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Crispr Therapeutics (NASDAQ: CRSP) is a fascinating growth stock that I’ve been watching for a few years now.
In early 2021 it soared to a ridiculous $200, despite the gene-editing biotech having no products or revenue at the time. Fast-forward to today though, I can pick up the stock for just $39.
Importantly, Crispr Therapeutics had its first treatment approved a year ago. Perhaps this is why Wall Street analysts currently have an $80 price target on the stock — 105% higher than the present level!
The lowdown
CRISPR–Cas9 gene editing is a revolutionary technology that allows scientists to precisely modify DNA in organisms to fix mutations and potentially cure diseases.
In late 2023, Crispr Therapeutics and its partner Vertex Pharmaceuticals had the world’s first such therapy approved to treat sickle cell disease and transfusion-dependent beta-thalassemia.
This once-and-done treatment is called Casgevy, and sales will be split 60-40 in favour of Vertex, which is doing most of the commercial heavy lifting.
Despite this historic milestone, the stock has since fallen by 40%. That’s because Casgevy involves the infusion of genetically modified stem cells taken from the patient, and this takes time.
However, some 40 patients had begun to have their cells collected by mid-October. And the two firms see an addressable market of 35,000 patients in Europe and the US, with a further 23,000 in Saudi Arabia and Bahrain.
At a cost of about $2.2m per patient, with a recent plan announced to help US patients on Medicaid afford it, there’s significant revenue growth potential over the next few years.
Indeed, analysts forecast $1bn in revenue in 2027, up from basically nothing today. For context, the company’s market cap is currently a modest $3.5bn.
Risks to consider
Of course, there’s no guarantee that Wall Street targets come to fruition. If the innovative biotech suffers a setback in one of its ongoing clinical trials, the stock could fall sharply, along with brokers’ price targets.
Remember, gene-editing is truly revolutionary because it allows the alteration of the fundamental building blocks of life. Beyond eradicating diseases, it offers the potential to influence traits or even create entirely new organisms.
As Jennifer Doudna, the Nobel Prize-winning co-developer of this technology, wrote: “The power to control our species’ genetic future is awesome and terrifying. Deciding how to handle it may be the biggest challenge we have ever faced.”
Back in 2018, a rogue Chinese scientist used this technology to create the world’s first genetically edited babies that were, he claimed, immune to HIV. Crispr stock dropped around 40% after this bombshell. Something similar could happen again.
Finally, the company is expected to plough all available resources into progressing its pipeline. Therefore, the business is in no way optimised for profits yet. Investing in a loss-making firm obviously adds risk.
I’m bullish
What I like here, though, is the firm’s cash position of $1.9bn in September. That’s a big cushion, especially if Casgevy revenue starts coming in every quarter. It should be enough to fund the drugmaker’s existing pipeline for several years.
Speaking of which, this includes two cancer treatments and a potential functional cure for type 1 diabetes. That could be a big deal one day.
I’m considering buying a few shares later this month.
