Crispr Therapeutics is facing its make-or-break moment as experts point to a pivotal decision in December that they say could spark the beleaguered CRSP stock and the broader biotech industry.
In three months' time, the Food and Drug Administration will decide whether to approve exa-cel, a gene-edited drug Crispr developed in partnership with Vertex Pharmaceuticals. If approved, it could offer a permanent solution for patients with severe sickle cell disease.
Exa-cel would also be the first-ever drug approved using a gene-editing technology known as CRISPR, from where the company gets its name. An approval could raise a number of boats in biotech. After running up through much of the Covid pandemic, biotech stocks have generally trended down since early 2021.
But a biotech spike isn't guaranteed, says Cody Powers, who leads the portfolio and business development practice for consulting firm ZS. And there are no promises for CRSP stock.
"I think both industry and investors have been looking to peg strong science to meaningful market index moves in aggregate, but this has been challenged for the last year and a half," Powers told Investor's Business Daily in an email. But big approvals in recent history haven't provided "the halo effect industry-wide, per se," he said.
CRSP Stock: Research At Super Speed
The CRISPR field is relatively young.
Jennifer Doudna and Emmanuelle Charpentier, who won the Nobel Prize in Chemistry in 2020, are credited with discovering a key component of the system in 2011. The so-called "molecular scissors" allow for cuts in a DNA's double helix. Researchers can then insert, change or remove problematic elements of the genetic code. After that, the DNA sews itself back up.
Roughly a decade later, the FDA is already reviewing the first product based on that technology. Crispr and Vertex have asked the agency to approve their gene-edited drug in patients with sickle cell disease and beta thalassemia. Both are inherited conditions that impact how the blood carries hemoglobin. Exa-cel could provide a permanent means of helping their bodies produce high levels of fetal hemoglobin.
The data are promising so far. Beta thalassemia patients haven't needed as many — or any — of the blood transfusions that previously kept them alive. Sickle cell patients have experienced marked decreases in the painful episodes known as vaso-occlusive crises, or VOCs, that used to plague their lives.
The FDA will decide whether to approve exa-cel for sickle cell patients in December. The agency will make a decision for beta thalassemia patients in March. Crispr Chief Executive Sam Kulkarni says the company is excited about the upcoming milestones.
"It will signal the power of the CRISPR platform and how it was relatively fast in terms of getting to a commercial product," he told IBD in reference to the potential for the first-ever approved CRISPR drug. "From the initial discovery to getting something to a product usually takes 20 years. Here we are within 10 years of elucidation of the technology — from its original discovery — we're on the cusp of getting something approved."
Biotech Stocks Under Pressure
Despite promising test results and the FDA's acceptance of Crispr and Vertex's application for approval, CRSP stock has tumbled this year. After hitting a high point at 72 in late May, shares have fallen by more than 36% as of late September.
That means CRSP stock has underperformed its peer group. Broadly, biotech stocks have fallen 12% over the same time period. Vertex stock, on the other hand, has climbed almost 6%. But Vertex has a myriad of products already approved, whereas this would be the first for Crispr.
Citeline analyst Daniel Chancellor says Wall Street expects the FDA to approve exa-cel. Citeline is a research firm that focuses on pharmaceutical and medtech markets. Chancellor doesn't foresee any major change in biotech stocks' valuations in the wake of the FDA's action.
"If approved, there will be closer attention on market access and commercial uptake, which will help validate revenue forecasts for similarly complex therapies," he said in an email to IBD.
Similarly, RBC Capital Markets analyst Luca Issi says it's difficult to estimate the commercial opportunity for exa-cel
"Overall, we think approval is likely given an uncontroversial clinical profile and having maintained the same (contract development and manufacturing organization) throughout clinical development mitigates (chemistry, manufacturing and controls) risks," Issi said in an August report to clients.
But he kept his sector perform rating and 55 price target on CRSP stock.
Commercial Opportunity Questioned
Part of the challenge for gene-edited drugs like exa-cel is that patients' bodies must first be "conditioned" to accept the treatment. This involves undergoing treatment with busulfan. Busulfan, which is often used before bone marrow transplants, can lead to infertility and carries other side effects.
Crispr CEO Kulkarni says it's hard to predict how many patients will seek the gene-edited drug. For many patients, exa-cel offers hope for a cure.
"That's why we think people are underestimating what this launch is going to be," he said. "There are patients living with this pain day in and day out, living with VOCs and the chance of death at any point."
Crispr also is working on a next-generation conditioning regimen that could be "gentler" and expand exa-cel to patients with less severe forms of sickle cell disease and beta thalassemia, he said. That shift could help other CRISPR-based gene-editing efforts in the pipeline.
Investors in CRSP stock are also watching the company's efforts in cancer treatments. Crispr is testing an updated approach to CAR-T. Traditionally, making CAR-T treatments involves removing a patient's immune cells, teaching them to find specific targets on cancer cells and then re-infusing them into patients.
Instead, the company is testing CAR-T drugs that use donor cells, a process known as allogeneic.
"These next-generation assets include edits to further enhance the persistence and health of the T cells in the tumor microenvironment," Needham analyst Gil Blum said in an August report. He kept his buy rating and 88 price target on CRSP stock.
Citeline's Chancellor notes sales of traditional CAR-T drugs are "beginning to ramp up nicely," which could be telling for next-generation allogeneic efforts.
Next Up For CRSP Stock
Today, CRSP stock has a low Relative Strength Rating of 28 out of a best-possible 99, according to IBD Digital. This puts the stock's performance over the past 12 months in the bottom quarter of all stocks. Three months ago, the RS Rating was higher at 79.
But Kulkarni says there are numerous catalysts in front of the company. Crispr also is working on other targets in heart disease, oncology and type 1 diabetes.
"There are big dreams to say, 'Let's attack these indications and diseases in a very different way than what pharma has been doing the last 30 years,' " Kulkarni said. "We have a platform that's very scalable and expandable, and I foresee in five years we may have 20 to 30 different programs in the clinic."
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
