Biotechnology outfit CRISPR Therapeutics (CRSP +5.21%) isn't a name on many investors' radar -- and understandably so. Its market capitalization is a mere $6 billion. The company remains in the red largely because it's barely got any revenue to speak of. It's not likely to swing to a profit in the immediate future, either.
Still, if you've got room in your portfolio for a little more risk paired with above-average upside potential, this is a stock worth adding to your watchlist (if not your portfolio) with three key things in mind. But first things first.
What's CRISPR Therapeutics?
Although the company was founded back in 2013, most of its time since then has been spent refining the work first done by Jennifer Doudna, Ph.D., and co-founder Emmanuelle Charpentier, Ph.D., who jointly figured out how to "edit" defective genetic code in a strand of DNA.
By using a protein called Cas9 to find and remove a damaged portion of a genetic sequence and then replace it using a gene-editing biotechnology based on clustered regularly interspaced short palindromic repeats -- or CRISPR -- medical science is now able to do what was once unthinkable.
It's still early days for the science -- very early. In fact, the FDA only made its first-ever approval of a gene-editing therapy in December of 2023. That's Casgevy, for the treatment of sickle cell disease, which was approved in the U.K. only a month earlier.
The thing is, Casgevy is CRISPR Therapeutics' treatment, underscoring how well developed this biotech outfit's science is, and perhaps indirectly underscoring the fact that many rival drug developers are still well behind.
NASDAQ: CRSP
Key Data Points
Casgevy isn't the company's proverbial big Kahuna, however -- it's merely proof that gene editing can be successfully done. The heavy hitters in CRISPR's developmental pipeline are CTX310 for the treatment of certain cardiovascular diseases, and CTX131 and CTX112, both of which are taking aim at cancer using the very same CRISPR science.
Although all of these drugs still have years of developmental work ahead of them, again, the underlying gene-editing technology works. Its potential applications are enormous. That's why CRISPR has a dozen or so others in clinical or pre-clinical trials also underway at this time.
Three things to watch
As time marches on, though, this stock's backstory is evolving from one broadly driven by an idea to one that increasingly hinges on some very specific factors. To this end, here are the three things that matter the most to current and prospective CRISPR Therapeutics shareholders right now -- and for the foreseeable future -- since they'll either drive the stock higher or let it slide into a sell-off.
1. Insurers and patients' acceptance of CRISPR-based medicine's cost
While the science of using CRISPR to repair faulty cells is exciting, it's not exactly cheap or easy. See, Casgevy isn't a pill or an injection. It requires a sample of a patient's own blood stem cells to create a completely customized therapy, which is then infused back into that patient after he or she has undergone chemotherapy.
All of this care can only be done at one of CRISPR's 65 authorized treatment centers. Total cost? A little over $2 million per patient. That's pretty steep for any therapy, but particularly for sickle cell disease, which at least has a handful of more affordable treatment options.
The cost of treating life-threatening cancer is less of a stumbling block, even for insurers that may occasionally see bills nearly this size for even the most conventional of oncology treatment regimens. The price tag of this and any other future CRISPR-based therapy, however, is likely to remain in this ballpark, where payers may well balk.
2. The ongoing development of CTX310
Again, while Casgevy is approved to treat sickle cell disease, it's really more of a proving ground for the other drugs in CRISPR Therapeutics' developmental pipeline.
This, of course, includes CTX131 and CTX112, but the company itself is putting the spotlight on CTX310 as a treatment for ANGPTL3 (angiopoietin-like 3), which is often associated with poorly regulated cholesterol, lipids, and triglycerides. If the company can demonstrate its solution is at least as good as (if not better than) alternative cholesterol-fighting drugs, investors might continue to support this stock.
This information is coming. The company posted encouraging early results of CTX310's phase 1 clinical trial late last month, and says it intends to offer more detailed data at a healthcare conference scheduled for later in the year. If it's compelling enough, it could tamp down worries over the high cost of any CRISPR-based treatment.
3. Liquidity
Finally, you'll want to keep an eye on CRISPR Therapeutics' liquidity, or the amount of cash it has on hand to cover its operating costs while it continues to develop CTX310 at the same time it's looking to expand Casgevy's commercialization.
As of the end of the first quarter, CRISPR was sitting on $1.86 billion in cash, which is a lot for a company of this size. It's working through this money pretty quickly, though, shelling out nearly $150 million in operating expenses in Q1 alone. That doesn't include a full quarter's worth of the sort of costs the phase 1 trial of CTX310 is incurring now, or any other trials it starts or expands in the foreseeable future.
Image source: Getty Images.
Continued revenue growth from Casgevy should seemingly help offset some of this spending, even if not all of it. Indeed, the analyst community expects CRISPR's top line to soar from less than $50 million this year to more than $400 million in 2027, even if these same analysts believe the company will still be well in the red then. A few years' worth of losses isn't exactly unusual for a young biotech start-up.
CRISPR Therapeutics would still lack much-needed scale even after such growth, though. The money it needs to spend just to get any meaningful degree of traction from Casgevy or maintain its clinical trials could far exceed any conceivable amount of revenue the newly approved drug might produce in the foreseeable future.
Don't confuse what CRSP stock is
So what's the call? There isn't one -- not this time. Buying or avoiding a stake in CRISPR Therapeutics is entirely up to you, depending on your risk tolerances and your ability to manage such a holding. If you're strictly a buy-and-hold investor, there's probably not enough certainty here yet to latch onto for the long haul. And there may never be. If you've got a speculative side that can tolerate risk in exchange for hype-driven reward, though, you could make a decent bullish case.
Just don't confuse the two, or muddy the waters by trying to be both. The last thing you want to do here is talk yourself into a long-term position that requires you to ignore obvious red flags like the three potential ones discussed above.
