About Crispr NASDAQ:CRSP
CRISPR Therapeutics is a biotechnology company developing gene-based medicines using CRISPR-Cas9 technology. Their work targets genetic diseases by editing DNA to correct or modify disease-causing genes. Key programs include treatments for beta-thalassemia and sickle cell disease, focusing on producing healthy blood cells. They are also advancing cancer immunotherapies by engineering immune cells to target tumors. Additionally, CRISPR explores regenerative medicine and other therapeutic areas to provide potentially curative treatments for severe genetic disorders.
Share Price Performance
In 2020, CRSP experienced substantial gains, which were erased in 2021. Since then, the stock has traded sideways, forming what technical analysts might consider a base. These periods often precede a potential breakout, provided the company delivers strong financial results to sustain upward momentum.
Market Overview
With a market cap of $4 billion, CRSP would rank comfortably within the ASX 200, as its valuation aligns with mid-to-upper-tier Australian companies. However, in the U.S. biotech sector, it is considered mid-sized. While it is much smaller than industry giants like Amgen or Regeneron, CRSP holds a notable position among innovative biotech firms developing cutting-edge therapies.
Short interest in CRSP exceeds 26%, with 19 days required to cover these positions based on average trading volume. This indicates significant market scepticism about the stock. However, unexpected positive developments could trigger a rapid price increase as short positions are closed.
Current Balance Sheet
CRSP’s tangible value stems primarily from its cash holdings, which are substantial. Often companies that are heavily shorted are low on cash and have significant debt loads suggesting a future capital raise will be needed. That is not the case with this company.
Earnings
The company’s revenue history is inconsistent, driven by milestone payments from its partner, Vertex Pharmaceuticals. Future revenues are expected to grow strongly as its first approved treatment gains traction. EBITDA is also forecasted to improve significantly.
Valuation
CRSP remains unprofitable, and its valuation at 20x sales appears high. However, the projected revenue growth may justify this multiple over time. Analyst sentiment is broadly positive, with a 12-month average price target of $79.54 from 24 analysts.
Technical Analysis
A look more closely at the recent price action shows that the short-term uptrend that was in place since mid-October has now collapsed back into a downtrend. CRSP has tried to break the downward price momentum on three occasions with the share price pushing above the medium-term trend as indicated by the 125 day EMA only to be rejected every time. It looks like the company will have to consolidate further around the lows before it can try and mount a fourth attempt at changing direction.
News From The Company
On November 11, (which can be seen as the day the share price spiked to almost $60) CRSPR’s CEO sold 30,000 shares. While still owning 196,540 shares, there is no doubt that that has put a serious dampener on what was looking like a promising share price recovery.
On November 5, the company announced their quarterly results beating market expectations with a narrower than expected loss of $1.01 per share. In the same period 12 months ago, they reported a loss of $1.41 per share. Total revenues were negligible though at $0.6M and were entirely from grants.
Vertex Pharmaceuticals (NASDAQ:VRTX)
Vertex leads the global commercialization of CRISPR’s gene therapy, Casgevy. They reported $2 million in initial product revenues during their latest earnings release, highlighting a strong launch. For risk-averse investors, Vertex may offer a safer way to gain exposure to CRISPR’s success.
Controversy
- Throughout my analysis, the phrase “controversial therapies” frequently appeared. CRSP operates in gene editing, which raises several concerns:
- Off-Target Effects: Unintended genetic changes may pose health risks.
- Germline Editing: Modifying embryonic genes can affect future generations, sparking ethical debates about “designer babies.”
- Access and Equity: High costs may limit access, worsening healthcare disparities.
- Environmental Impact: Gene editing in organisms might have unpredictable ecological consequences.
- Regulatory Challenges: Global laws on genetic modification vary, complicating compliance and oversight.
Final Thoughts On CRISPR
CRISPR Therapeutics operates at the forefront of biotechnology, leveraging cutting-edge gene-editing technology to address critical medical challenges. Despite its innovative approach and strong financial position, the company faces significant hurdles, including market skepticism, ethical controversies, and inconsistent revenues. CRSP’s future will likely depend on its ability to deliver consistent results, navigate regulatory landscapes, and address public concerns about gene editing’s broader implications. While the company shows potential, its path forward remains contingent on balancing these challenges with its technological promise.
Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.
Crispr NASDAQ:CRSP Analysis