Introduction
I assigned Crispr Therapeutics (NASDAQ:CRSP) a hold rating in my debut review of the firm. At the time, I thought Crispr Therapeutics’ development did not justify the valuation of the business. Furthermore, the company’s prospects for the future seemed too uncertain. Nevertheless, I gave the company a cautious buy rating. Faster than anticipated progress and drastically reduced valuation multiples were why I gave this assessment.
I thought that despite the uncertainties and risks, the rapid development and low valuation multiples called for a cautious buy recommendation. Since my last analysis, Crispr Therapeutics’ valuation has grown dramatically, but I still think it’s a good investment given its sustained success in commercializing its Crispr Cas-9 technology.
The main criterion to watch a firm is how well it is doing in moving toward an opportunistic future. Crispr Therapeutics has been displaying exactly the outcomes I think are most important. As a result, despite higher valuation risks, I still think Crispr Therapeutics is a buy.
Progress
Pre-revenue company Crispr Therapeutics exists. The potential possibility of employing the new technology dubbed CRISPR CAS-9, a tool for genetic editing, to treat diseases previously thought to be incurable is driving the company’s optimism. The most crucial aspect to consider when evaluating Crispr Therapeutics is how well the company is doing in getting its drugs licensed.
CTX001
The treatment for sickle cell disease and beta-thalassemia, CTX001, is on track to be approved globally by the end of 2022, as the management team has consistently advised. Additionally, with approval, CTX001 may be able to permanently treat sickle cell disease and beta-thalassemia, thus expanding its market.
A global regulatory submission for CTX001, which is believed to present the company with enormous potential, is already anticipated by the company after research that lasted around 37.2 months. The CDC estimates that over 100,000 Americans have sickle cell disease, with a mortality rate of up to 68% for infants aged 0 to 4 years. Sixty thousand people worldwide are affected by beta-thalassemia each year. The possibility for Crispr Therapeutics is enormous, given that CTX001 is expected to cost up to $2 million.
CTX130
Crispr Therapeutics’ CTX130 program has seen the most development since my previous post. To treat solid tumors and hematologic malignancies, CTX130 is a program that intends to target CD70. According to the findings of the most recent research conducted by the business, CTX130 had a clinical benefit rate of 90% among patients, a response rate of 70% overall, and a response rate of 30% for complete responses. Additionally, no severe adverse responses or DLTs were observed in any patients. The Crispr Cas-9 technology is still demonstrating its effectiveness and efficiency through application by Crispr Therapeutics.
Massive opportunities are also present with CTX130. In the United States, a diagnosis of one hematologic malignancy—leukemia, lymphoma, or myeloma—occurs every three minutes. Around 186,000 people are diagnosed with this illness yearly, and 56,000 Americans pass away. Therefore, CTX130 presents enormous prospects for Crispr Therapeutics and a large number of patients.
Crispr Therapeutic’s conviction that modified cell therapy may be the future of cancer treatment was reinforced by the preliminary findings from the trial one testing of CTX130. This claim is supported by the high efficacy, safety, and quick development times. In light of this, I think the business is poised to seize the enormous future market.
CTX120
The cancellation of the CTX120 program has only marred the company’s progress due to the high bar set by the approval of Legend’s CAR-T CARVIKTi and Johnson & Johnson’s (JNJ) CAR-T CARVIKTi, both of which target multiple myeloma as CTX120 does.
I don’t think the cancellation of CTX120 poses a sizable risk for stockholders because of the company’s pre-revenue status and the ongoing development and promise of the current programs. Since the revenue recognition for CTX120 would have happened years later, Crispr Therapeutics’ current new pipelines, including CTX110 and in-vivo initiatives, can replace CTX120. The business can devote more resources and time to developing its current pipelines.
Overall, Crispr Therapeutics has demonstrated that cutting-edge gene editing technology may one day allow for treating previously impossible diseases, prohibitively expensive or too risky to treat.
Evaluation Peril
Crispr Therapeutics is making great strides in science, but the business is still in the pre-revenue stage and doesn’t anticipate starting producing money until 2023 or even 2024. Crispr has not even considered profitability as of yet. As a result, investing in the company entails substantial risks, particularly when the Federal Reserve is actively hiking interest rates. Crispr Therapeutic’s stock price has increased—at the time of writing—by over 46%, resulting in a market capitalization of roughly $5.9 billion, raising questions about the value.
However, considering the size of Crispr Therapeutics’s potential over the next ten years, I think the risk may be justified. Valuation is indeed a significant risk factor for a pre-revenue firm. In the upcoming years, hundreds of thousands of people with diseases formerly thought to be incurable may be able to receive treatment, possibly allowing Crispr Therapeutics to dominate the quickly expanding genome editing business.
In my opinion, the significant, sustained progress towards Crispr Therapeutics’ future significantly overcomes the current price volatility for investors looking for fruition in the many years. Due to the company’s rapid development and success, the current higher valuation is justified.
Conclusion
With Crispr Cas-9 technology, Crispr Therapeutics is at the forefront of introducing genome editing to hundreds of thousands of patients globally. As a result, I think that given the present pace of development and the promises made, Crispr Therapeutics’ possibilities well outweigh the volatility and price risks associated with the firm’s stock. As a result, I still consider buying Crispr Therapeutics with caution.
Featured Image: Megapixl © Ipopba
