CRISPR Therapeutics AG (NASDAQ: CRSP) is a leader in gene editing technology. The company is working on cures for serious diseases using its proprietary gene-editing technology. Its technology allows for targeted changes to DNA.
Recent Stock Performance
CRSP stock closed trading 8.84% higher on December 19, 2023 and is up 63% YTD. Market analysts predict the stock will continue rising. The prediction is based on a recent FDA approval for treating sickle cell diseases using gene therapy.
Why Is CRSP Stock Not Rising
For a biotech firm, a major announcement often means the stock shoots up. However, that has not happened with CRSP. One reason for this is the profit-sharing arrangement it has in place with Vertex.
According to the agreement, Vertex will pay $200 million to CRISPR as a milestone payment. Additionally, they will retain all revenue and related costs for Casgevy, the gene-based sickle cell treatment.
However, it will only pay 60% for all further research expenses. That means CRISP will have to pick up 40% of the tab, which will be included in the costs of goods sold expenses that Vertex pays. Consequently, the full launch of the drug will not benefit CRISPR much.
Based on this agreement signed with Vertex, Wall Street analysts estimate that CRISPR will not be profitable for the next two years. As a result, some investors have offloaded their stock, causing the price to slump.
Why CRISPR Has a Buy Rating
Despite the recent dismal performance of the stock, stock analysts rate CRISP a buy. One major reason is that it has gotten the regulator’s vote of confidence. While the regulators could have attached caveats to their approval, there were none.
Another reason why the stock has a buy rating is that CRISP is expanding its gene therapy treatment into other illnesses. Currently, they are only approved for sickle cell disease, which has about 32,000 potential patients in Europe and the US.
However, analysts estimate that the company’s unique treatment could be applied to up to 450,000 patients. CRISPR Therapeutics sees potential in treating autoimmune diseases using its unique gene-editing technique. It plans to launch a trial for lupus in early 2024.
The third reason is the upcoming product sales. Casgevy, their first approved product, is currently priced at $2 million per treatment. CRISPR will have to negotiate with insurers regarding payments. However, as product sales begin rolling out, it will undoubtedly reflect positively on their earnings reports, which could push stocks higher.
Should You Invest In CRSP
CRISPR has the potential to be a game-changer in the medical field. It marks the first that gene editing technology has received approval for mass use. Additionally, the company is still working on other treatments using its unique therapy. If they manage to get approval for more treatments, it could turn things around for the stock price.
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