Why CRISPR Therapeutics Just Became an Even Better Buy

CRISPR therapeutics (CRSP -0.15%) is a growth stock with a lot of long-term potential. Its gene-editing business could be poised to take off if exa-cel gets Food and Drug Administration (FDA) approval. And while that alone should generate a lot of upside, there’s an even bigger reason why the stock might look like a solid long-term investment.

Gene-editing therapies could be expensive

What makes gene editing therapies a game-changer in the world? the health industry is that they have the potential to revolutionize disease treatment options. Gene-editing therapy could replace years of ongoing medication and/or injections. This means that health insurers, patients and the healthcare industry as a whole could spend less on a particular disease.

Exa-cel, for example, is a potential functional remedy for beta-thalassemia and sickle cell disease, two rare blood disorders. With a functional cure, it is no longer necessary to continue treatment of the disease. Because it can have such a positive impact on patients and reduce overall healthcare costs, it’s possible that companies developing these types of treatments will price them high and health insurers will continue to cover them.

The Institute for Clinical and Economic Review, an organization that provides reports to insurance companies on medical treatments, estimates that even at $1.9 million, a single dose of exa-cel would still be cost-effective. It’s easy to see why the processing can generate billions in potential revenue for CRISPR and its development partner, Vertex Pharmaceuticals. The two companies would split the profits on exa-cel, with Vertex taking 60% and CRISPR the remaining 40%.

A company with a potentially valuable future

Exa-cel could gain approval within the next year, as Vertex and CRISPR submitted their biologics license application to the FDA earlier this month. Beyond that, CRISPR has other therapies in its pipeline that are in early trials, including CTX110, which is for certain blood cancers, and CTX130, which is being tested for the treatment of cell carcinoma. kidney cells.

The big takeaway for investors is that if the company’s other gene-editing therapies are as successful as exa-cel, then even if there isn’t a significant population in need of those therapies , they could fetch a high enough price where they could still generate millions in revenue for the company. Every therapy is different, but if they could cost over a million dollars, there could be significant potential for CRISPR to generate strong revenue growth in the years to come. And that might make its $4 billion valuation look cheap.

Is CRISPR Therapeutics stock a buy?

It’s hard not to like CRISPR stocks right now. Although the business is not profitable, it is close to being approved by exa-cel, assuming that happens within the next 12 months.

Additionally, the company is well funded with over $1.8 billion in cash and short-term investments; that’s a lot, considering the company has spent $496 million in cash through operations in the last 12 months. CRISPR can absorb several years of this kind of cash burn, so investors don’t have to worry about high dilution risk and frequent stock offerings.

If you’re willing to take risks, CRISPR might be one of the best biotech stocks to buy right now.

David Jagelsky has no position in the stocks mentioned. The Motley Fool holds posts and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

Leave a Comment