CRISPR Therapeutics’ gene-editing platform looks fairly promising, but plenty of challenges could sink the stock.
Vertex Pharmaceuticals has a robust underlying business along with some exposure to the gene editing field.
Gene editing, a set of techniques used to alter sections of an organism’s DNA, is helping scientists cure diseases previously considered untreatable. That’s why biotechs that specialize in gene editing and that succeed in making important breakthroughs could make investors who get in on the ground floor much richer over the long run.
One of the more famous companies in this niche is CRISPR Therapeutics (NASDAQ: CRSP). Is this mid-cap company worth considering for investors looking to cash in on gene editing? It depends. For those who are risk-averse, there are arguably many better options out there, one of which is Vertex Pharmaceuticals (NASDAQ: VRTX).
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Let me explain.
Image source: Getty Images.
Vertex Pharmaceuticals isn’t a pure-play gene-editing company. The company got into the game by partnering with smaller drugmakers in this field, most notably CRISPR Therapeutics. The two developed a medicine called Casgevy, which in 2023 became the first gene-editing medicine approved to use the famous, Nobel Prize-winning CRISPR technique. Casgevy treats two rare blood disorders: sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT).
Now, here’s a key difference between CRISPR Therapeutics and Vertex Pharmaceuticals. For the former, Casgevy is its only approved medicine on the market. That’s a problem because, despite being a revolutionary medicine, Casgevy hasn’t generated much revenue yet.
Gene-editing therapies are complex to administer. The ex vivo kind Casgevy belongs to requires a challenging “cell collection” phase, followed by modification and reinsertion into the patient. Casgevy can only be administered in authorized treatment centers.
Further, it is extremely expensive ($2.2 million per treatment course in the U.S.), making adoption by health insurance companies challenging.
All these factors mean the commercial progress of therapies like Casgevy will generally be slow, and that’s what we have seen. CRISPR Therapeutics continues to generate little revenue and to sustain consistent net losses.
By contrast, Vertex has a product lineup that enables it to create robust sales and profits. For the biotech giant, Casgevy is just part of its arsenal, and not even the most important part. Vertex is a diversified gene-editing play, making it a safer bet, given that this niche still has plenty of work to do to achieve widespread adoption by third-party payers, without whom gene-editing medicines would be inaccessible to the average patient.
Now, CRISPR Therapeutics could see its shares soar if Casgevy continues to gain traction and makes solid clinical progress with some of its candidates. The company is developing products that could revolutionize standards of care in certain areas. Take its CTX310, a medicine being developed to help decrease LDL cholesterol and lipoprotein(a). Both can cause serious cardiovascular events at high levels, and while there are ways to deal with them, few (if any) are as quick as CTX310 would be, if approved.
The medicine could be a one-and-done treatment for patients with high levels of LDL cholesterol or lipoprotein(a). CRISPR Therapeutics has several other highly promising medicines in its pipeline. If these programs pan out, the company could see its shares skyrocket in the next decade.
The flip side: CRISPR Therapeutics could sink if its leading candidates don’t perform well in clinical studies. So, while the biotech has plenty of upside, it also has ample downside. That means only investors comfortable with elevated risk and volatility should consider the stock.
Vertex offers a very different value proposition. Beyond its lineup of products that generate consistent revenue and earnings — and should continue to do so for a while — Vertex boasts several mid- and late-stage pipeline candidates, at least one or two of which should earn approval in the next three years or so.
As a result, Vertex can rebound from the occasional clinical setback, as it has in the past. And given its deep pipeline, it will eventually succeed in launching new products, even if its currently most advanced candidate fails.
Vertex Pharmaceuticals may not have the upside potential that CRISPR Therapeutics does, but the former also avoids the latter’s downside potential. Vertex can offer more stability than its smaller peer to somewhat risk-averse investors. That’s why it is a better pick for those kinds of investors.
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Prosper Junior Bakiny has positions in Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
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