Despite making significant clinical progress, CRISPR Therapeutics (CRSP 4.11%) has been struggling financially in the past three years. The company's shares are down by 24% over this period, while the S&P 500 has gained 41%. The gene-editing specialist has, no doubt, faced some headwinds.
However, important catalysts could double its stock price by 2030. For those keeping score at home, that would amount to a compound annual growth rate of about 14.9%, well above the market's historical average returns.
Progress is a slow process
CRISPR Therapeutics' focus on gene editing has some advantages and disadvantages. On the one hand, its revolutionary techniques can allow researchers to create therapies for otherwise untreatable (or difficult-to-treat) conditions. CRISPR proved as much when it created and developed Casgevy, a one-time treatment that provides a functional cure for two genetic blood disorders: sickle cell disease and transfusion-dependent beta-thalassemia. CRISPR shares the rights to Casgevy together with Vertex Pharmaceuticals.
On the other hand, ex vivo gene-editing treatments are complex to manufacture and administer. The process involves collecting the patient's cells, editing their genes, and reinserting them into the patient.
Image source: Getty Images.
That's why, despite being approved since late 2023, Casgevy isn't meaningfully contributing to CRISPR Therapeutics' financial results yet. But it will eventually, and at its peak, is almost certain to far exceed the $1 billion per year in sales that is the milestone for blockbuster status. There are few competing treatments for sickle cell disease and transfusion-dependent beta-thalassemia, even in the U.S. The competitive landscape looks even better for CRISPR and Vertex in several countries in the Middle East, where they have received approvals for this product.
Overall, the two estimate an addressable market of 58,000 patients in the regions they are targeting. At $2.2 million per treatment course in the U.S., the opportunity looks massive. It might take time to get there, but expect CRISPR Therapeutics' sales to grow at a good clip once money starts rolling in from Casgevy, and that should happen well before the end of the decade.
Potential catalysts on the way
Casgevy's slow uptake is one reason CRISPR Therapeutics stock has not performed well in recent years. Another is that clinical progress often drives the performance of small biotechs with few or no products on the market. Some investors take their profits and leave once they achieve significant clinical and regulatory milestones.
That's what happened here. CRISPR Therapeutics' shares skyrocketed in the five years following its 2016 IPO, a period during which it more than doubled.
Though it has experienced a significant pullback since 2021, CRISPR Therapeutics could bounce back as it shows substantial pipeline progress while making commercial headway with Casgevy.
The company is working on several promising candidates for which it could release data readouts as early as this year. They include CTX112 and CTX131, two potential cancer medicines. The former received the Regenerative Medicine Advanced Therapy designation from the Food and Drug Administration, a sign that it has shown promising clinical evidence in treating a serious condition.
NASDAQ: CRSP
Key Data Points
CRISPR Therapeutics should also release data from an ongoing clinical trial for CTX320, a medicine being developed to lower lipoprotein(a) levels, which can cause a range of cardiovascular problems when too high. These programs and others -- such as CRISPR's investigational functional cure for type 1 diabetes -- could make significant headway in the next five years.
They might not all pan out, but even a 50% success rate in getting products to market, after the smashing success it saw by laser-focusing on Casgevy, would be a significant win for the company. In the meantime, a series of clinical wins could eventually jolt the company's shares.
Of course, there is the possibility that the biotech will run into severe setbacks, and given that it only has one product on the market and remains unprofitable for now, that could send the stock down even further. CRISPR Therapeutics carries above-average risk as an investment, but for those comfortable with the volatility, it is worth initiating a small position in the stock -- it could deliver monster returns in the next five years.
