CRISPR Therapeutics (NASDAQ: CRSP) is a healthcare company that makes gene-editing therapies that can transform the lives of patients. While it doesn’t have an approved product today, that could change by the end of the year.
The company has come a long way in establishing itself. But just how well has the stock done over the years, and would it have proven to be a good investment if you bought shares at its initial public offering?
Oct. 19, 2016 was officially CRISPR Therapeutics’ first day of trading. It opened at a price of $15, so if you invested $30,000 into the business at the time, you’d have been able to buy 2,000 shares. Today, with the stock trading at around $51, your investment would be worth approximately $102,000. That’s a return of 240% in a little less than seven years, which averages out to a compounded annual growth rate of 19%.
By comparison, a $30,000 investment in the S&P 500 over the same period would now be worth close to $63,000. Even if you include dividends, which would get your investment in the broad market index to a value of over $71,000, you’d still fall well short of CRISPR Therapeutics’ returns since then.
For investors brave enough to take a chance on this up-and-coming healthcare stock, returns have been great. More important, however, is whether the business is still a good buy today.
The allure of investing in a gene-editing company such as CRISPR Therapeutics is its long-term potential. According to data from Markets and Markets, the gene-editing market is worth a fairly modest $5.3 billion this year. But by 2028, it will double in value to $10.6 billion. And in the long run, there will be even more potential for these therapies, particularly if they prove effective in difficult-to-treat diseases.
Even though CRISPR doesn’t generate much revenue and its losses totaled nearly $416 million over the trailing 12 months, investors remain optimistic about its opportunities in the long run.
The date CRISPR Therapeutics investors likely have circled on their calendars is Dec. 8, 2023. That’s the PDUFA date for exa-cel, when investors will know whether the Food and Drug Administration (FDA) has approved the gene-editing therapy as a treatment for sickle cell disease. CRISPR has been working on exa-cel with Vertex Pharmaceuticals to treat the rare blood disorders sickle cell disease and transfusion-dependent beta thalassemia.
The therapy could be pricey. The Institute for Clinical and Economic Review believes that even at more than $2 million, it could be cost-effective. That’s because exa-cel can save patients and the healthcare industry a tremendous amount of money: It can potentially cure people with sickle cell disease with just a single dose.
CRISPR has other gene-editing therapies in its pipeline, but exa-cel is the furthest along. If it obtains approval, that could be a game changer for the business.
CRISPR Therapeutics is a much safer business now than it was in 2016. Although it still lacks an approved product, that could change in just a few months. The consensus analyst price target for the stock is just under $71, which suggests that CRISPR has an upside of close to 40% right now. And if exa-cel obtains approval, Wall Street analysts will likely upgrade their price targets.
However, it’s important to remember that while formal approval may look probable for exa-cel, it’s not a done deal. If the FDA chooses not to approve the therapy, a huge sell-off could follow, so this may not be a suitable investment for all types of investors. However, if you can tolerate moderate risk, CRISPR Therapeutics could be a great investment to hang on to for the long haul — it may have many more growth opportunities to tap into in the future.
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David Jagielski 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.
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