Thursday, 16 May 2024
by BD Banks
CRISPR Therapeutics (NASDAQ: CRSP) closed last week down 8.5% after reporting first-quarter “earnings” results that looked a lot more like losses. Lacking a big milestone payment like the one in Q1 2023, CRISPR’s revenue plummeted 99.5% year over year, and the company reported a per-share loss of $1.43 — more than twice the year-ago loss.
And that’s OK — at least according to Oppenheimer analyst Jay Olson, who on Friday lowered his price target on CRISPR stock to $95 a share, but maintained an outperform rating on the stock.
CRISPR remains on track to start clinical trials for CTX112, a gene-editing treatment for systemic lupus erythematosus, this year, in addition to ongoing cancer and autoimmune disorder trials. And while success is never certain in the biotech field, CRISPR boasts a $2.1 billion bank account to fund its work.
With only $166.5 million in quarterly negative free cash flow — down significantly from the prior two quarters — CRISPR has at least three years before it’s likely to need additional cash. Meanwhile, the company’s Casgevy treatment for sickle cell anemia, developed in partnership with Vertex Pharmaceuticals (NASDAQ: VRTX), has received Food and Drug Administration (FDA) approval, becoming the first CRISPR-based gene-editing therapy to make it to market.
It remains to be seen how much the 40-60 revenue split on sales between CRISPR and Vertex will benefit CRISPR, but Olson says the new treatment already has “encouraging momentum.” Certainly some effect will be felt, and it’s likely to slow the company’s cash-burn rate even further.
Will this be enough to launch the stock to $95 within a year? That’s harder to predict. Few analysts expect CRISPR to turn profitable before 2028, earning close to $3.50 per share. But some of the predictions farther out are truly tremendous — such as CRISPR earning more than $25 a share by 2030.
Expecting a jump from around $55 today to $95 in order to get $25 in annual profits six years from now may not be the most outrageous proposition I’ve ever heard.
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Rich Smith 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.