2023-03-31 04:07:54 ET
Summary
- CTX001 has progressed enough to start discussing details regarding the launch of the program.
- Regulatory decisions, likely carrying an approval, will likely come in the coming quarters.
- Potential CTX001 is massive with attractive potential pricing and demand.
Introduction
2023 will likely be a turning point for Crispr Therapeutics ( CRSP ) as the company is awaiting US FDA, Food and Drug Administration, and EMA, European Medicines Agency, approval. With the current status and the outlook recently given by the management team, I believe the odds of a potential decision within a year are extremely high, and because of the outsized benefit, the approval of CTX001 can have in society along with the positive clinical trial data, I believe it will be likely for the program to receive an approval. Further, due to the extremely attractive risk-reward potential CTX001 has, I believe Crispr Therapeutics is a cautious buy.
Outlook
As a pre-revenue company awaiting FDA and EMA approval, investors should follow the progress of the CTX001 approval process as it is likely the most important metric for Crispr Therapeutics today, and in the healthcare conference held in early March, Crispr gave a clearer outlook regarding the progress. Although the company's management team carefully avoided guiding specific dates the CTX001 might see approval, the conversation surrounding the company's view on global launch gave valuable insight.
First, as expected, the company said that after "rolling submission in the U.S. in November last year" started, they are expected to do the remaining "process [in] this quarter" confirming that the company is on track. Considering that FDA takes, on average, about 8 months to make a decision for priority candidates, the confirmation of finishing the rolling submission, in my opinion, is monumental as Crispr may see a decision in late 2023 or early 2024.
Further, the company discussed topics surrounding the launch of CTX001. Crispr Therapeutics has said that patients "who raise their hands to come into the process" will get priority treatment as a "fair number of [the] sites" that can administer a CTX001 therapy will be "fully ready from Day 1." This comment comes after the company acknowledged that there are about 75 sites in the US and Europe that can administer CTX001, and while most sites will be gradually on board, only a fair number will be available on Day 1. Regarding demand, the company said that "based on the level of interest and inquiry around [the] clinical trials, there is a lot more demand than people anticipate."
(There are more than 75 sites that can administer the program, but the company sees this number as optimal.)
These comments showed significant progression since my last article in September 2022 where I said that Crispr Therapeutics is a buy as the company is nearing regulatory filing. Not only did the company start the filing in the US and finished filing in Europe, but the CTX001 program has progressed enough for the company to be discussing topics surrounding the launch of the program. I believe this is proof that Crispr Therapeutics has confidence for the launch to happen in the near future.
Odds of Approval
Beyond the progress the company has made so far, I view the odds of approval of the program to be high. CTX001 showed promising results in its clinical trials and there is a multitude of patients desperately in need of a cure for sickle cell disease and beta-thalassemia.
Going back to the healthcare conference that I referred to earlier, the management team said that "there is no options for [the] patients with sickle cell disease or transfusion-dependent thalassemia" showing the unmet demand and the importance of CTX001 to the patients and the society, which is backed by positive CTX001 clinical trial results.
Looking at clinical trials, COO Lawrence Klein said that "I think it's safe to say the results are spectacular" due to the consistency. Of 75 patients, she said that 73 could be identified as a functional cure seeing a "very, very significant clinical benefit."
As such, with such a dire need for CTX001 backed by promising clinical trial data, I believe the upcoming decision regarding the program will likely be positive.
Attractive Potential
The progression Crispr Therapeutics is making combined with the odds of approval of CTX001, in my opinion, creates a potential tailwind for the company. Moreover, due to the unmet demand for the program, the potential of CTX001 is expected to be monumental.
Vertex Pharmaceuticals ( VRTX ), Crispr's launch partner, said that there are "about 32,000 patients in the US and Europe with severe disease " and since these patients "require multiple hospitalizations annually for vaso-occlusive crises or are dependent on frequent blood transfusions," they form targeted patients for the program. In regards to the potential, because these hospitalizations are estimated to cost about $4 to $6 million over the lifetime in the US, the cost of the CTX001 program will likely be in the millions, especially as CTX001 is a one-time treatment for what was thought to be an incurable disease. Although the company did not give official guidance, if we assume that the price of CTX001 is between $2 to $4 million with about 10,000 to 16,000 patients receiving the program for the sake of argument, revenue estimation, roughly, could be between $20 billion to $64 billion. Obviously, the numbers could be far from the real estimation as it was put in place for the sake of argument and for clearer understanding, but with speculation of the program costing about $2 million since 2021 and the company directly acknowledging that there are about 32,000 targeted patients, I believe my estimation at least shows the potential of the CTX001 program. However, my estimation may be on the low side as the CEO Sam Kulkarn i in 2022 said that "in thalassemia, even price, up to $5 million" and "even more" for the sickle cell may be in line with price effectiveness based on the ICER data. Overall, with Crispr Therapeutic's market capitalization of about $3.5 billion today, the risk-reward potential continues to be attractive.
Balance Sheet
Beyond the possibilities that are present with Crispr Therapeutics, the company has a strong balance sheet to carry on its operations to reach the goal of launching CTX001 program. The company has $1.8 billion in cash and short-term investments while burning about $110 million in the previous quarter leaving ample room for the company to wait for CTX001 decisions. Further, as Crispr Therapeutics is not the only company seeing the potential in the company's pipeline, Crispr continues to announce collaborations and licensing agreements on its programs such as receiving $100 million upfront from Vertex Pharmaceuticals for future gene-edited hypo immune T1D products licensing agreement. Therefore, with ample cash considering the most recent burn rate and continued coloration and licensing agreements, I believe Crispr Therapeutics has enough time to wait for the decisions regarding CTX001.
Risk To Thesis
I believe there are two risks to my bullish thesis. FDA or EMA may take more than the estimated time frame to reach a decision, which could sour investment sentiment, but more importantly, FDA and/or EMA may not approve CTX001, which could be catastrophic for Crispr Therapeutics as the company is at a pre-revenue stage heavily relying on the success of the CTX001 for its future endeavors.
Summary
Crispr Therapeutics continues to progress toward the launch of the CTX001 program, and today, there is a likelihood of a decision coming in less than a year as the program is given priority. Further, with a dire need for CTX001 and the positive clinical trial results, it may be likely that the FDA and EMA give approval leading to the massive potential for Crispr Therapeutics that comes from the pricing and the demand for the program. Therefore, given the progress, the likelihood of approval and decision in coming quarters, and massive potential, I believe Crispr Therapeutics is a buy.
For further details see:
Buy Crispr Therapeutics On Approval Odds