CRISPR Therapeutics
and should you take a gamble on this company?
We’re spending more than ever on pharmaceuticals. As per Statista, in 2022 humans have spent $1.48 TRILLION on medicines globally.
Bad eating habits. Haphazard sleeping patterns. Polluted environment. Increasing stress. Anxiety issues. A general decline in mental health. These are some of the factors leading to increased spending on medicine.
It’s a sad state of affairs, but the reality is that we’re going to be increasingly dependent on medicines as a species. And that means pharmaceuticals is going to be a multi trillion dollar market.
One of the technologies that I have been reading on is gene-editing. I wrote a piece on Genomics a few months back where I explored how this was going to be a massively disruptive technology in the field of medicine and how investors should keep a close tab on developments in this space.
In this piece, I am going to talk about CRISPR Therapeutics and why it deserves a place in your watchlist [and maybe your portfolio].
What’s the business?
CRISPR is in the business of gene-editing. It has developed a unique technology called CAS-9 through which it can edit/delete/modify the sequencing of a DNA.
Why is this important?
A lot of people inherit genetic diseases. Some of these diseases are practically untreatable. But through CAS-9, CRISPR is developing treatments to cure & eliminate these rare genetic diseases.
And there’s a BIG market for it. Recently, CRISPR in partnership with Vertex Pharmaceuticals applied to the USFDA to develop and sell exa-cel (a gene editing therapy drug)
Exa-cel is targeted to treat two rare genetic blood disorders whose names I am unable to pronounce properly:
Transfusion-dependent beta-thalassemia (TDT)
Severe sickle cell disease (SCD)
The clinical trials done so far have been MASSIVELY successful. Reports state that exa-cel therapy just didn’t treat TDT/SCD but effectively cured these disorders with the patients no longer needing blood transfusions.
This therapy could treat around 30K people in the US + Europe and the treatment could cost around $1.9million bucks a pop. That’s a $60B market right there. And although CRISPR would be entitled to only 40% share of the revenue pie (as per the agreement with Vertex) that’s still a BIG number.
Worth a gamble?
The future looks [extremely] bright for CRISPR, but the reality is that at present it doesn’t have any marketable drug. It has ZERO product revenue (although it did receive an upfront payment of $100 million from Vertex) and is entirely focused on R&D and building new drugs/treatments.
The company is making losses and will continue to do so until it has a stable drug in place which can start generating recurring revenues.
However, if you’re up to take a VC type gamble in your portfolio — CRISPR ticks the right boxes. Here’s why:
Blockbuster pipeline: CRISPR is developing various drugs (CTX130 & CTX110) targeted to treat kidney cancer & leukemia. The market for these diseases is HUGE and CRISPR has achieved proof of concept with both the drugs. Plus, since these treatments are owned by CRISPR there wouldn’t be any revenue sharing (like in the case of exa-cel)
Cash to back R&D: CRISPR has $1.89 BILLION in cash reserves. This ensures that the Company doesn’t have to worry about survival and can focus on development of new drugs.
Market Size: Gene editing is going to change the way we look at medicine. The market for treatment of genetic diseases is healthy & once CRISPR can prove that this technology can also be used to effectively eliminate other high risk diseases like cancer, sky is the limit.
With a market capitalization of $5B, there’s a lot of room for CRISPR to grow if it can play it’s cards right.