2023-07-25 05:06:26 ET
Summary
- CRISPR Therapeutics, leading in gene-editing technology, progresses with exa-cel for treating beta-thalassemia, severe sickle cell disease, and type 1 diabetes.
- Despite considerable volatility and risk, CRSP shows a robust cash position and revenue growth, with revenues forecasted to increase substantially over the next few years.
- CRISPR Therapeutics is speculative, despite likely regulatory approval. CRISPR is rated as "Hold" due to uncertainties in utilization.
Company Overview
CRISPR Therapeutics ( CRSP ) is a gene-editing company dedicated to developing CRISPR/Cas9-based therapeutics. Utilizing technology co-invented by one of their scientific founders, Dr. Emmanuelle Charpentier, they aim to precisely modify genes to treat genetically defined diseases and engineer advanced cellular therapies. They're pursuing treatments for conditions like beta thalassemia, severe sickle cell disease, and type 1 diabetes. Their lead product candidate, exagamglogene autotemcel (exa-cel), a gene-edited hematopoietic stem cell therapy, aims to reduce transfusion requirements and debilitating crises for patients. They have submitted applications for authorization with EMA, MHRA, and are in the process with FDA.
This article explores CRISPR Therapeutics' operations, focusing on their groundbreaking gene-editing technology, financials, stock performance, major challenges, and potential growth opportunities.
Financial Performance
As of Q1 2023 , CRISPR Therapeutics' cash position stands at $1.88 billion, up by $21.1 million primarily due to an upfront payment from Vertex ( VRTX ). The total collaboration revenue for the quarter was $100.0 million, mainly attributed to the payment from Vertex. R&D expenses dropped to $99.9 million from $118.2 million in Q1 2022 due to reduced external research and manufacturing costs. G&A expenses also decreased to $22.4 million from $28.0 million in Q1 2022 because of lower professional costs. Collaboration expense rose to $42.2 million, mainly driven by manufacturing and pre-commercial costs related to the exa-cel program. Net loss for Q1 2023 was $53.1 million, a significant decrease from a $179.2 million loss in Q1 2022.
Stock Assessment
Per Seeking Alpha data, CRSP has been showing considerable volatility. Their earnings per share [EPS] are predicted to improve by 27.17% in 2023 but decline by 10.64% in 2024, before bouncing back by 47.76% in 2025. Revenues are forecasted to skyrocket by over 17,000% in 2023, followed by increases of 22.36% and 156.62% in subsequent years.
Their financial indicators, however, show mixed results. In terms of profitability, their return on equity stands at -25.56% and return on assets is -14.47%. The valuation metrics are challenging to gauge due to the non-applicability [NM] of P/E ratios, but their EV/Sales [TTM] is quite high at 31.87, indicating potential overvaluation.
Regarding momentum, CRSP has seen positive growth over the last three, six, and nine months, but has experienced a decrease of 30.63% over the past year, underperforming the S&P 500 in the same period.
Finally, CRISPR Therapeutics' market capitalization is $4.84 billion, with $240.27 million in total debt and $1.88 billion in cash, resulting in an enterprise value of $3.20 billion. The overall assessment indicates some risk, but with promising future growth prospects.
Exa-cel: Mechanism of Action & Regulatory Recognitions
Exagamglogene autotemcel (exa-cel), which was formerly identified as CTX001, is a gene therapy undergoing trials and it utilizes the CRISPR/Cas9 gene-editing technique. This treatment functions by modifying a patient's own hematopoietic stem cells in order to produce significant amounts of fetal hemoglobin (HbF) in their red blood cells. HbF, naturally produced during fetal growth, is replaced with adult hemoglobin following birth. The goal of this treatment is to increase HbF levels, potentially reducing the need for blood transfusions in patients with transfusion-dependent thalassemia (TDT) and decreasing the number of painful episodes in severe sickle cell disease [SCD] patients.
Initial trial results have shown promise, leading to multiple recognitions from various regulatory bodies. The US Food and Drug Administration (FDA) has given exa-cel several designations, including Regenerative Medicine Advanced Therapy (RMAT), Fast Track, Orphan Drug, and Rare Pediatric Disease. The European Commission and the European Medicines Agency [EMA] also recognized it, granting Orphan Drug Designation and Priority Medicines (PRIME) designation respectively. Meanwhile, in the UK, the MHRA has given it an Innovation Passport.
Exa-cel: Market Opportunity & Challenges
Exa-cel, targeting both transfusion-dependent thalassemia (TDT) and severe sickle cell disease ((SCD)), presents a significant market opportunity as these are severe and debilitating genetic diseases with limited effective treatment options. TDT requires lifelong blood transfusions, and SCD often results in painful crises and other severe complications.
The World Health Organization estimates that each year, approximately 300,000-500,000 babies are born with severe forms of hemoglobin disorders, including TDT and SCD. The chronic nature of these conditions, the high healthcare costs associated with their management, and the potential of CRISPR-based therapy to provide a cure or significantly alter disease progression, all contribute to the sizeable market opportunity.
However, competition exists. Several other gene therapy and gene editing companies are working on treatments for these diseases. For example, bluebird bio's ( BLUE ) gene therapy Zynteglo has been approved in the EU and US for TDT, and they're also developing LentiGlobin for SCD. Other competitors in the space include Sangamo Therapeutics ( SGMO ), which is developing a zinc-finger nuclease-based approach, and Editas Medicine ( EDIT ), which also uses a CRISPR-based technology. The competitive landscape is complex and rapidly evolving, but the critical unmet need in these diseases presents a substantial opportunity for multiple successful therapies.
Pipeline Developments
CRISPR Therapeutics is also advancing multiple developments in immuno-oncology and regenerative medicine.
In immuno-oncology, they are conducting a Phase 2 clinical trial for CTX110, a CAR T therapy targeting CD19+ B-cell malignancies. They are also testing CTX130, another CAR T therapy targeting CD70, in a Phase 1 trial for relapsed or refractory T-cell malignancies. CTX130 was granted the RMAT designation by the FDA due to encouraging early results. The company has initiated clinical trials for CTX112 and CTX131, both CAR T cell candidates targeting CD19+ B-cell and CD70 respectively, incorporating additional edits to increase cell potency.
In regenerative medicine, they have partnered with Vertex and ViaCyte, Inc., working on therapeutic products for type 1 diabetes (T1D). CRISPR received $100 million from Vertex, with eligibility for additional research and development milestones and future product royalties.
Moreover, the company is progressing with its in vivo approaches for liver gene editing. They plan to move multiple programs to clinical trials within the next year, including their lead in vivo program, CTX310, targeting angiopoietin-related protein 3 (ANGPTL3).
My Analysis & Recommendation
In concluding, CRISPR Therapeutics is at the forefront of gene-editing technology, pioneering innovative treatments for diseases that have historically had limited therapeutic options. Its leading candidate, exa-cel, shows significant promise in the treatment of transfusion-dependent thalassemia and severe sickle cell disease, but faces stiff competition from other gene therapy companies.
Investors should closely monitor the progression of exa-cel through regulatory review, as successful approval would validate CRISPR's technology and open substantial market opportunities. The further development of their CAR T candidates and the exploration into regenerative medicine and in vivo gene editing also offer exciting growth prospects.
However, it is crucial to remember the challenges ahead. The path to regulatory approval is often long and unpredictable. Furthermore, the healthcare sector is characterized by fierce competition and rapid technological advances. Success hinges on not just scientific breakthroughs, but also the ability to navigate a complex regulatory landscape and effectively commercialize in a competitive market.
At its current valuation, and considering the risks, CRISPR Therapeutics could be viewed as a speculative investment. The high EV/Sales ratio suggests potential overvaluation, but if the company's treatments gain approval and reach commercial stage, the outlook could significantly improve.
Given these factors, I would recommend a 'Hold' position on CRISPR Therapeutics for now, especially for risk-tolerant investors interested in the gene-editing space. It will be crucial to stay tuned for upcoming data readouts and regulatory decisions that could dramatically impact the stock's trajectory. Remember, investing in biotech often requires a long-term view and patience as developments unfold.
For further details see:
Crispr Therapeutics: Awaiting Approval And Clarity For Market Prospects