Cathie Wood Is Buying CRISPR Therapeutics Ahead of This Big Event. Should You?

Cathie Wood is known for seeking out the most innovative companies, placing big bets on them early, and holding on for the long term. This strategy has helped her flagship Ark Innovation ETF climb more than 25% to outperform the S&P 500 so far this year. And even at times when the market and some of her favorite stocks slip, Wood buys -- reinforcing her commitment.

In recent weeks, the famous investor has been adding to her position in CRISPR Therapeutics (CRSP 0.34%) ahead of a very big event for the gene editing company. In December, the U.S. Food and Drug Administration (FDA) expects to issue a decision on what could become CRISPR's very first commercialized product. Should you join Wood and pile into this stock now? Let's find out.

Fixing faulty genes

First, let's talk a bit about CRISPR. The gene editing company's platform involves cutting DNA at a particular location so that a natural repair process can happen. The idea is to fix faulty genes responsible for certain diseases, and this means the technology could lead to functional cures. That's big news for patients -- and could result in significant revenue for CRISPR.

CRISPR has rivals, but it is the most advanced among those using this particular gene-editing technique. It also has a very solid partner accompanying it to the finish line: Vertex Pharmaceuticals (VRTX -0.06%). Vertex, as the global leader in cystic fibrosis (CF) treatment, has brought four CF drugs to market and sells them worldwide. The company generates billions in earnings annually and is experienced in every part of the drug launch and general commercial process.

As of late last year, CRISPR and Vertex started submitting exa-cel, their blood disorders candidate, to regulatory agencies in the U.S., the U.K., and Europe. The FDA aims to issue a decision on exa-cel for sickle cell disease in December and on exa-cel for beta thalassemia in March.

Data have been strong for both indications, so there's reason to be optimistic about exa-cel's future. For example, 94% of patients in the sickle cell trial remained free of pain crises for at least one full year. In the beta thalassemia trial, more than 88% didn't require blood transfusions for at least 12 straight months.

Potential for blockbuster revenue

Exa-cel could generate $1.7 billion in revenue in 2028, according to Evaluate Pharma, which puts it in blockbuster territory. Of course, CRISPR shares profit with Vertex, and Vertex will take the lion's share -- 60% -- since it also is making a bigger investment in the program's costs. But the potential product still represents a significant amount of revenue for CRISPR.

It's also important to note this isn't CRISPR's only near-term opportunity. The company is studying an immuno-oncology candidate in a trial that could support a regulatory submission. If all goes smoothly, this represents another potential product within the next few years.

Meanwhile, CRISPR is also generating revenue by licensing its gene-editing technology to others. This spring, Vertex bought access to the platform for use in one of its other programs, one targeting type 1 diabetes.

Now, let's consider whether you should follow Cathie Wood into this innovator. It's clear CRISPR is about to reach a key moment in its story as a company. An FDA approval would lead to product revenue and serve as a vote of confidence in CRISPR's technology -- a platform it uses throughout its pipeline. CRISPR is in the early chapters of its growth story, so investing now -- if CRISPR wins this and other product approvals down the road -- could bring big rewards.

Your investment style

That said, it's important to consider your investment style before making any decisions. CRISPR may not be for every investor. Like all biotech and pharma companies, it faces the risk of a candidate failing in trials -- or getting rejected by regulators. CRISPR, in a fast-moving growth area like gene editing, also faces the possibility of a rival's technology producing even better treatments down the road.

So, if you're a cautious investor, you may want to watch how the gene editing space evolves before diving in.

But if you can tolerate some risk, CRISPR makes an interesting buy right now. The stock has declined about 35% from a high point earlier this year, and it still trades well below its peak a couple of years ago, when there was a lot less visibility regarding the future. All this means you may want to follow Wood into this gene editing specialist before its big moment -- and possibly reap great rewards over the long run.