CRISPR Therapeutics (CRSP +0.92%) has significantly lagged broader equities over the past five years. There are several reasons for that. Challenging economic conditions have led investors to rotate their money out of somewhat speculative investments, and it also doesn't help that the biotech's only approved medicine has, so far, generated little revenue. However, there is one key reason the stock could still deliver outstanding returns over the long run: Its pipeline could help redefine an entire therapeutic area. Let's dig in.
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Shooting for the stars
CRISPR Therapeutics has a fair number of pipeline candidates for a biotech worth a bit under $5 billion. Using its gene-editing platform, the company is targeting various areas with high unmet needs. Some of its most promising products in development are aiming to address risk factors for cardiovascular disease. Consider, for instance, CTX310, being developed for certain patients with high levels of LDL cholesterol and triglycerides (TGs) due to various conditions, including some genetic disorders.
CTX310 targets the ANGPTL3 gene (inhibiting ANGPTL3 protein function), which plays an important role in regulating LDL and TGs; both, at high levels, can cause coronary artery disease. Why could CTX310 redefine this therapeutic area? First, CRISPR Therapeutics is focusing on high-risk patients for whom current treatment options are somewhat limited.
Second, whereas patients typically take existing therapies to lower LDL and TGs over long periods, CTX310 could be a one-and-done gene-editing medicine. CRISPR Therapeutics estimates that 40 million people in the U.S. have high TG and LDL levels.
The company won't target all of them with CTX310, but even an addressable population that comprises a tiny portion of this market, like 0.1% (or 40,000 people), would be fairly large, given that the therapy would fill a high unmet need for these patients.
NASDAQ: CRSP
Key Data Points
CRISPR Therapeutics' CTX320 is similarly looking to lower lipoprotein(a) -- a risk factor for major cardiovascular events -- in certain patients. It could also be a one-time cure for eligible individuals. These two candidates, if approved, would be important breakthroughs. Further, CRISPR Therapeutics has other exciting pipeline programs, including at least one that could be a functional cure for Type 1 diabetes -- that too would be a significant clinical success.
With all that said, it's important to highlight that there are significant risks here. CRISPR Therapeutics generates little revenue and is unprofitable. Although it has a promising pipeline, clinical or regulatory setbacks will sink its stock price. Here's the bottom line: CRISPR Therapeutics is a promising mid-cap biotech stock that is well-suited for investors comfortable with heightened risk and volatility. Risk-averse investors, on the other hand, will want to stay away.
