It finally happened. About 10 years after being created, gene-editing specialist CRISPR Therapeutics (CRSP 1.31%) earned approval for its first therapy late last year. The treatment in question is called Casgevy and targets sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), two blood-related diseases. This regulatory development was a significant milestone for CRISPR, but the biotech will need more clinical and regulatory success in the years ahead to keep investors happy.
Can CRISPR Therapeutics pull that off? Let’s find out how things might evolve for the biotech over the next five years.
Looking at Casgevy’s potential
CRISPR Therapeutics developed Casgevy with Vertex Pharmaceuticals. So far, the therapy has earned approval in the U.K., the U.S., and Bahrain. More regulatory nods should be coming pretty soon, including in the European Union, Saudi Arabia, and Canada. Of note, Casgevy is the first gene-editing treatment on the market that uses the Nobel prize-winning CRISPR/Cas9 technique.
However, investors will be more interested in how successful the therapy could become. CRISPR and Vertex priced Casgevy at $2.2 million in the U.S., not an unreasonable price for a gene-editing treatment. Administering these medicines isn’t easy. It requires specialized equipment, trained physicians, and a pretty long process.
In other words, it will take some time for Casgevy’s sales to ramp up — but once they do, it should allow CRISPR Therapeutics to generate steady revenue. Why? Consider that Vertex and CRISPR are initially targeting 32,000 patients in the U.S. and Europe, not to mention those in other regions, such as the Middle East, where Casgevy should also be commercialized.
That gives the therapy a total addressable market north of $70 billion. Yes, CRISPR and Vertex will have to compete with Bluebird Bio, which has gene-editing treatments for TDT and SCD on the market. But here is why that’s not that big a problem.
First, Bluebird only operates in the U.S. Second, Vertex is a much larger biotech than either Bluebird or CRISPR, and it has a track record of negotiating lucrative deals with third-party payers. Third, Bluebird’s SCD treatment, Lyfgenia, has a boxed warning for blood cancer. Lastly, Lyfgenia will cost $3.1 million, compared to Casgevy’s $2.2 million.
All these factors suggest that CRISPR Therapeutics and Vertex Pharmaceuticals can grab a decent share of their target market, at the very least. The two partners will divide up the spoils on a 60/40 basis, with 40% of the profits and costs going to CRISPR. Even with this arrangement in place, the biotech should still be making plenty of money from Casgevy in five years.
The innovative wheel should keep spinning
Casgevy could earn label expansions, first in treating patients aged 5 through 11 — its current approvals cover those 12 years or older. Further, hundreds of thousands of SCD patients won’t be eligible for Casgevy as of now, but CRISPR and Vertex are working on potential label expansions to target them too.
Beyond Casgevy, CRISPR Therapeutics should make solid clinical progress over the next five years. In 2024 alone, it expects clinical updates for two of its leading oncology candidates, CTX112 and CTX131, and new clinical trial starts for other products, while it is also undergoing phase 1 studies for still other programs. In other words, 2024 should be a busy year for the company.
The work it does throughout the next 12 months should help it lay a foundation for future major regulatory success beyond Casgevy. In the next five years, expect the company to earn approval for at least one more CRISPR-based gene editing treatment.
Is CRISPR Therapeutics stock a buy?
CRISPR Therapeutics’ work in developing Casgevy has been exceptional. The company is better positioned to push other clinical programs through the pipeline. Although the biotech won’t hit gold with every candidate, there is more than enough for CRISPR to expand its lineup over time significantly.
In short, the company has proven innovative capabilities and a rich pipeline, and thanks to Casgevy, it will have the funds necessary to support its ambitious gene-editing platform. In my view, that makes CRISPR Therapeutics a top biotech stock to buy.
