Cathie Wood loves CRISPR Therapeutics (CRSP 0.34%). The stock wouldn't be the sixth-largest holding in her Ark Genomic Revolution ETF portfolio and rank No. 11 in her flagship Ark Innovation ETF if she didn't.
But just because a famous investor like Wood is a fan of a stock doesn't automatically mean it's a great pick. What's the real story for CRISPR Therapeutics? Below are the bull and bear arguments for this gene-editing stock.
The bull case for CRISPR Therapeutics
Keith Speights: I can sum up the bull case for CRISPR Therapeutics in two words: pipeline potential. The pipeline program that most investors are fixated on right now is exagamglogene autotemcel. Thankfully, we can refer to this gene-editing therapy by its abbreviated name of exa-cel.
CRISPR Therapeutics and its much larger partner, Vertex Pharmaceuticals, await U.S. Food and Drug Administration (FDA) approvals for exa-cel in treating the rare blood disorders sickle cell disease and transfusion-dependent beta-thalassemia. The word "treating" really doesn't do justice to the therapy, though: Exa-cel essentially cures these two diseases in many patients.
But CRISPR Therapeutics' pipeline also features several other programs in clinical development. The most promising program at this point is CTX110, an experimental cell therapy targeting CD19-positive B-cell malignancies. It's already being evaluated in phase 2 trials.
In addition, the company has several gene-editing candidates in early-stage testing. These include wholly owned programs, as well as programs in partnership with ViaCyte (which is now owned by Vertex).
CRISPR Therapeutics' market cap currently stands at close to $3.6 billion. Exa-cel will almost certainly become a blockbuster if approved. The company should only need another pipeline program to show progress in late-stage studies for the stock to be worth a lot more.
The bear case for CRISPR Therapeutics
Adria Cimino: CRISPR Therapeutics is approaching two exciting moments: the upcoming FDA decisions -- one in December and one in March -- on what would become its first product, exa-cel.
But that doesn't necessarily mean the shares of this biotech will take off right away. As we can see, the stock already declined quite a bit from a peak reached earlier this year. Investors may be assuming that a product approval is baked into the shares, and they could be right.
It's also important to remember CRISPR Therapeutics isn't alone in the field of gene editing; it's surrounded by rivals making important progress. One in particular, Caribou Biosciences, is working on a next-generation form of the technology. This allows Caribou to make potential treatments that include more than one edit to the genome, and a technique that improves precision.
Of course, rivals aren't always working on treatments for the same diseases as CRISPR Therapeutics. But their presence and advances in the field still represent a risk to its long-term story.
And speaking of risk, it's important to remember that CRISPR Therapeutics and its gene-editing peers all face a certain amount. The field is relatively new, and it's possible to hit a roadblock at any stage of the development process. A clinical trial failure or a negative response from the FDA could deal a devastating blow to any of their stocks.
That's why, before investing in CRISPR Therapeutics or other biotech companies that don't yet have products on the market, it's important to be aware of these potential scenarios. If you can handle the risk, then the stock could be a good choice for you.
Is CRISPR Therapeutics stock a buy?
CRISPR Therapeutics likely has a bright future ahead, but it may not be the right stock for every investor right now. If you favor a cautious approach to investing, you may be better off considering other biotech players with solid product portfolios and revenue track records.
On the other hand, if you're an aggressive investor, you'll probably like this stock. CRISPR Therapeutics has multiple pipeline programs with significant potential, and a near slam-dunk with exa-cel.
