Our genetics are like nature's roadmap. Our DNA dictates what color eyes we have, how tall we become, and our physical abilities.
Our genetics also influence our susceptibility to certain conditions or diseases. Some biotechnology companies, such as CRISPR Therapeutics(NASDAQ: CRSP), hope to use gene editing technology to treat, or even cure, diseases that existing drugs cannot.
It's been a long journey for CRISPR Therapeutics, which went public in 2016 and has declined over 80% from its 2021 peak. But now, the business could finally be nearing liftoff. Can buying today and holding it forever make you a millionaire?
The first steps of commercialization, and what's next
CRISPR Therapeutics develops gene therapies for health conditions and diseases using CRISPR gene editing, which essentially cuts into a patient's DNA to edit genes to achieve a desired effect.
The company's first therapy, Casgevy (Exagamglogene autotemcel), a joint venture with Vertex Pharmaceuticals, was approved in late 2023 to treat sickle cell disease in the U.S. and transfusion-dependent beta thalassemia in early 2024. It's an industry milestone, as it's the first cell therapy using CRISPR gene editing technology to receive approval from the U.S. Food and Drug Administration.
CRISPR Therapeutics has begun selling the treatments. Analysts estimate the company will generate $45 million in revenue this year and $214 million in 2026.
Image source: Getty Images.
There could be more therapies on the way; CRISPR Therapeutics currently has five therapies undergoing clinical trials and another 10 preclinical programs. The company's pipeline spans some massive treatment areas, including certain cancers, cardiovascular and rare diseases, and type 1 diabetes.
A healthy financial position helps mitigate the risks in a speculative stock
Investors should know up front that drug and therapy development is a risky business. Far more drugs fail the regulatory process than ultimately arrive on the market. The uncertainty makes it difficult to forecast a company's future growth, and these stocks are riskier to buy and hold.
The good news is that the company's strong cash position enables investors to buy and hold while things play out. CRISPR Therapeutics has burned $307 million in cash over the past year. With no long-term debt and $1.85 billion in cash left, the company could theoretically operate for years without raising additional funds.
CRISPR Therapeutics has a high ceiling
CRISPR Therapeutics's ability to enrich shareholders will depend on whether it commercializes additional drugs in its pipeline over the coming years.
Gene editing unlocks tremendous opportunities, which shows in the company's pipeline. CRISPR Therapeutics has five therapies in clinical stages, including:
CTX112: A CAR T Cell therapy for B-cell malignancies and certain autoimmune diseases.
CTX131: A CAR T Cell therapy for renal cell carcinoma, other solid tumors, and hematological cancers.
CTX310: An in vivo gene editing therapy for cardiovascular diseases.
CTX320: An in vivo gene editing therapy for atherosclerotic cardiovascular disease with elevated Lp(a).
CTX211: An immune-evasive, stem cell-derived beta-cell replacement therapy to cure Type 1 diabetes.
Several of these will likely fail, but it may only take a home run or two to establish CRISPR Therapeutics as a leader in gene editing, which would give the stock a tremendous ceiling. Some of today's leading pharmaceutical companies are worth hundreds of billions of dollars.
Can the stock make you a millionaire? The price looks right
Paying the right price is often crucial for these high-risk, high-reward stocks. CRISPR Therapeutics has been working toward its first therapy for many years, and has been a volatile stock without any concrete sales or earnings investors could hang their hats on.
As mentioned, CRISPR Therapeutics is down over 80% from its all-time high. Today, the stock has an enterprise value of just $1.2 billion. That's only about 6 times next year's revenue estimates, and sales should continue to grow, since CRISPR Therapeutics and Vertex Pharmaceuticals have just started rolling out Casgevy.
Even better, CRISPR Therapeutics wholly owns all five therapies currently in clinical trials. Therefore, it would reap the full windfall of any commercialization. Any long-term blockbuster, an industry term for a highly successful product that generates a billion dollars or more in annual sales, could position the stock for tremendous investment returns.
This risk is that these blockbusters never arrive, and investors will likely need to wait several more years to know whether the company delivers. But can the stock make you a millionaire if things go well over the next decade? Absolutely. Consider stashing shares away in a diversified portfolio.
You might be glad you did a decade from now.
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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
