CRISPR Therapeutics (CRSP 1.05%) and Bluebird Bio (BLUE 10.04%) are at the forefront of developing gene therapies, yet the shares of both companies have underperformed the market over the last 12 months. Still, the pair will likely soon be locked in a head-to-head competition for the same markets, and the stakes are high.

So which would be the better growth stock to buy now?

The case for CRISPR Therapeutics

CRISPR Therapeutics doesn't have any approved treatments on the market yet, but that'll change soon enough, which is the crux of the thesis in favor of it being a great growth stock. Through its partnership with Vertex Pharmaceuticals, it's aiming to commercialize the gene therapy exa-cel, which was developed to provide a functional cure for both beta-thalassemia and sickle cell disease. The Food and Drug Administration (FDA) is already considering the pair's applications for both indications. The regulator will make its decision on the therapy as a sickle cell treatment in late Q4, and as a beta-thalassemia treatment at the end of Q1 2024.

Approval for exa-cel in either or both conditions would send this stock flying, and it would also enable CRISPR to start realizing revenue for the first time. Management thinks it could treat around 30,000 patients with exa-cel. Of course, it'll only get 40% of the total sales revenue (and it'll only be on the hook for 40% of the costs as well) as a result of its collaboration agreement with Vertex. Wall Street analysts estimate that it could bring in as much as $165 million in its next fiscal year as a result -- not a terribly big difference from the $170 million in trailing 12-month revenue it derived from hitting its collaboration milestones. It will need to keep working to advance its other candidates through clinical trials. CRISPR currently has three oncology programs and two diabetes programs in early to mid-stage studies. It'll be a few years before those treatments have a shot at approval. 

Critically, CRISPR Therapeutics isn't under financial pressure to get exa-cel out the door, nor is it on a tight schedule to commercialize its other projects. It has more than $1.7 billion in cash, equivalents, and short-term investments on its books, but its operating expenses were $563 million over the trailing 12 months. That means it has enough of a cushion to cover at least three years of expenses, taking its cash runway into the middle of 2026. It won't need to take out any new debt to get exa-cel out the door if it gets approved, and even if regulators have issues with the applications that they ask the companies to address, CRISPR Therapeutics won't have any trouble paying for additional clinical trials. 

For a biotech, CRISPR's position going into its first attempt at commercializing a therapy is strong. And that's likely to help it to grow rapidly and without major constraints in the likely event that it succeeds with regulators in the coming months.

Can Bluebird Bio make a turnaround? 

Bluebird's situation is considerably different from CRISPR's because it already has a pair of therapies on the market, and it might soon have another. It sells Skysona, which is approved to treat cerebral adrenoleukodystrophy in young boys, and Zynteglo, which is approved to treat beta-thalassemia. Both medicines were approved roughly a year ago, but the company still isn't profitable.

Its sickle cell disease therapy candidate, lovo-cel, could get approved by regulators by the end of this year, just a few weeks after CRISPR's exa-cel. That means while Bluebird has a first-mover advantage in penetrating the beta-thalassemia market, it'll be on even footing with its peer when it comes to sickle cell disease.

So far, its two approved treatments have powered a fair amount of growth. Its trailing 12-month revenue rose by 83% over the last year to $9.4 million. Wall Street is anticipating that it'll register $137 million in its next fiscal year, which would be quite the sharp run-up. Bluebird Bio has a problem, though. Management is clear that it only has enough money on the books to last into Q2 2024 unless something changes. 

While it has cash, equivalents, and short-term investments of more than $245 million, it expects to spend between $270 million and $300 million in 2023. About $45 million of its cash is restricted, and not usable. If it were, with the help of the anticipated revenues from drug sales, it would still only have enough cash to last into Q4 2024. So it may need to take out fresh debt to ramp up the commercialization infrastructure for lovo-cel, and the company already has a hefty debt load of $239 million. 

The verdict

Over the next year, Bluebird Bio will likely grow faster than CRISPR Therapeutics. But after that, there's no contest over the long term. Bluebird doesn't have any clinical-stage programs in its pipeline aside from its likely soon-to-be-approved therapy for sickle cell disease and an earlier-stage program for the same indication that uses the same therapeutic platform. Nor does it have the cash to initiate fresh clinical trials. It barely has enough money to launch the drug that's up for approval. 

In a few years, CRISPR will be trying to commercialize its next batch of candidates, and it already has the money to finish advancing them through clinical trials. Meanwhile, at that point, Bluebird Bio will probably be just entering the clinic with its next crop of candidates. And that'll make CRISPR Therapeutics the better growth stock by a mile.