With the launch of its first gene therapy that's near-curative for sickle cell disease (SCD), everyone's talking about CRISPR Therapeutics (CRSP 0.34%) and its collaboration partner Vertex Pharmaceuticals.
But CRISPR isn't the only biotech pursuing advanced medicines, and investors are already looking for the next players that might make big breakthroughs. It's riskier to invest earlier along in a company's development, but that's precisely where the largest returns lie, which means that now is the time to be looking for the rising stars of tomorrow.
While there's no telling precisely which companies are going to succeed or fail, there is a pair of early-stage gene editing businesses that are worth keeping on your radar. If their plans come to fruition -- and that's a big if -- they could deliver handsome profits to their shareholders.
1. Intellia Therapeutics
Intellia Therapeutics (NTLA 3.70%) might be the next CRISPR Therapeutics because it's in clinical trials to develop curative gene-editing interventions for a pair of inherited diseases: Transthyretin (ATTR) amyloidosis, and hereditary angioedema (HAE).
Its ATTR program is entering into phase 3 trials now, and the HAE program is wrapping up enrollment for its phase 2 study. If everything goes as planned, it also could initiate a phase 1 trial for alpha-1 antitrypsin deficiency (AATD)-associated lung disease in 2024. That means by 2030, it's possible (though improbable) that the company could have three different gene-editing medicines on the market.
Importantly, Intellia is backed by Regeneron, which will be responsible for 25% of the costs and profits of the ATTR program. That bodes well for its chances of being another CRISPR Therapeutics. Regeneron itself is roughly the same size as Vertex, which was instrumental in getting CRISPR's first program out the door, so the company can bring substantial financial resources to bear to help Intellia if necessary.
So far, the biotech doesn't look like it needs any help. Its cash and investments are worth $855 million, but its trailing-12-month research and development (R&D) expenses are only $426 million.
But investors should be aware that it might face competition for market share in the ATTR market, assuming its therapy is proven to be safe and effective and that regulators agree to let the company sell it. As of Dec. 21, AstraZeneca just commercialized a therapy that treats polyneuropathy in the context of ATTR, so patients may eschew Intellia's curative treatment.
But CRISPR Therapeutics faces competition in its first market, too, so don't count this business out.
2. Verve Therapeutics
Verve Therapeutics (VERV -0.96%) only has one program in clinical trials, its VERVE-101 candidate to treat or cure heterozygous familial hypercholesterolemia (HeFH), which is in phase 1. In its initial form, VERVE-101 aims to permanently correct problems in patients' genomes that lead them to experience dangerously high LDL-C cholesterol levels. But management thinks that once there's a working proof of concept in the most severe patients, it might be possible to expand the scope of the project to eventually treat the 20% of the entire population who are at risk for developing atherosclerotic cardiovascular disease (ASCVD). If that happens, way down the road it could treat hundreds of millions of people.
For now, Verve has a lot of work to do, and it has the right players in its corner to make serious progress. Its champion and collaborator is none other than Eli Lilly, a company with a tremendous amount of resources. It's also working with Vertex Pharmaceuticals.
Eli Lilly clearly sees promise in what the biotech is working on. In late October, it purchased some of the commercialization rights for VERVE-101 and a few other programs that Verve had initially granted to another collaborator, Beam Therapeutics, presumably to ensure that it could get in on the action. If the pair escalate or alter their collaboration again, it'll be another bullish sign.
Verve's chances of becoming the next CRISPR Therapeutics are also buoyed by its substantial cash reserves of $485 million as of the third quarter. It additionally raised $144 million in a public stock offering in early December, as well as $23 million in a private placement. Considering that it burned only $154 million in cash over the trailing-12-month period, it won't even need to lean on its collaborators anytime soon.
And that kind of strong balance sheet means that it's a biotech stock worth watching, to say the least.
