What's going on with CRISPR Therapeutics (CRSP 4.32%)? The company's shares have been southbound for the better part of three years. And despite major regulatory wins since late 2023, the biotech hasn't recovered: The stock is down 23% year to date.
Can CRISPR Therapeutics bounce back? Some recent developments could move the needle for the gene-editing specialist down the road. Let's find out what they are and what they mean for investors.
Expanded coverage for CRISPR Therapeutics' crown jewel
Since November 2023, CRISPR Therapeutics has been earning approvals for Casgevy, a gene-editing medicine, in various countries and regions. The list includes the U.S., the U.K., the European Union, Saudi Arabia, and Bahrain.
Casgevy, developed with Vertex Pharmaceuticals, treats sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT). Both are rare blood disorders with few treatment options. Gene-editing techniques allowed researchers to create onetime cures for them -- that's what Casgevy is.
However, gene-editing medicines have a significant disadvantage. Due to the complexity of manufacturing and administering these products, they tend to be very expensive. The process involves collecting a patient's cells and using them to manufacture the treatment before reinserting them back into the patient.
Casgevy costs $2.2 million in the U.S. While CRISPR Therapeutics and Vertex estimate a target market of 35,000 patients in the U.S. and Europe, it won't matter if the medicine is inaccessible to many of them due to its cost. At these levels, private insurance can only cover so many people.
NASDAQ: CRSP
Key Data Points
Thankfully, CRISPR Therapeutics just received some good news from the U.S. government: The Biden administration announced a plan to help patients on Medicaid afford the medicine. As Medicaid is a program aimed at people with limited income, they'd have trouble accessing Casgevy otherwise. The plan is an outcome-based program that will tie payment to the therapy's efficacy, and it should kick off next year.
Note that about 100,000 people in the U.S. have SCD, and according to some estimates, 50% to 60% of them are on Medicaid. While not all of these will be eligible for Casgevy, many undoubtedly will. So this program will meaningfully expand access to Casgevy.
Looking beyond Casgevy
In the first nine months of the year, CRISPR Therapeutics reported revenue of about $1.6 million. That's almost nothing for a company worth more than $4 billion. And this top line was not generated from Casgevy-related sales, meaning the medicine's uptake is slow.
It will take some time before it starts meaningfully contributing to CRISPR Therapeutics' financial results, but the Biden administration's initiative will help, at least in the U.S.
This new coverage could also make it easier once CRISPR Therapeutics earns approval for other gene-editing medicines. The biotech is working on several programs, including a pair of investigational cancer treatments, and a potential functional cure for type 1 diabetes.
As CRISPR Therapeutics sets up a network of qualified treatment centers to administer Casgevy and garners support from third-party payers, the launch process should be a lot easier and faster for the company next time around.
Is CRISPR Therapeutics stock a buy?
CRISPR Therapeutics' potential with Casgevy is large. In addition to the 35,000 patients in the U.S. and Europe, the company and its partner, Vertex Pharmaceuticals, estimate a market of about 23,000 in Saudi Arabia and Bahrain.
The two partners do have some competition in the U.S. Bluebird Bio, a small gene-editing specialist, has competing treatments on the market for SCD and TDT. However, Vertex and CRISPR Therapeutics have far more funds. Furthermore, Bluebird's Lyfgenia, which treats SCD, costs $3.1 million in the U.S. -- and comes with a warning for blood cancer.
Vertex and CRISPR Therapeutics have even less competition in Europe, and especially in the Middle East. So Casgevy is looking at a multibillion-dollar revenue opportunity, even before we consider potential label expansions.
According to some analysts, Casgevy's peak annual sales could exceed $2.2 billion. CRISPR Therapeutics is entitled to just 40% of the profits from the medicine, per its agreement with Vertex. However, the revenue from its first product will help it fund the development of other potential breakthrough CRISPR-based gene editing medicines in its pipeline.
CRISPR Therapeutics' development of Casgevy helped validate its gene-editing platform. The company's innovative approach should yield more solid clinical and regulatory wins in the next five years.
All these reasons explain why, in my view, this biotech stock is worth investing in for those focused on the long game.
