CRISPR Therapeutics (NASDAQ:CRSP) has a compelling scientific story, but has yet to turn it into drugs for sale. CRSP stock is currently up 51% year-to-date.

CRISPR (CSPR stock) logo within a DNA sequence

Source: Catalin Rusnac/ShutterStock.com

The story is gene editing, one of the most exciting concepts of the coming decade. The technique lets scientists search for and replace strands of DNA as you would words in a document.

In theory, it’s great. But we’re still at the Microsoft (NASDAQ:MSFT) Basic stage of the technology. That is, the 1975 Basic compiler that Bill Gates wrote himself. We don’t yet have an application, the Visicalc program that might justify gene editing to the world.

CRISPR, the company, needs to get some medicines out the door to justify investor love.

Investors Love CRSP Stock

Investors do love CRSP stock. The shares opened Sept. 2 at $93.42, a market cap of $6.5 billion for a company without therapeutics in the market. Revenue for the first six months has been $200 million.

CRSP has two treatments in clinical trials. One is CTX-001, a treatment for B-thalassemia. This is a genetic disease that about 60,000 people are born with each year, causing pain, anemia, and early death. The company recently shared data on two patients in an early trial.

The other, CTX-100, covers cancer, which is far more common. The idea here is to use gene editing to get CAR-T cells, which have some efficacy, from someone other than the patient. Data is expected here by the end of the year.

Based on this early data Piper Sandlin made CRSP a “top pick” in June, when its market cap was about $4.5 billion. Our Louis Navillier also wrote in praise of it at that time. If you bought on their recommendations, you made money.

Over the last two months, a succession of articles have come out for investors. Most talk about the stock’s rating, or its chart pattern, or the gains made since the last article.

Solid data and fundamentals are great. Lots of people can draw a hockey stick graph. But what matters are drugs that can be sold to people that make them better.

CRISPR doesn’t have any yet.

The Bear Case

CRISPR/CAS9, the technique CRSP is based on, may not even be the right platform for gene editing.

A gene editing technique dubbed Prime Editing may be better, allowing direct editing of cells that haven’t yet divided. There are alternatives being worked on in labs around the country.

CRSP does have a financial runway for proving itself. It has minimal debt, it can sell stock, and it has a development partner, Vertex Pharmaceuticals (NASDAQ:VRTX). Vertex may be even more expensive than CRSP. It has a market cap of $71 billion on four drugs for cystic fibrosis from which it may get $6 billion this year, and a pipeline of early clinical trials.

The Bottom Line

There’s a lot of Fear of Missing Out (FOMO) in the CRISPR/Cas9 market right now, as our Chris Markoch wrote recently. The future for therapies using the technique is still years away.

Buying early stage drug companies is like oil wildcatting in the 1930s. Spread your bets widely enough and you’re likely to find a gusher. If CRSP’s CAR-T technique works, it could revolutionize cancer treatment, allowing the creation of cancer-fighting immune cells at low cost.

But there is always risk. The technique CRSP was built around may not be the final word in gene editing. You might find yourself with an IMSAI-8080 when the Apple II comes out. Prime Editing itself may not be the final word.

CRSP is a reasonable speculation. Just don’t put money into it you can’t afford to lose. You may get a gusher, pardner, or a stream of tobacco juice on your wingtips.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear,  available at the Amazon Kindle store. Write him at [email protected] or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story. 





Source link