CRISPR Therapeutics is a buy for Cathie Wood!
CRISPR Therapeutics is a favourite of star stock buyer Cathie Wood. It’s up 27% over the past month. Will this strength last and should I be adding it to my portfolio?
CRISPR Therapeutics (NASDAQ:CRSP) is a Swiss–American biotechnology company headquartered in Zug that uses gene therapy to correct genetic mutations to treat and cure diseases. CRISPR refers to the technology used by the firm, which itself is an acronym for “clustered regularly interspaced short palindromic repeats”. It’s considered more efficient than other gene altering technologies.
The stock is down a whopping 45% over the past 12 months. But that’s not entirely surprising. Speculative growth stocks like CRISPR Therapeutics aren’t exactly in vogue. Moreover, government and regulators around the world are being particularly cautious when it comes to gene therapy treatments.
However, there’s plenty of reason to be optimistic about CRISPR Therapeutics’ future. And clearly Cathie Wood thinks the same. The star stock picker, and CEO of Ark Invest (NYSEMKT:ARKK), has repeatedly bought CRISPR Therapeutics stock for the Ark portfolio over the past fortnight. And that might be the reason why this stock has outperformed the NASDAQ over the past month. The index is down 6.4% over the past 30 days. Meanwhile, CRISPR Therapeutics has soared, up 27.7%.
Financials and balance sheet
CRISPR Therapeutics annual revenue for 2021 was $915m, a 127154.94% increase from 2020. This substantial rise year-over-year is primarily due to collaboration revenues from Vertex Pharmaceuticals (NASDAQ:VRTX).
The vast majority of this revenue came in Q2 and in relation to the development of CTX001 — an investigational ex-vivo CRISPR gene-edited therapy for treating sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). Vertex made a $900 million upfront payment to CRISPR Therapeutics in June 2021 after amending their arrangement over CTX001. In Q4, CRSPR Therapeutics received $12.3 million from Vertex after the firm reached a research milestone in the Myotonic Dystrophy Type 1 (DM1) programme.
CRISPR Therapeutics is solely dependent on Vertex Pharmaceuticals for collaboration revenues. The rise in revenue was reflected by a turnaround in profitability. The firm reported gross profits of $476m in 2021, up from a loss of $266m in 2020.
Operating expense have increased year-on-year, reaching $102m in 2021. Research and development costs rose from $257m in 2020 to $420m in 2021. Expense have increased amid a steady expansion programme. The company’s headcount has increased and so have development costs, including those for advancing the hemoglobinopathies and immuno-oncology programmes.
Basic earnings per share came in at $4.97 for the year ending December 2021, up from a loss of $5.29 the year before.
At the end of 2021, CRISPR Therapeutics had a very healthy balance sheet with around $2.4 billion in cash, equivalents and short-term investments. Meanwhile, total debt only amounted to a manageable $225m. Total employees numbered 473, up from 410 at the end of 2020.
Pipeline
The firm’s burn rate doesn’t appear to be anything to worry about, and it looks like this biotech should be able to get a few products off the ground and onto the market before the money runs out. CRISPR has three 100%-owned gene-editing therapies in clinical trials and is co-developing two other therapies with partners Vertex Pharmaceuticals and ViaCyte.
In its latest update (Q1, 2022), CRISPR Therapeutics said it anticipated submitting global regulatory filings for CTX001 in late 2022. The company successfully reached full enrolment for stage Phase 3 clinical trials of the gene-edited therapy for TDT and SCD. CRISPR Therapeutics and Vertex have also initiated two new Phase 3 studies of CTX001 in children and infants with TDT and SCD.
The firm is also trailing Immuno-Oncology programmes and expects to report back with trial results later in 2022. CRISPR Therapeutics also said that enrolment was ongoing for the Phase 1 clinical trial for its type one diabetes candidate. The evasive-cell replacement therapy is designed to enable patients to produce their own insulin.
Valuation
While the company didn’t generate traditional sales in 2021, it generated plenty of revenue. In fact, it has a price-to-sales ratio of 5.8 for the trailing 12 months versus an industry average of 4.1. Meanwhile, CRISPR Therapeutics actually has a price-to-earnings ratio of 18.4 versus an industry average of 25.2. It is unclear whether the company will generate a similar level of revenue this year. Q2 of 2021 was the only quarter in the last 18 months in which it generated more than $15 million in revenue. As such, we can see that revenue is unlikely to grow consistently until it has a product on the market.
Despite the volatility of the past month, shares in CRISPR Therapeutics have actually gained considerably. The stock is up 32% over the past 30 days and now trades for $73 a share. The firm currently has market cap of around $5.4 billion. Despite the recent gains, CRISPR Therapeutics is still down 43% over the past 12 months.
Competition
CRISPR Therapeutics isn’t the only company exploring gene therapy. Beam Therapeutics also uses CRISPR technology. The company changes single bases in the genome using a technique called base editing. This method only breaks a single strand of the DNA and therefore may have higher cell survival rates. Beam is on track to start its clinical trial of BEACON-101 in treating SCD. The company focuses on hemoglobinopathy and oncology.
Another competitor is Apellis Pharmaceuticals. The biotech focuses on therapies that enhances the immune system's ability to clear damaged cells. Apellis’s main product is already approved in the US for treating paroxysmal nocturnal hemoglobinuria – a rare, acquired blood disease. It’s also conducting late-stage development for treating a cause of vision loss in old age.
Summary
Cathie Wood has backed a lot of big winners in the past. And I think CRISPR Therapeutics might be another big winner in the future. However, there are some considerable risks here.
Governments and regulators have been slow to back gene therapies. The US Food and Drug Administration (FDA) has approved only a small number of gene therapy products for sale in the United States to date. The UK has been cautious too, although it markets itself as the primary destination for advanced therapy treatments. CRISPR Therapeutics has noted caution on the part of regulators with regards to gene therapy treatments.
However, the future looks positive for the sector, and CRISPR Therapeutics appears to be at the forefront of the industry. It is speculative at this moment in time as none of the therapies have been approved for use. But it’s a stock that’d I’d be willing to back. At $73 a share, I think CRISPR Therapeutics looks like a good addition to my portfolio.
CRISPR Therapeutics (NASDAQ:CRSP) is a Swiss–American biotechnology company headquartered in Zug that uses gene therapy to correct genetic mutations to treat and cure diseases. CRISPR refers to the technology used by the firm, which itself is an acronym for “clustered regularly interspaced short palindromic repeats”. It’s considered more efficient than other gene altering technologies.
The stock is down a whopping 45% over the past 12 months. But that’s not entirely surprising. Speculative growth stocks like CRISPR Therapeutics aren’t exactly in vogue. Moreover, government and regulators around the world are being particularly cautious when it comes to gene therapy treatments.
However, there’s plenty of reason to be optimistic about CRISPR Therapeutics’ future. And clearly Cathie Wood thinks the same. The star stock picker, and CEO of Ark Invest (NYSEMKT:ARKK), has repeatedly bought CRISPR Therapeutics stock for the Ark portfolio over the past fortnight. And that might be the reason why this stock has outperformed the NASDAQ over the past month. The index is down 6.4% over the past 30 days. Meanwhile, CRISPR Therapeutics has soared, up 27.7%.
Financials and balance sheet
CRISPR Therapeutics annual revenue for 2021 was $915m, a 127154.94% increase from 2020. This substantial rise year-over-year is primarily due to collaboration revenues from Vertex Pharmaceuticals (NASDAQ:VRTX).
The vast majority of this revenue came in Q2 and in relation to the development of CTX001 — an investigational ex-vivo CRISPR gene-edited therapy for treating sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). Vertex made a $900 million upfront payment to CRISPR Therapeutics in June 2021 after amending their arrangement over CTX001. In Q4, CRSPR Therapeutics received $12.3 million from Vertex after the firm reached a research milestone in the Myotonic Dystrophy Type 1 (DM1) programme.
CRISPR Therapeutics is solely dependent on Vertex Pharmaceuticals for collaboration revenues. The rise in revenue was reflected by a turnaround in profitability. The firm reported gross profits of $476m in 2021, up from a loss of $266m in 2020.
Operating expense have increased year-on-year, reaching $102m in 2021. Research and development costs rose from $257m in 2020 to $420m in 2021. Expense have increased amid a steady expansion programme. The company’s headcount has increased and so have development costs, including those for advancing the hemoglobinopathies and immuno-oncology programmes.
Basic earnings per share came in at $4.97 for the year ending December 2021, up from a loss of $5.29 the year before.
At the end of 2021, CRISPR Therapeutics had a very healthy balance sheet with around $2.4 billion in cash, equivalents and short-term investments. Meanwhile, total debt only amounted to a manageable $225m. Total employees numbered 473, up from 410 at the end of 2020.
Pipeline
The firm’s burn rate doesn’t appear to be anything to worry about, and it looks like this biotech should be able to get a few products off the ground and onto the market before the money runs out. CRISPR has three 100%-owned gene-editing therapies in clinical trials and is co-developing two other therapies with partners Vertex Pharmaceuticals and ViaCyte.
In its latest update (Q1, 2022), CRISPR Therapeutics said it anticipated submitting global regulatory filings for CTX001 in late 2022. The company successfully reached full enrolment for stage Phase 3 clinical trials of the gene-edited therapy for TDT and SCD. CRISPR Therapeutics and Vertex have also initiated two new Phase 3 studies of CTX001 in children and infants with TDT and SCD.
The firm is also trailing Immuno-Oncology programmes and expects to report back with trial results later in 2022. CRISPR Therapeutics also said that enrolment was ongoing for the Phase 1 clinical trial for its type one diabetes candidate. The evasive-cell replacement therapy is designed to enable patients to produce their own insulin.
Valuation
While the company didn’t generate traditional sales in 2021, it generated plenty of revenue. In fact, it has a price-to-sales ratio of 5.8 for the trailing 12 months versus an industry average of 4.1. Meanwhile, CRISPR Therapeutics actually has a price-to-earnings ratio of 18.4 versus an industry average of 25.2. It is unclear whether the company will generate a similar level of revenue this year. Q2 of 2021 was the only quarter in the last 18 months in which it generated more than $15 million in revenue. As such, we can see that revenue is unlikely to grow consistently until it has a product on the market.
Despite the volatility of the past month, shares in CRISPR Therapeutics have actually gained considerably. The stock is up 32% over the past 30 days and now trades for $73 a share. The firm currently has market cap of around $5.4 billion. Despite the recent gains, CRISPR Therapeutics is still down 43% over the past 12 months.
Competition
CRISPR Therapeutics isn’t the only company exploring gene therapy. Beam Therapeutics also uses CRISPR technology. The company changes single bases in the genome using a technique called base editing. This method only breaks a single strand of the DNA and therefore may have higher cell survival rates. Beam is on track to start its clinical trial of BEACON-101 in treating SCD. The company focuses on hemoglobinopathy and oncology.
Another competitor is Apellis Pharmaceuticals. The biotech focuses on therapies that enhances the immune system's ability to clear damaged cells. Apellis’s main product is already approved in the US for treating paroxysmal nocturnal hemoglobinuria – a rare, acquired blood disease. It’s also conducting late-stage development for treating a cause of vision loss in old age.
Summary
Cathie Wood has backed a lot of big winners in the past. And I think CRISPR Therapeutics might be another big winner in the future. However, there are some considerable risks here.
Governments and regulators have been slow to back gene therapies. The US Food and Drug Administration (FDA) has approved only a small number of gene therapy products for sale in the United States to date. The UK has been cautious too, although it markets itself as the primary destination for advanced therapy treatments. CRISPR Therapeutics has noted caution on the part of regulators with regards to gene therapy treatments.
However, the future looks positive for the sector, and CRISPR Therapeutics appears to be at the forefront of the industry. It is speculative at this moment in time as none of the therapies have been approved for use. But it’s a stock that’d I’d be willing to back. At $73 a share, I think CRISPR Therapeutics looks like a good addition to my portfolio.
