Is CRSPR Stock a Buy?

Interest in CRISPR Therapeutics AG (NASDAQ:CRSP) peaked in early 2021, with shares reaching nearly $200, but the stock hasn’t reached that level again. The current trading price is down 33% from the 52-week high of $86.95. But CRSP has bounced back this year, with shares up around 40% year-to-date.

One of the major reasons for the stock’s decline is the length of time it has taken for the biotech to get its products to market. CRISPR has a strong portfolio of treatments that will help millions of patients but all of them are still in the research and clinical phases.

But the company’s first treatment, exa-cel, is in the final stages, with CRISPR hoping to get FDA approval over the next 8-12 months. By the middle of 2024, the company could start realizing profits from this game-changing treatment for blood diseases. And the biotech has more than enough cash to fund operations until then.

So is CRISPR Therapeutics stock a buy?

What Does CRISPR Actually Do?

CRISPR Therapeutics AG (NASDAQ:CRSP) is a biotechnology firm that leverages Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR) and CRISPR-associated protein 9 (Cas9) gene-editing technology to develop treatments for various severe diseases.

It has been able to achieve remarkable growth by entering into multiple lucrative partnerships. These partnerships allowed CRISPR to take technology that was only discovered 10 years ago and deliver viable treatments for chronic diseases. The most important of these deals was a long-term collaboration with Vertex Pharmaceuticals.

Under an agreement that began in 2017 and was amended in 2021, Vertex agreed to take on the manufacturing and commercialization of exa-cel. Vertex agreed to assume 60% of the costs of exa-cel production in exchange for 60% of the profits. Vertex also agreed to pay CRISPR $900 million upfront with more to come if milestones are met.

That was just the first collaboration with Vertex. The two companies recently signed another deal to create a treatment for Type 1 Diabetes. Additional partnerships with Bayer, Viacyte, and others are the main reason that CRISPR has been able to achieve success in such a short time.

CRISPR Targets Lifelong Conditions

Exagamglogene autotemcel, or exa-cel, a product formerly known as CTX-001, is a treatment for Sickle Cell Disease (SCD) and transfusion-dependent beta-thalassemia (TBT). TBT and SCD are lifelong, inherited conditions that require frequent transfusions and can cause pain, hospitalization, and decreased life expectancy.

With over 300,000 SCD and 60,000 TBT births every year, exa-cel is a vital treatment for millions of patients. After stem cells are harvested from the patient, they are edited in a manufacturing location using CRISPR/Cas9 technology. Then the new cells are returned to the patient, where it’s hoped they will generate healthy cells going forward.

But blood diseases aren’t the company’s only focus. The biotech is using CRISPR/Cas9 technology to develop immuno-oncology treatments for cancer. In the past, scientists used a patient’s own cells to develop a treatment for that specific patient, which was time-consuming and ineffective.

CRISPR’s CTX110 and CTX130 treatments are derived from healthy donor cells and provide cancer and tumor therapies that are much more effective and quicker to develop. CTX110 is currently in phase 2 clinical trials, while CTX130 is in phase 1.

$100M Revenue Stream

The company’s collaboration revenue of $100 million in the first quarter of 2023 was due to a payment from Vertex. CRISPR had negligible revenue in the same quarter of 2022. The company reduced R&D expenses from $119.2 million in 2022 to $99.8 million in the first quarter by bringing more research functions in-house.

G&A expenses also dropped from $28 million in 2022 to $22.4 million. Collaboration expenses did increase year-over-year, from $30.6 million in 2022 to $42.2 million in the first quarter. This was due to the increased production and commercialization costs from the exa-cel program.

As a result of the reduced expenses and increased collaboration revenue, the company’s net loss was reduced from $179.2 million in 2022 to $53.1 million in the first quarter. Because the company isn’t profitable, it’s important that CRSP has nearly $1.9 billion in cash on hand to fund operations until revenues from exa-cel come in.

That cash on hand increased $21.1 million from the same quarter in 2022, largely due to the deal with Vertex.

Analysts’ Ratings for CRISPR

The majority of analysts believe that CRISPR stock is a buy. Out of 31 analysts, only 2 analysts consider the stock a sell. 16 analysts still consider CRSP a buy, with the highest forecast predicting shares will reach $220 over the next 12 months. That would be a 281% increase over where the stock trades today.

But the consensus has CRSP shares reaching around $74 over the next year, which is still around a 30% gain on top of the 40% rise the stock has had this year.

The most bearish forecast has CRISPR shares dropping to $42 over the next 12 months.

Is CRISPR Stock a Buy?

CRISPR Therapeutics is a biotech that uses groundbreaking gene-editing technology to create treatments for multiple diseases. The company’s lucrative partnerships have funded operations and provided enough cash to fund CRISPR’s operations until its first treatment hits the market next year.

Given the company’s disruptive product, it’s easy to understand why most analysts are bullish on CRSP. Exa-cel will have a near monopoly on treatment for SCD and TBT and with other treatments in the pipeline, there doesn’t appear to be anything standing in CRSP’s way.

While the stock is trading off its all-time and 52-week highs, now is a great time to take a position in a company that’s poised to bring revolutionary technology to market.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.