be a suitable investment for all types of investors. However, if you can tolerate moderate risk, CRISPR Therapeutics could be a great investment to hang on to for the long haul -- it may have many more growth opportunities to tap into in the future.
