CRSP stock may offer an intriguing opportunity for investors with a long time horizon
Shares of CRISPR Therapeutics (NASDAQ: CRSP) are up 4% in 2022. And long-term shareholders who have held their shares in CRSP stock for the last five years have been rewarded with a gain of over 330%. However, the stock is trading nearly 50% below its 52-week high. That means, if you were a shareholder that got in on CRSP stock near its peak, you could have a negative opinion of the stock.
That's the nature of speculative stocks in areas like gene editing. CRSPR Therapeutics attracted a lot of speculative money on the promise of its CRISPR/Cas9 gene editing platform. But in the flight to safety, investors are fleeing from a company that may be years away from a truly breakthrough product release.
With all that said, investing in emerging growth stocks such as CRISPR Therapeutics means having belief in the company’s underlying technology. And being willing to hold on to your shares until that belief becomes a reality.
In this article, I’ll lay out the current state of affairs for CRISPR Therapeutics so you can decide if the company is worth a speculative investment.
An Investment in the Future of Medicine
Despite the volatility in the broader market, the gene editing sector has been a consistent source of investor speculation. And CRISPR Therapeutics is a leader in this space. The company is synonymous with transformative medicines through its signature CRISPR/Cas9 gene editing platform.
CRISPR Therapeutics has a long pipeline that focuses in four primary areas:
- Hemoglobinopathies – This is focused on β-thalassemia and sickle cell disease (SCD). Both diseases result from gene mutation. The company’s therapeutics is hoping to alter the current course of lifetime treatment that includes regular transfusions, painful symptoms and chronic hospitalizations
- Immuno-Oncology – This area is focusing on developing allogenic CAR-T cells that the company believes will have similar or better efficacy than autologous CAR-T cells that are the current standard of care for many cancers. These would also provide other benefits such as immediate availability, increased potency, and allow for flexible dosing.
- Regenerative Medicine – This involves the use of stem cells to “repair or replace tissue or organ function lost due to disease, damage or age...” The company believes this is a field where “compelling clinical proofs of concept” are likely to emerge.
- In Vivo – This wil allow the company to use its gene editing platform to systemically or directly into specific target organs. The company believes this can help cure a variety of genetically-defined diseases.
A Solid Cash Position
As you can see, the company has a long pipeline that is full of breakthrough potential. However, the reality remains that only a handful of these projects are in the clinical testing phase. That process alone generally takes several years to work through.
That means it will take years, and plenty of cash, to continue developing these products. The good news for investors is that, as of the company’s last earnings report, it was being a good steward of the cash it had on hand. Specifically, the company had total assets valued at $2.6 billion as opposed to total liabilities of approximately $361 million. This will be something that investors will want to watch when the company reports earnings in August.
CRSP Stock May Be an Opportunistic Buy
As I mentioned above, if you’re an existing shareholder in CRSP stock, your feelings about your investment will depend on when you bought. But assuming you don’t have a position, this may be a buying opportunity.
Currently CRSP stock is trading about 15% below the midpoint of its 52-week range. And analysts tracked by MarketBeat give the stock a price target of $111.27, that implies a 40% upside from the stock’s current level. What makes that number more believable is that is after the stock has received several lower price targets in the last 90 days.
By way of full disclosure, I’m not a shareholder in CRSP stock. It doesn’t fit my personal investment strategy at this time. But the stock is on my watchlist because I do find the company’s gene editing platform intriguing. As my headline states, this could be a moonshot that’s hiding in plain sight.
However, the company appears to be several years away from delivering meaningful revenue. And it will be longer than that before the company is profitable. Nevertheless, if you have a high risk tolerance and the ability to wait on a stock that may be years away from delivering on its true potential, CRSP stock may be one to consider.