Shares of gene therapy specialist, CRISPR Therapeutics (CRSP 1.34%) have been beaten down a long way despite some impressive accomplishments. The company already earned approval to sell its first treatment from the Food and Drug Administration (FDA), but the stock price is way down.

Investment bank analysts up and down Wall Street have noticed the disconnect between CRISPR Therapeutics' recent accomplishments and its stock price. The average analyst following the drug developer stock thinks it can soar to $78.20 per share in the year ahead.

The consensus target implies a gain of about 106% from the stock's price that fell below $38 per share on May 19. While the potential rewards are high, so are the risks. Here's a closer look to see if this stock could be a good fit for your portfolio.

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Reasons to buy CRISPR Therapeutics now

In December 2023 and January 2024, the FDA approved Casgevy for the treatment of severe sickle cell disease (SSD) and transfusion-dependent beta thalassemia (TDT), respectively. Both diseases are caused by inherited mutations that lead to misformed hemoglobin, the protein in red blood cells that carries oxygen to tissues that need it.

Patients with TDT and SCD require blood transfusions throughout their lives, but a single administration of Casgevy allows them to produce a functional form of hemoglobin on their own. If all goes as expected, they'll never need another blood transfusion. These diseases are rare, but Casgevy carries a list price of $2.2 million.

Independent drug launches are highly unpredictable, but CRISPR Therapeutics can lean on its collaboration partner, Vertex Pharmaceuticals (VRTX 1.12%). Vertex successfully markets the first and only FDA-approved treatments that address the underlying cause of cystic fibrosis, another rare disease. With product sales that grew past $11 billion last year, it's clear Vertex knows a thing or two about selling rare disease drugs.

CRISPR Therapeutics is still losing money, but it also finished March with $1.9 billion in cash after burning through $134 million during the first quarter. If Casgevy's launch gets off the ground soon, the drugmaker could achieve profitability before it needs to raise capital again.

Casgevy sales have been limited because the treatment requires the removal of stem cells that are modified in a laboratory. Before reinfusion, patients must undergo a difficult preconditioning regimen to ensure the modified stem cells can find a home in the patient's bone marrow. Recently, CRISPR Therapeutics posted promising results from a phase 1 trial with a treatment candidate, called CTX310, that doesn't require the same preconditioning because it modifies liver cells in the body.

A single intravenous infusion of CTX310 at all dosages tested knocked down production of ANGPTL3, a protein that leads to higher cholesterol and triglyceride levels. The highest dose tested helped one patient reduce their cholesterol by 65% and their triglycerides by 82% at the 30-day checkup.

Reasons to remain cautious

Permanent gene therapies are really hard drugs to sell for reasons beyond preconditioning regimens. Insurers and government payers hesitate due to the huge up-front costs. Physicians and patients hesitate because of the long-term unknowns.

In the first quarter, Vertex recorded Casgevy sales that reached just $14.2 million. With an agreement to receive just 40% of the profits Casgevy generates, it doesn't seem like this treatment will do enough to lower CRISPR Therapeutics' cash burn rate. At its present rate, CRISPR Therapeutics has less than four years before it needs to raise capital again.

As CTX310 and other candidates advance toward larger clinical trials, though, operating expenses will more than likely accelerate. While this candidate won't have challenges related to preconditioning, it could run into stiff competition from Novartis and Leqvio.

Leqvio is a twice-yearly injection that has been shown to reduce cholesterol levels by more than half for patients who were already maxed out on statins. Last year, Leqvio sales more than doubled to reach $754 million, so Novartis isn't going to let go of this space without a fight.

Time to buy?

CRISPR Therapeutics' market cap of about $3.3 billion at recent prices implies a level of success for Casgevy and CTX310 that is a long way from guaranteed.

Improving sales of Casgevy could narrow CRISPR Therapeutics' losses and extend its cash runway. Muted sales more than a year after its first approval, though, suggest it's a dud. Looking further ahead, it's hard to imagine a successful launch for CTX310 when there's an effective, twice-yearly injection available for folks with stubbornly high cholesterol. Without a clear path to blockbuster drug sales, even investors with a high tolerance for risk will want to avoid the stock until we're certain Casgevy can achieve blockbuster sales.