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Introduction
CRISPR Therapeutics AG (NASDAQ:CRSP) (“Crispr”) is an interesting company. Although still in the pre-revenue stage with no clear future, the company garners a massive valuation of about $4.9 billion. The reasoning behind this is due to the potentially revolutionary technology Crispr Therapeutics is attempting to yield: Crispr Cas-9. With this gene editing tool, the company aims to cure diseases like sickle cell disease that were once believed to be incurable. As such, and as I have mentioned in my previous article, Crispr Therapeutics’ valuation and stock price are heavily reliant on the progress the company is making towards getting approval for its products.
Today, after the 2022Q2 earnings report and BioPharm conference, I am maintaining my buy rating despite macroeconomic pressures leading to a negative view toward more risky assets. The company’s plans to submit regulatory filing of CTX001 are on track with an announcement regarding the matter coming in the next few weeks with other products following suit. Further, the company’s vision and the power of Crispr Cas-9’s potential are difficult to ignore. Therefore, with less than 4 months left before the regulatory filing of CTX001, I am maintaining my buy rating on Crispr Therapeutics.
Progress
The biggest near-term catalyst for Crispr Therapeutics is the expected regulatory filing of CTX001, which targets sickle cell disease and B-thalassemia. According to the company’s 2022Q2 earnings report, the company has completed the regulatory discussions in Europe while discussions are ongoing in the U.S. Then, at the BioPharm conference held on September 7th, Crispr Therapeutics announced that the company will be releasing a statement regarding U.S. filing discussions within the coming weeks before its planned regulatory filing by the end of 2022, which is less than 4 months from today.
Apart from the progress of CTX001 filing, Crispr Therapeutics’ other products have progressed meaningfully as well, with an expected 6 different data points to be released throughout 2023. CTX110 is currently at an enrolling status with an expected data point release later in 2022 and VCTX211 will start the clinical trial process in 2022.
I believe the above progress is a testament to the strong execution the management team is making. Crispr Therapeutics is not only nearing its first regulatory filing, but the company’s various other ambitious products are also showing continued promising progress and results.
Additional Color
Finally, during the biopharma conference, Crispr Therapeutics’ management team hinted at the potential future pricing structure. According to the conference, the Thalassemia treatment pricing of up to $5 million was a pharmacoeconomic value generator, with sickle cell disease treatment expected to be higher than this number. Considering an external estimate that came in at about $2 million for CTX001, there may be a chance that investors are undervaluing not only CTX001 but the entire Crispr Cas-9-based products. In regard to this matter, Vertex Pharmaceuticals (VRTX) purchased an additional 10% of CTX001 for a $900 million upfront payment and $200 million for regulatory filing valuing the CTX001 product alone at about $11 billion, which is greater than Crispr Therapeutics’ entire valuation. Therefore, given the new data regarding the pharmacoeconomics of Thalassemia, I believe Crispr Therapeutics is sitting on an even bigger opportunity than what investors are valuing today.
Vision
Crispr Therapeutics’ vision goes far beyond CTX001, the company, upon proving its concept through CTX001 or a single ex-vivo product, will start to diversify into broader ex-vivo products including CTX110 and CTX130. Further, Crispr Therapeutics, with its ongoing VCTX211 and CTX310, will venture into more lucrative regenerative and in-vivo platforms.
Crispr Therapeutics is pioneering in a new market, genome editing, that is expected to grow at an exponential speed. According to Bloomberg, the Crispr genome editing market is expected to grow at 29.5% CAGR through 2028. As such, given that the grand vision and opportunity start with the success of CTX001, I believe more risk-tolerant investors agreeing with genome editing future and Crispr Therapeutics’ progress and vision should consider a long-term position in the company.
Macroeconomic Sentiment
The macroeconomic sentiment is almost worsening by the day. Foreign exchange headwinds, geopolitical threats, inflation, rate increases, and more are causing many investors to pull back on relatively risky investments including companies that are either exposed to these risks or are not profitable. While in a traditional sense, this would make sense, I do not believe the negative macroeconomic sentiment applies to Crispr Therapeutics today.
First, the company does not have any revenue that may be impacted, and with about $2 billion in cash, the company will be able to weather the storm. Further, the product Crispr Therapeutics is attempting to offer is not a discretionary good. The demand for CTX001 will likely not be impacted by an economic contraction. Therefore, if the current macroeconomic headwinds affect Crispr Therapeutics’ stock price in a meaningful way, I believe investors should see it as an opportunity.
Final Thoughts
Until Crispr Therapeutics can prove to the market that its products can be approved, uncertainties will always cloud over the company, making progress towards the company’s vision more important than any other factors. With regulatory filing updates coming in weeks and filing to proceed within 2022, I believe the execution and catalysts are strong in both the near term and the long term. Crispr’s vision of showing proof of concept with an ex-vivo product before diversifying and ultimately moving into regenerative and in-vivo is so far on track. Therefore, given the potential Crispr Therapeutics holds, I believe speculative investors should add Crispr today before the company completes filing for CTX001.
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