CRSP - Vertex And Crispr: Second Casgevy Approval Pushes Revenue Potential Into Multi-Billion Dollar Range

2024-01-22 13:52:27 ET

Summary

• The FDA approved Casgevy, a CRISPR/Cas9 gene-edited therapy, for transfusion-dependent beta-thalassemia (TDT) in patients 12 years and older last week.
• The market has reacted negatively to the approval, causing a drop in stock prices for Vertex and Crispr Therapeutics, the drug's co-developers.
• Casgevy faces limitations such as a complex and expensive treatment process, safety concerns, and competition from other gene therapies.
• The market sold off CRSP and VRTX after Casgevy was initially approved to treat sickle cell disease back in December - it's taking a short-term view.
• There may be issues with Casgevy, but they're solvable, and this is a potentially multi-billion selling therapy, with a great opportunity to expand into a >100k patient market. It may be wise to take advantage of market skepticism today.

Investment Overview

After securing a historic first approval for a CRISPR/Cas9 gene-edited therapy to treat Sickle Cell Disease ("SCD") on Dec. 8, 2023, co-development partners Vertex Pharmaceuticals Incorporated ( VRTX ), the Boston-based pharma with the $10bn per annum revenue Cystic Fibrosis treatment franchise, and CRISPR Therapeutics AG ( CRSP ), the Swiss headquartered gene-editing specialist, were celebrating again last week as the FDA announced it also had approved Casgevy in a second indication - transfusion-dependent beta thalassemia ("TDT") in patients 12 years and older.

The approval of Casgevy - formerly known as exagamglogene autotemcel, or exa-cel for short - in TDT has come two months ahead of schedule. The FDA had set a Prescription Drug User Fee Act ("PDUFA") target action date of March 24, but having approved Casgevy in SCD, presumably the agency saw no need to delay the inevitable approval in TDT also, based on exceptionally compelling clinical data across both indications.

As I wrote in a Seeking Alpha note on the approval of exa-cel for SCD in December, despite the significance of the event - Casgevy has the potential to "functionally cure" SCD and TDT patients, relieving them from a lifetime of painful symptoms, such as vaso-occlusive crises , and helping them live fuller, healthier, and potentially longer lives, the market reacted negatively to the news, sending CRISPR stock down ~8%, and Vertex stock down by 1%....

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