CRISPR Therapeutics' (CRSP 0.95%) stock has soared this year -- and for good reason. The biotech company is getting closer and closer to a major milestone: potential regulatory approval of what may become its first product. In just a few days, the U.S. Food and Drug Administration (FDA) will decide on exa-cel for sickle cell disease -- and in March, the agency will consider exa-cel for beta thalassemia.
Excitement about the upcoming decisions has breathed new life into the stock, which prior to this year had declined more than 60% from its peak back in 2021. So, if you decided to buy CRISPR Therapeutics right at the start of this year, you clearly have benefited. How much would you have today if you invested $5,000 on the first trading day of this year? Let's find out.
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A 64% gain this year
CRISPR Therapeutics has climbed 64% so far in 2023, but the increase wasn't exactly steady. The stock started the year off right, then gave back a lot of the gains during the summer months -- only to take off again in early November. If you held on through the tough times and stuck by the idea of long-term investing, today your initial $5,000 investment would be worth $8,200. Not bad for a holding period of barely one year.
But now, you may be wondering if you should forget about long-term investing and lock in your CRISPR Therapeutics gains. It's true the stock may not continue rising at such a pace in the months to come, and potential approval news may even be priced into the shares at today's level. That doesn't mean your potential to gain from the investment is over, though.
Here's why. News of approvals is great, but what truly should drive shares higher over time is earnings growth -- this is yet to come, offering share performance catalysts down the road. A quick look at the exa-cel situation offers investors reason to be optimistic about the idea of bringing the candidate to market and generating blockbuster revenue.
NASDAQ: CRSP
Key Data Points
The first authorized CRISPR treatment
The U.K. recently became the first country to authorize exa-cel -- to be commercialized as Casgevy -- for use in both blood disorder indications. This represents the first-ever authorization for a treatment based on CRISPR gene-editing technology -- a big step forward as it shows regulators are ready to give a nod to such treatments.
CRISPR gene editing involves fixing faulty genes responsible for disease by cutting DNA in a particular spot and allowing a natural repair process to take over. This technology serves as the backbone for CRISPR Therapeutics' entire pipeline, so the idea that regulators are ready to OK it is crucial for the company.
In the U.S., an FDA advisory committee a few weeks ago signaled the benefits of the treatment outweigh the risks, offering patients, doctors, and investors a positive message ahead of the regulatory decision.
Though exa-cel requires a months'-long treatment process and may not be right for every patient, it still could spur significant demand. That's because treatment options for sickle cell and beta thalassemia are limited today -- and exa-cel represents a potential functional cure. The product could generate revenue of $1.7 billion in 2028, according to Evaluate Pharma.
CRISPR Therapeutics also has a second potential treatment approaching commercialization -- immuno-oncology candidate CTX-110 -- so the biotech may find itself with more than one source of product revenue in the next few years.
A $100 million payment
Meanwhile, CRISPR Therapeutics generates revenue by licensing out its gene-editing technology too. It signed a deal with Vertex Pharmaceuticals earlier in the year that brought it $100 million in an upfront payment plus the possibility of milestone payments and royalties down the road.
All of this means your share price gains may be far from over. CRISPR Therapeutics is just setting out on its journey as a commercial-stage company, after all, so there should be a lot more growth to come. As I mentioned earlier, further share price increases may not come overnight, but instead progressively as the biotech brings in revenue and grows that revenue.
So CRISPR Therapeutics makes a great gene-editing stock to hold on to as it heads into this new stage of its story and for the long term.
