3 Reasons to Buy CRISPR Therapeutics Stock

CRISPR Therapeutics (CRSP 5.51%) has significantly underperformed broader equities over the past five years. Some will argue the company's value -- its market cap is $5.7 billion as of writing -- is still too high given the fundamentals of the business. CRISPR Therapeutics generates little revenue, is consistently unprofitable, and hasn't earned significant late-stage clinical wins over the past couple of years. However, despite all that, CRISPR Therapeutics could be an attractive buy-and-hold option. Let's consider three reasons why the biotech is worth serious consideration.

1. Multiple catalysts on the way

CRISPR Therapeutics specializes in developing gene editing therapies. This technology has already helped unlock groundbreaking medicines for otherwise difficult-to-treat conditions. However, we are arguably still in the early innings of the gene-editing revolution in the biotech industry, as the U.S. Food and Drug Administration has approved only a few treatments of this kind. But thanks to its potential to transform standards of care across many therapeutic areas, it's worth investors' time to look for the best gene-editing-focused companies. CRISPR Therapeutics fits the bill.

Image source: The Motley Fool.

The biotech's lineup features several promising candidates that could make significant progress over the next few years, jolting its stock price. Consider CRISPR Therapeutics' CTX310, an investigational one-time treatment designed to permanently lower LDL cholesterol by switching off the ANGPTL3 gene (which helps regulate cholesterol) in the liver, helping the body remove harmful fats from the bloodstream more effectively. If it proves safe and effective, it could transform care by replacing lifelong cholesterol drugs with a one-time treatment. With millions of people at high risk of heart disease (and other cardiovascular conditions) due to high cholesterol levels, CTX310 has a potentially large commercial opportunity.

CRISPR Therapeutics plans on releasing results from an ongoing clinical trial of CTX310 during the second half of the year. Positive data could send CRISPR Therapeutics' shares soaring. And that's just the tip of the iceberg. CRISPR Therapeutics has other promising candidate that should also make progress in the next few years. The biotech's strong, gene-editing-focused pipeline makes the stock attractive, as the company's breakthrough could lead to highly effective treatments and significant commercial success.

2. Casgevy's large opportunity

CRISPR Therapeutics has already shown it can secure approval for a gene-editing medicine. It did so with Casgevy, a therapy for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), which it developed with Vertex Pharmaceuticals (VRTX 2.08%). This may seem trivial, but the fact is that many (perhaps most) of CRISPR Therapeutics' peers -- that is, biotechs that specialize in gene editing -- have yet to earn approval for a single one of their candidates. Also, Casgevy's milestone was all the more impressive because it was the first CRISPR-based gene-editing therapy to receive regulatory approval.

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NASDAQ: CRSP

CRISPR Therapeutics

Today's Change

(-5.51%) $-3.11

Current Price

$53.24

Key Data Points

Market Cap

$5.4BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$52.05 - $56.65

52wk Range

$44.12 - $78.48

Volume

1.2M

Avg Vol

1.8M

Gross Margin

-528340.24%

Casgevy has not yet generated much revenue, but that could change soon. CRISPR Therapeutics and Vertex Pharmaceuticals recently announced that the U.S. Food and Drug Administration had approved the medicine for children as young as two (it was previously indicated for people aged 12 and older). This label expansion adds 5,500 patients to Casgevy's addressable market in the country.

That may not seem like a lot, but at $2.2 million per treatment course, that's an additional $12.1 billion commercial opportunity, and that's only in the U.S. (Vertex and CRISPR Therapeutics share the earnings from Casgevy, with the latter getting 40% of the profits). Casgevy won't capture this entire market on its own, but the medicine's sales should ramp up over the next few years, helping boost CRISPR Therapeutics' financial results.

3. Expanding beyond gene editing

Although gene editing remains CRISPR Therapeutics' core focus, the company has branched out into other areas. The biotech partnered with Sirius Therapeutics, a privately held company, to develop CTX611, a small-interfering RNA (siRNA) therapy. Unlike gene-editing medicines that alter the DNA sequence, siRNA medicines "silence" genes responsible for certain diseases, though the effect is temporary, and these therapies need to be readministered.

CTX611 is a long-acting siRNA therapy designed to prevent dangerous blood clots while causing less bleeding than today's anticoagulants. If approved, its potential for just two injections per year could make it a transformative treatment and a multibillion-dollar commercial success. Just as important, CRISPR Therapeutics is showing that it isn't just a gene editing company. The biotech is willing to pursue attractive opportunities in other fields.

Read the fine print

A lot could still go wrong with CRISPR Therapeutics, particularly significant clinical setbacks for its most promising candidates. The company's commercial opportunity with Casgevy could also fail to materialize. These are all risks investors should keep in mind. However, given its partnership with a biotech giant to commercialize Casgevy and its deep (and innovative) pipeline, CRISPR Therapeutics looks likely to significantly expand its approved product portfolio and improve its financial results by the end of the decade. The stock may offer outstanding returns along the way.