Struggling Biotech Company Receives Positive Development: Is Now the Moment to Invest?
What's the deal with CRISPR Therapeutics (CRSP -2.56%) lately? The company's shares have been on a downward trend for nearly three years now, despite scoring significant regulatory victories since late 2023. Despite these wins, the biotech's stock has dropped by 23% this year.
Could CRISPR Therapeutics make a comeback? Recent developments may give the gene-editing expert a boost down the line. Let's delve into what these developments are and their implications for investors.
Widened reach for CRISPR Therapeutics' top product
Since November 2023, CRISPR Therapeutics has scored approvals for its gene-editing medication, Casgevy, in various countries and regions. These include the U.S., the U.K., the European Union, Saudi Arabia, and Bahrain.
Casgevy, developed in collaboration with Vertex Pharmaceuticals, targets sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT). Both are rare blood disorders with limited treatment options. Gene-editing techniques enabled researchers to create one-time cures for them, and that's the essence of Casgevy.
However, gene-editing medicines have a notable drawback. Due to the complexities in manufacturing and administering these products, they tend to be quite expensive. The process involves obtaining a patient's cells, manufacturing the treatment using them, and then reintroducing the treatment into the patient.
Casgevy costs $2.2 million in the U.S. CRISPR Therapeutics and Vertex estimate a potential US and European market of 35,000 patients. However, the high cost may limit access to many patients. With insurance only covering a limited number of individuals at these prices, affordability remains a concern.
Fortunately, CRISPR Therapeutics received some good news from the U.S. government: The Biden administration announced plans to assist Medicaid patients in affording the medicine. Since Medicaid is a program for people with limited income, affordability would have been challenging without this assistance. This program will tie payment to the therapy's efficacy, which should launch next year.
About 100,000 people in the U.S. have SCD. According to some estimates, half to two-thirds of them are on Medicaid. Although not all will be eligible for Casgevy, many certainly will. Consequently, this program will significantly expand Casgevy's availability.
Beyond Casgevy
In the first nine months of the year, CRISPR Therapeutics reported revenue of around $1.6 million. For a company valued at more than $4 billion, this is hardly significant. Moreover, this revenue did not stem from Casgevy sales, indicating slow adoption.
It may take some time before Casgevy starts making a substantial impact on CRISPR Therapeutics' financials, but the Biden administration's initiative will undoubtedly help, at least in the U.S.
This new coverage may also facilitate CRISPR Therapeutics' approval process for other gene-editing medications. The biotech is working on several initiatives, including a couple of cancer therapy investigational treatments and a potential functional cure for type 1 diabetes.
As CRISPR Therapeutics sets up a network of qualified treatment centers to administer Casgevy and garners support from third-party payers, the launch process should be easier and quicker for the company when it comes to future gene-editing medications.
Should investors consider CRISPR Therapeutics stock as a buy?
CRISPR Therapeutics' potential with Casgevy is substantial. In addition to the 35,000 US and European patients, the company and its partner, Vertex Pharmaceuticals, estimate a potential US market of about 23,000 in Saudi Arabia and Bahrain.
Vertex and CRISPR Therapeutics face competition in the US, with Bluebird Bio offering competing treatments for SCD and TDT. However, Vertex and CRISPR Therapeutics have more funding, and Bluebird's Lyfgenia, which treats SCD, costs $3.1 million in the US, with a warning for blood cancer.
Vertex and CRISPR Therapeutics have minimal competition in Europe and especially in the Middle East. This bodes well for Casgevy, which is eyeing a multibillion-dollar revenue opportunity before considering potential label expansions.
According to some analysts, Casgevy's peak annual sales could surpass $2.2 billion. CRISPR Therapeutics gets 40% of the profits from the medicine, as per its agreement with Vertex. However, the revenue from its first product will help fund the development of other potential breakthrough CRISPR-based gene-editing medicines in its pipeline.
CRISPR Therapeutics' development of Casgevy validated its gene-editing platform. The company's innovative approach should yield more solid clinical and regulatory wins within the next five years.
In conclusion, based on my perspective, this biotech stock is worth considering if investors are playing the long game.
With the U.S. government's plan to assist Medicaid patients in affording Casgevy, investments in CRISPR Therapeutics could potentially benefit from an expansion in the availability of their gene-editing medication. Furthermore, CRISPR Therapeutics' ongoing work on other gene-editing treatments, such as cancer therapy investigational treatments and a potential functional cure for type 1 diabetes, could see smoother approval processes due to their established network of qualified treatment centers and support from third-party payers.
