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Picking a growth stock that becomes a big winner over the course of a decade or more can transform any investor's return. I know this from my portfolio, where the flowers happily outshine the occasional giant weed.
Here, I'll highlight a high-risk, high-reward stock that recently piqued my interest.
An interesting platform for gene editing
The assignment is CRISPR Therapeutics (NASDAQ: CRSP). This biotech company focuses on developing gene editing therapies using CRISPR technology to treat genetic diseases, such as sickle cell disease and cancer.
Its successful drug, Casgevy, is now approved in many countries. Developed in collaboration with Vertex Pharmaceuticalsthis treatment cures sickle cell disease and transfusion-dependent beta thalassemia. Both are rare, debilitating blood disorders.
The treatment works by removing stem cells from the patient's bone marrow, editing the faulty gene in the lab, and then reinfusing the changed cells into the patient. It is no exaggeration to call this a revolution.
In August, the NHS announced that it would start prescribing Casgevy for beta thalassemia. There are around 460 patients in England who may be eligible for the treatment. It will cost around £1.65m ($2.09m) per patient.
Limited competition
CRISPR and Vertex see a potential market of 35,000 patients in Europe and the US, and another 23,000 in Saudi Arabia and Bahrain.
Considering the treatment costs $2m-$2.2m in Europe and the US, that's a significant revenue opportunity. Vertex, the company that will share the product's revenue, predicts “a potential billions opportunity“.
Even better, the treatment is currently unrivaled in Europe and the Middle East. In the US, it has a rival in the form of Bluebird Biowhich has an approved treatment for sickle cell disease. So that's important to note.
However, the market doesn't seem to be weighing in on Bluebird's hopes, as the stock is down 84% in one year and is valued at just $0.50. It has limited funding and its treatment cost an outrageous $3.1m.
As of mid-July, Vertex had opened more than 35 treatment centers around the world to collect patients' cells. But since the revenue is only realized when the patients receive their treatment, the sale is still in its early stages.
So while sales are expected to increase from 2025, potential delays can always appear.
It is inseparable from magic
CRISPR stock rose to $199 in 2021, but is down 74% from its current price of $50. This gives the company a market capitalization of $4.3bn.
By comparison, Vertex Pharmaceuticals is now a $123bn company after its share price has risen nearly 4,350% over the past two decades. This shows what can happen when a small biotech gets it right.
CRISPR ended Q2 with $2bn in cash and cash equivalents, so it remains highly leveraged to advance its five other gene-editing drugs into clinical trials. Naturally, however, there is a risk that some or all of these may fail.
Also, since these treatments are designed to be a one-time treatment, they are unlikely to generate repeat sales like medications that require continuous use. Investors obviously like recurring income.
However, the high up-front price and possible expansion in other areas can create great financial success. So, I think the stock can rocket in the coming years and I'm thinking of buying it.
British science fiction writer Arthur C. Clarke once said: “Any sufficiently advanced technology is inseparable from magic.” This genetic modification technology is like magic, in my opinion.
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