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CRISPR (CRSP) Loses 24% YTD: How Should You Play the Stock?
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CRISPR Therapeutics (CRSP - Free Report) has declined 23.6% in the year-to-date period compared with the industry’s 1.7% fall, as seen in the chart below. The stock also underperformed the sector and the S&P 500. The shares are also trading below its 50-day and 200-day moving averages.
Since the start of this year, CRSP received approval for its Vertex Pharmaceuticals (VRTX - Free Report) -partnered one-shot gene therapy Casgevy in two blood disorders, namely sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), in the United States and Europe. Despite these approvals, the stock is down likely due to a lack of pipeline updates.
Let’s dig a little deeper into the stock’s prospects.
Regulatory Approvals for First CRISPR-Based Gene Therapy
The approval for Casgevy comes as a breakthrough for medical science, as it is the first approval for a CRISPR-based gene-editing therapy in the world. Following the approval, Casgevy offers a new treatment option to an estimated 35,000 patients living with severe SCD or TDT across the United States and Europe, with additional patients in Bahrain and Saudi Arabia. Vertex expects to start recording revenues from Casgevy sales in second-half 2024. Per the terms of the partnership, Vertex leads the global development and commercialization of Casgevy.
Both SCD and TDT indications have a significant unmet medical need. Casgevy demonstrated the potential to alleviate blood transfusion requirements for TDT patients and reduce painful and debilitating sickle crises for SCD patients. If successfully commercialized, the therapy can reap enormous profits. The company, along with Vertex, also initiated two new phase III studies evaluating gene therapy in pediatric patients with TDT and SCD.
Solid Partner in Vertex Pharmaceuticals
Both CRISPR and Vertex initially entered into a partnership in 2015 to develop gene editing therapies for treating various neurological conditions and cancer. Casgevy is one of the therapies resulting from this partnership. Since then, the collaboration has further expanded to the development of therapies for cystic fibrosis, Duchenne Muscular Dystrophy (DMD) and Myotonic Dystrophy Type 1 (DM1) indications. In March 2023, CRISPR signed a new deal with Vertex to develop hypoimmune cell therapies for type I diabetes (T1D).
The collaboration with Vertex bodes well for the stock. With no stable revenue stream, such collaboration deals augur well for CRISPR Therapeutics as the same helps management access capabilities and resources for supporting the ongoing therapeutic programs. Per the terms of the agreement, the company is eligible to receive milestone payments of more than $1.3 billion and royalties on potential future sales of the therapies developed under these agreements.
Stock Valuation & Estimates
From a valuation standpoint, CRISPR Therapeutics is trading at a discount to the industry. Going by the price-to-book value (P/B) ratio, the company’s shares currently trade at 2.05, lower than both the 4.58 for the industry and the stock’s mean of 2.81.
Image Source: Zacks Investment Research
Estimates for CRISPR’s 2024 loss per share have improved from $5.65 to $5.61 in the past 60 days. Over the same timeframe, loss estimates for 2025 have widened from $4.44 to $4.92 to account for an increase in the company’s R&D costs to support pipeline expansion.
Image Source: Zacks Investment Research
Conclusion
Though CRSP has an encouraging pipeline consisting of novel therapies being developed to treat multiple immuno-oncology and autoimmune diseases, they are still in early-stage development and years away from potential regulatory approval. However, Casgevy’s approval also gives it an edge over companies like Beam Therapeutics (BEAM - Free Report) and Editas Medicine (EDIT - Free Report) , which are also working on developing CRISPR-based gene therapies. While BEAM and EDIT are developing their respective pipeline candidates for treating SCD and TDT indications, they are still at least a couple of years away from marketing them.
After receiving regulatory approval for Casgevy, which is an ex-vivo therapy, management is focusing its attention on in vivo candidates. Unlike ex-vivo therapies, where cells are removed, modified and then inserted back into one’s body, in vivo therapies involve infusing new genes directly into the body. Management is currently evaluating two new candidates, CTX310 and CTX320, in separate phase I clinical studies targeting ANGPTL3 and lipoprotein(a), respectively.
Though CRISPR Therapeutics appears to be trading a discount to the industry, we advise a new investor to exercise caution when investing in this #3 Ranked stock. Investing in a biotech with an early-stage pipeline is risky. We advise investors to wait and watch for a couple of pipeline updates before investing in the stock.
For those who already own the stock, the next major catalyst for CRSP will be its upcoming third-quarter results as we expect it to be the first quarter when it records revenues from Casgevy sales. It will also give us an insight into the demand and market potential for Casgevy. Up until now, we have only been getting updates on the launch progress of the therapy, which so far seems rapid thanks to Vertex’s efforts.
Image: Bigstock
CRISPR (CRSP) Loses 24% YTD: How Should You Play the Stock?
CRISPR Therapeutics (CRSP - Free Report) has declined 23.6% in the year-to-date period compared with the industry’s 1.7% fall, as seen in the chart below. The stock also underperformed the sector and the S&P 500. The shares are also trading below its 50-day and 200-day moving averages.
CRSP Stock Underperforms Industry, Sector & S&P 500
Since the start of this year, CRSP received approval for its Vertex Pharmaceuticals (VRTX - Free Report) -partnered one-shot gene therapy Casgevy in two blood disorders, namely sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT), in the United States and Europe. Despite these approvals, the stock is down likely due to a lack of pipeline updates.
Let’s dig a little deeper into the stock’s prospects.
Regulatory Approvals for First CRISPR-Based Gene Therapy
The approval for Casgevy comes as a breakthrough for medical science, as it is the first approval for a CRISPR-based gene-editing therapy in the world. Following the approval, Casgevy offers a new treatment option to an estimated 35,000 patients living with severe SCD or TDT across the United States and Europe, with additional patients in Bahrain and Saudi Arabia. Vertex expects to start recording revenues from Casgevy sales in second-half 2024. Per the terms of the partnership, Vertex leads the global development and commercialization of Casgevy.
Both SCD and TDT indications have a significant unmet medical need. Casgevy demonstrated the potential to alleviate blood transfusion requirements for TDT patients and reduce painful and debilitating sickle crises for SCD patients. If successfully commercialized, the therapy can reap enormous profits. The company, along with Vertex, also initiated two new phase III studies evaluating gene therapy in pediatric patients with TDT and SCD.
Solid Partner in Vertex Pharmaceuticals
Both CRISPR and Vertex initially entered into a partnership in 2015 to develop gene editing therapies for treating various neurological conditions and cancer. Casgevy is one of the therapies resulting from this partnership. Since then, the collaboration has further expanded to the development of therapies for cystic fibrosis, Duchenne Muscular Dystrophy (DMD) and Myotonic Dystrophy Type 1 (DM1) indications. In March 2023, CRISPR signed a new deal with Vertex to develop hypoimmune cell therapies for type I diabetes (T1D).
The collaboration with Vertex bodes well for the stock. With no stable revenue stream, such collaboration deals augur well for CRISPR Therapeutics as the same helps management access capabilities and resources for supporting the ongoing therapeutic programs. Per the terms of the agreement, the company is eligible to receive milestone payments of more than $1.3 billion and royalties on potential future sales of the therapies developed under these agreements.
Stock Valuation & Estimates
From a valuation standpoint, CRISPR Therapeutics is trading at a discount to the industry. Going by the price-to-book value (P/B) ratio, the company’s shares currently trade at 2.05, lower than both the 4.58 for the industry and the stock’s mean of 2.81.
Estimates for CRISPR’s 2024 loss per share have improved from $5.65 to $5.61 in the past 60 days. Over the same timeframe, loss estimates for 2025 have widened from $4.44 to $4.92 to account for an increase in the company’s R&D costs to support pipeline expansion.
Conclusion
Though CRSP has an encouraging pipeline consisting of novel therapies being developed to treat multiple immuno-oncology and autoimmune diseases, they are still in early-stage development and years away from potential regulatory approval. However, Casgevy’s approval also gives it an edge over companies like Beam Therapeutics (BEAM - Free Report) and Editas Medicine (EDIT - Free Report) , which are also working on developing CRISPR-based gene therapies. While BEAM and EDIT are developing their respective pipeline candidates for treating SCD and TDT indications, they are still at least a couple of years away from marketing them.
After receiving regulatory approval for Casgevy, which is an ex-vivo therapy, management is focusing its attention on in vivo candidates. Unlike ex-vivo therapies, where cells are removed, modified and then inserted back into one’s body, in vivo therapies involve infusing new genes directly into the body. Management is currently evaluating two new candidates, CTX310 and CTX320, in separate phase I clinical studies targeting ANGPTL3 and lipoprotein(a), respectively.
Though CRISPR Therapeutics appears to be trading a discount to the industry, we advise a new investor to exercise caution when investing in this #3 Ranked stock. Investing in a biotech with an early-stage pipeline is risky. We advise investors to wait and watch for a couple of pipeline updates before investing in the stock.
For those who already own the stock, the next major catalyst for CRSP will be its upcoming third-quarter results as we expect it to be the first quarter when it records revenues from Casgevy sales. It will also give us an insight into the demand and market potential for Casgevy. Up until now, we have only been getting updates on the launch progress of the therapy, which so far seems rapid thanks to Vertex’s efforts.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.