[Updated 2/17/2021] Buy or fear CRISPR shares after the fourth quarter?
A few months ago, we explained why the resumption of CRSP actions could continue given the positive developments around CTX001, an experimental gene therapy for people with sickle cell disease and transfusion-dependent beta-thalassemia. CRSP stock has extended its rally of levels from around $ 107 in mid-November 2020 to $ 161 currently. Additionally, the stock has risen 5 times from levels of $ 34 at the end of March 2020 – when markets hit a low following the spread of Covid-19. Now can the rally continue? We do not think so. While CRSP stock has momentum on its side, given the strong 5x rally in less than a year, investors may want to wait for better levels to get into the stock.
Looking at the recently released fourth quarter numbers, revenue of $ 0.4 million was down 99.5% year-on-year and missed the consensus of $ 2.2 million. Note that 2019 revenues were higher due to Vertex Pharmaceuticals collaboration revenues
[Updated 11/17/2020] CRISPR stock rally
Despite a sharp 3-fold increase from the lows of March 23 of this year, at the current price of around $ 107 per share, we believe CRISPR Therapeutic Stock (NASDAQ
Part of the 4-fold increase over the past 2 years is justified by the roughly 7-fold growth seen in CRISPR’s revenue from 2017 to 2019, while its revenue per share increased 5-fold to 5, $ 32 in 2019, up from $ 1.02 in 2017. This lag can be attributed to a 36% increase in the total number of shares outstanding due to share issuances. Despite the growth in RPS, the company’s Multiple P / S has experienced a contraction. We believe the stock is likely to see a rise despite the recent rise and the potential weakness of a recession triggered by the Covid outbreak. Our dashboard, ‘What factors motivated 350% of the CRISPR therapeutic stock between 2017 and now?‘, has the underlying numbers.
CRISPR’s P / S multiple fell from 23x in 2017 to 11x in 2019. While the company’s P / S is now 20x (based on the leakage RPS), there is potential for upside given the expected growth of RPS in the coming years, as we discuss. below.
So what is the likely trigger and timing of the upside?
There’s not much to see CRISPR’s $ 0.2 million third-quarter sales compared to $ 212 million in the previous year’s quarter, which included Vertex Pharmaceuticals’ collaboration revenue in as part of the co-development of CTX001, an experimental gene therapy for people with sickle cell disease. and transfusion-dependent beta-thalassemia. So, with little revenue this year, what is the buzz around CRISPR stock, given that it has tripled in recent months? It all comes down to its pipeline. The company strives to mass produce cell therapies that will work in any person. Currently, cell therapies are made from cells derived from human donors or from a patient’s own cells, making the process long and cumbersome to develop the drug. If CRISPR is successful in its approach, it would mean ready-to-use cell-based drugs developed using cells from various groups of donors. The company’s internal treatment CTX110 for non-Hodgkin’s lymphoma has shown positive results in phase 1 trials. CTX001, which the company is jointly developing with Vertex, has received a rare pediatric disease designation from the US FDA. Overall, the value of CRISPR stock should be examined only from its potential pipeline. The CTX110 alone, if approved, could generate sales of over $ 1.5 billion. The estimated revenues for 2020 and 2021 are $ 2.5 million and $ 12.7 million.
CRISPR is a high growth stock and also carries high risk. There could be a case where therapies in the CRISPR pipeline are not proving effective. In addition, we do not know when the products will be ready to be sold. That said, investors willing to be patient will likely be rewarded with positive clinical trial data for these therapies.
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