CRISPR Therapeutics (CRSP +4.07%) has reached a very exciting point in its story. The biotech company that specializes in gene editing is awaiting regulatory decisions on what could become its first commercialized product. The U.S. Food and Drug Administration (FDA) is set to rule on exa-cel for sickle cell disease next month and exa-cel for beta thalassemia in March. And regulators in the U.K. and Europe also are considering the blood disorders candidate.
Meanwhile, shares of CRISPR Therapeutics have climbed about 39% this year -- but they still are far from their peak level, reached in 2021.
So, investors who have been watching CRISPR Therapeutics, or even holding the shares for a while, may be wondering if the stock has any chance of returning to those highs or making it part of the way. Could this dynamic biotech stock double in five years? It's possible -- here's what it would take.
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A potential regulatory nod
The first point is pretty obvious. For CRISPR Therapeutics' shares to extend gains, the company must get a nod from the FDA -- first in the indication of sickle cell disease, then in the indication of beta thalassemia. These victories could push the shares higher in the near term, but they also could set the stock up for long term gains.
This is for two reasons. First, approvals could lead to blockbuster revenue -- after all, treatment options for these blood disorders are limited today, and exa-cel is designed as a one-time curative therapy. Second, a regulatory win could be seen as a vote of confidence in CRISPR Therapeutics' gene editing technology.
The exa-cel filings became the first-ever CRISPR gene editing filings to be accepted by the FDA for review. CRISPR gene editing involves fixing faulty genes responsible for disease by cutting DNA at a certain location and allowing a repair process to take over. This is big because we're talking about a new way of treating illness -- and this method is used throughout CRISPR Therapeutics' pipeline.
So CRISPR Therapeutics needs the regulatory win -- but it also needs something else to follow. For the stock to continue advancing, this approval must translate into demand from doctors and patients and revenue growth. As mentioned, the lack of treatment options and exa-cel's curative potential could encourage patients to consider exa-cel -- but it won't be right for everyone due to a heavy preparation procedure involving a chemotherapy phase, followed by a lengthy treatment process.
Revenue growth may take time
This means exa-cel uptake could be slower than that of a standard therapy, which isn't exactly a problem -- it just means revenue growth may take some time. The main risk is some patients will decide against going for exa-cel due to the extensive preparation and treatment process. This could weigh on earnings potential, and therefore hold the shares back.
If doctors and patients see exa-cel as worth the effort, though, revenue could take off -- and help the shares take off too.
Finally, one more thing could serve as a big catalyst for CRISPR Therapeutics shares, and that's the approval of a second product. Today, the company is testing immuno-oncology candidate CTX110 in a phase 2 trial that may support a regulatory request. So, all eyes will be on progress there.
NASDAQ: CRSP
Key Data Points
Share price catalysts
The combination of an exa-cel regulatory win, growth in demand for the product, and a potential approval of CTX110 could drive CRISPR Therapeutics higher. And the idea of doubling in five years is very possible, considering the stock has already risen to well beyond those levels at a time when we had much less visibility on the company's revenue potential. The stock's price at its peak back in 2021 was more than 260% higher than today's level.
Of course, CRISPR Therapeutics involves some risk -- a candidate can fail at any stage of clinical trials, and products could miss revenue estimates. But if the company doesn't encounter those problems, it could easily be on the road to major share gains over the coming five years -- and that's great news for long-term shareholders.
