CRISPR Therapeutics’ Pipeline Continues to Make Progress; FVE Remains $119; Shares Very Undervalued

Business Strategy & Outlook:

CRISPR Therapeutics is a gene editing company focused on the development of CRISPR/Cas9-based therapeutics. The company’s proprietary platform specializes in Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/Cas9, which precisely cuts DNA to disrupt, delete, correct, and insert genes to treat genetically defined diseases. CRISPR’s emerging technology has led to a new class of therapies, which are well suited for targeting rare diseases or other disorders that are caused by genetic mutations. CRISPR/Cas9 works by having CRISPR (pieces of DNA sequences) guide Cas9 (an enzyme that can cut and edit DNA) to edit, alter, or repair genes. The company’s proprietary technology has the potential to build blockbusters in rare diseases with limited treatment options available. CRISPR Therapeutics currently has no approved drugs and a largely early-stage pipeline, so to refrain from awarding the company an economic moat. CRISPR Therapeutics is focused on developing and commercializing novel therapies to treat severe, genetic diseases and currently possesses a sizeable, yet mostly early-stage pipeline. Its lead candidate, CTX001, is being developed in collaboration with narrow-moat Vertex Pharmaceuticals for the treatment of transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD). CRISPR Therapeutics and Vertex plan to file for regulatory approval by the end of 2022. The rest of CRISPR Therapeutics’ pipeline is either in early (Phase 1) or pre-clinical stages of development. While CRISPR Therapeutics does not currently have approved products, the company provides long-term investors with pure play exposure to gene editing.

Financial Strengths:

To assign CRISPR Therapeutics a Standard capital allocation rating. Analysis evaluates what to determine to be the three key facets of management decision-making from the perspective of shareholders: balance sheet strength, investment efficacy, and distributions. The Standard rating results from a sound balance sheet, fair investment strategy, and an assessment of shareholder distributions as appropriate. CRISPR Therapeutics’ revenue cyclicality possesses a medium rating and its operating leverage has a low rating. To assess the company’s balance sheet as sound due to management’s demonstrated ability to maintain little to no debt and run a fairly lean operation despite heavily investing in R&D as it works to advance its pipeline candidates. As of year-end 2021, CRISPR Therapeutics had nearly $2.4 billion in cash and investments.

CRISPR Therapeutics’ investment decisions were fair. As an early-stage biotechnology company, it invests heavily in R&D since it’s focusing on developing its pipeline. CRISPR Therapeutics is investing in its gene editing technology to treat a diverse range of severe, genetic diseases. The validation of the company’s gene editing technology through FDA approvals will be crucial as it competes with other companies also entering the gene editing space. If approved, CRISPR Therapeutics’ drugs could be quite lucrative due to high unmet medical needs leading to pricing power. Finally, to assess overall shareholder distributions as appropriate. Even though the company does not currently pay a dividend, to view this as appropriate since CRISPR Therapeutics is investing in its pipeline to help build value for shareholders. CRISPR Therapeutics is led by Dr. Samarth Kulkarni, who joined the company in 2015 initially as Chief Business Officer. Prior to joining CRISPR Therapeutics, Kulkarni was a partner at McKinsey & Company in the Pharmaceutical and Medical products practice. While at McKinsey, he co-led the biotech practice, where he focused on strategy and operations, and led initiatives in areas such as personalized medicine and immunotherapy.

Bulls Say:

Partnerships allow CRISPR Therapeutics to receive milestones and economic benefits from drug candidate progression while offsetting some of the clinical development costs.
CRISPR Therapeutics’ CRISPR/Cas9 platform has the potential to develop highly efficacious and potentially curative treatments for rare, genetic diseases with high unmet needs, which will likely lead to pricing power.
To view the company’s pipeline as possessing strengthening intangible assets and assign it a positive moat trend.

Company Description:

CRISPR Therapeutics is a gene editing company focused on the development of CRISPR/Cas9-based therapeutics. CRISPR/Cas9 stands for Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/CRISPR-associated protein 9 (Cas9), which is a revolutionary technology for precisely altering specific sequences of genomic DNA. The company is focused on using this technology to treat genetically defined diseases. CRISPR’s most advanced pipeline candidate, CTX001, is in collaboration with Vertex Pharmaceuticals and targets sickle cell disease and transfusion-dependent beta-thalassemia, which have high unmet medical needs. The company is progressing additional gene editing programs for immuno-oncology, as well as a stem cell-derived therapy for the treatment of Type 1 diabetes.

(Source: Morningstar)

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