The gene-editing solution is in its infancy, and with a vast market opportunity, CRISPR Therapeutics is the stock I am buying today.
CRISPR Therapeutics (NASDAQ: CRSP) is a biotechnology company headquartered in Switzerland and founded in 2013 by Emmanuelle Charpentier, one of the co-discoverers of CRISPR technology. CRISPR is focused on gene editing using the Cas/9 technology to precisely change specific sequences of genomic deoxyribonucleic acid (DNA). This is done by the disruption, deletion, correction, or insertion of genes to treat genetic diseases.
A look at CRISPR Therapeutics financials
CRISPR Therapeutics stock has surged by roughly 90% over the last year and more than 700% since going public in 2016. Like many other players in the space, the company has yet to make any meaningful revenue and instead funded itself via public and private offerings. In Q1 2021, revenue was the same as the year prior at $0.2 million. Unsurprisingly, the company is also operating at a loss, coming in at $113.2 million in Q1 2021 compared to $69.7 million the year prior as it is still in the research stages but has a strong cash position of $1.8 billion which should aid this.
What I like about CRISPR Therapeutics
Jennifer Doudna and Emmanuel Charpentier were awarded the Nobel Prize in Chemistry 2020 for their discovery of breakthrough technology CRISPR/Cas9. Doudna stated that genome editing for at least some diseases would be realized in the next 5-10 years, and this company is at the forefront of this megatrend.
The market opportunity is enormous due to numerous different use cases such as Duchenne muscular dystrophy, cystic fibrosis, sickle cell disease, and many more rare and common diseases where current biopharmaceuticals have had little success. According to ARK Invest, monogenic diseases affect at least 250 million people globally, and the global monetary opportunity is more than $75 billion annually. However, only 2% of genetic diseases are monogenic, which leaves further upside if CRISPR Therapeutics can tap into polygenic diseases. As well as this, there are other use cases such in agriculture, producing vaccines, and more.
CRISPR Therapeutics is one of only three companies to have exclusive licenses for the use of CRISPR/Cas9 in a commercial setting along with Editas Medicine and Intellia Therapeutics. Currently, CRISPR is focused on several clinical trials for beta-thalassemia, sickle cell disease, and cancer. CRISPR Therapeutics is also backed by Vertex Pharmaceuticals who invested $105 million to collaborate on discovery and development. CRISPR Therapeutics is entitled to development and regulatory milestones of up to $420 million along with royalties for future sales. This collaboration has made significant progress, with two people being successfully treated for beta thalassemia and one for sickle cell disease using the technology.
Risks to CRISPR Therapeutics share price
There are ethical and social concerns surrounding the technology due to its wide range of applications and, in particular, regarding germline editing. One such alleged instance caused public condemnation from the scientific community and the public. Former Stanford graduate He Jiankui claimed to have created the first gene-edited babies in 2018 to try and give them protection against HIV and subsequently received jail time. This event demonstrated the risk as it caused the stock to drop, and future ethical challenges pose a risk. However, Doudna believes that the way forward for this technology is by educating people and that there will need to be clear oversight and regulation.
The competition in the gene-editing space is fierce with companies such as Editas Medicine, Beam Therapeutics, bluebird bio, and many others. Furthermore, many of its competitors may have greater financial resources to spend on research and development, clinical trials, or other areas. However, the technology is rapidly advancing, and gene editing is an active area of research. Therefore, if there is a better alternative, this would negatively impact the stock.
CRISPR Therapeutics growth potential
CRISPR Therapeutics is an exciting play in arguably the most significant development in healthcare in the last decade. The sheer size of the market opportunity means that there is likely to be more than one winner in the space, and CRISPR Therapeutics appears to be well-positioned to benefit. It has demonstrated its ability to treat diseases successfully. If it can manage to get full approval for commercialization, the revenue opportunity is astonishing, and long-term investors should be rewarded.
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