CRISPR Therapeutics (NASDAQ:CRSP)

Given the potential market value of its greenlit treatment and the potential of the company’s pipeline, I think CRISPR is significantly undervalued. I’m bullish on CRSP stock.

What Is CRISPR Therapeutics?

CRISPR Therapeutics is a Swiss company at the forefront of gene editing. The company harnesses CRISPR-Cas9, a tool inspired by bacteria’s defense system and co-invented by Dr. Emmanuelle Charpentier, one of the CRISPR Therapeutics founders. The technology can be understood by looking at its three constituent parts:

• CRISPR: this stands for “Clustered Regularly Interspaced Short Palindromic Repeats” of genetic information that some bacteria use as part of an antiviral system,
• Cas9: a CRISPR-associated (Cas) endonuclease, or enzyme, that acts as “molecular scissors” to cut DNA,
• Guide RNA (gRNA): a type of ribonucleic acid (RNA) molecule that binds to Cas9 and guides it to where the DNA needs to be cut.

This technology provides a potential cure for a range of illnesses that we haven’t been able to treat, such as sickle-cell disease (SCD) and certain cancers. CRISPR Therapeutics has built a diverse portfolio of treatments across a broad range of disease areas, including hemoglobinopathies (like SCD), oncology, diabetes, and cardiovascular disease.

Its partnership with Vertex Pharmaceuticals (NASDAQ:VRTX) has led to the development of CASGEVY, the first CRISPR-based therapy for specific blood disorders. Not only was this the first CRISPR approval for specific blood disorders, but it was the first gene-editing approval globally. CRISPR Therapeutics is very much at the forefront of this technology, bringing the promise of gene-editing therapies across multiple areas of research closer to reality.

To date, the Swiss firm has only earned money through achieving milestone payments from Vertex. However, with CASGEVY receiving regulatory approval for the treatment of SCD and transfusion‑dependent beta-thalassemia in the UK, U.S., EU, and Saudi Arabia, among other places, CRISPR Therapeutics is moving towards generating revenue from commercial activities.

In a recent and potentially positive development, it’s been suggested that the Centers for Medicare and Medicaid Services (CMS) is proposing a new technology add-on payment (NTAP) of 75% for the CRISPR SCD and beta-thalassemia treatments. That’s up from the usual 65% for NTAP products.

This higher payment mirrors a strategy the CMS previously used to incentivize the development of new treatments and drugs. The CMS and other experts believe that offering a higher reimbursement will make these groundbreaking but expensive therapies more accessible for both hospitals and patients.

How Much Should CRISPR Therapeutics Stock be Worth?

Valuing CRISPR Therapeutics is challenging because it’s not earning money through typical revenue-generating activities yet. As such, its market value is a reflection of forecasted revenue from its approved products and the strength of its pipeline.

Estimates vary greatly as to the size of the initial patient cohort. While CRISPR’s CASGEVY is one of two treatments approved for use against SCD and transfusion‑dependent beta-thalassemia, it’s by far the cheaper of the two at $2.2 million per treatment. Moreover, two Wall Street analysts noted shortly after the treatments were greenlit that Bluebird Bio’s (NASDAQ:BLUE) higher price and safety warning would hinder its sales in comparison to CASGEVY.

According to conservative estimates, the potential market for CASGEVY could include around 32,000 patients, as I noted in a previous article. Given the $2.2 million price tag, this could create a market opportunity valued at about $70.4 billion. The crux of the matter lies in how forthcoming healthcare providers are in offering the treatment and whether insurers cover it. This is why the recently reported proposal from the CMS is so promising.

Finally, CRISPR Therapeutics boasts a healthy balance sheet with cash, cash equivalents, and marketable securities at $1.7 billion. However, while revenue generation from commercial activities might not be too far away, the company is not forecasted to turn a profit until 2027. This could be offputting for some investors. According to forecasts, CRISPR is currently trading at 34.4x expected earnings for 2027.

Is CRISPR Therapeutics Stock a Buy, According to Analysts?

Crispr stock is rated as a Moderate Buy, according to analysts, with 10 Buys, five Holds, and two Sells assigned in the past three months. The average CRSP stock price target is $80.47, with a high forecast of $112 and a low forecast of $30. The average price target represents a 46.2% change from its last price.

The Bottom Line on CRISPR Therapeutics Stock

Because CRISPR Therapeutics has yet to generate revenues from commercial activities and is not forecasted to turn a profit until 2027, it is challenging to understand what its fair value might look like. However, given the size of the market for SCD and beta-thalassemia treatments and CRISPR’s dominant position in the market, I’m bullish on the company’s prospects.