Could CRISPR Therapeutics Become the Next Vertex Pharmaceuticals?

Vertex Pharmaceuticals (VRTX 0.43%) has made it to the major leagues in the world of biotech. The company is the leading maker of cystic fibrosis (CF) treatments, with its products generating more than $9.8 billion in revenue last year. Vertex also recently submitted its latest CF candidate to regulators for consideration — and an approval could truly cement its long-term dominance.

On top of this, late last year Vertex won approval — along with partner CRISPR Therapeutics (CRSP -0.76%) — for Casgevy, a gene-editing therapy for blood disorders. It showed that the big biotech can indeed expand beyond its CF specialty. And Vertex is continuing this with its recent rolling regulatory submission of its candidate for pain.

So, over time, Vertex has become a company with multiple products and multiple treatment areas, helping it to generate billions of dollars in earnings. The stock price followed, climbing more than 145% over the past three years.

Vertex remains an excellent investment, but investors also may want to try to get in on the next Vertex while the player is in its early stages of growth. Is CRISPR Therapeutics a good candidate? Let’s find out.

The CRISPR Therapeutics story so far

First, a bit of background on CRISPR Therapeutics’ story. The company specializes in CRISPR gene editing, a technique that involves cutting DNA at a particular location, then allowing a natural repair process to take place. The idea is to fix faulty genes responsible for disease. And by doing this, CRISPR Therapeutics actually can create functional cures, making its products potential game changers for patients.

As mentioned above, CRISPR Therapeutics and Vertex recently won the nod for Casgevy in sickle cell disease and beta thalassemia. It marked the world’s first approval of a CRISPR-based gene-editing treatment — and it showed that regulators are open to approving these types of products as long as trial data are strong. This is positive for CRISPR Therapeutics, because the company uses the technique throughout its pipeline.

CRISPR Therapeutics, in its latest earnings report, said more than 25 Casgevy authorized treatment centers are up and running, and multiple patients have begun the treatment process. The procedure takes months, as cells are collected from patients, edited, then returned to the patient. All of this means revenue growth won’t be as fast as (for example) that of a company selling a new drug in pill form. But in the coming quarters, we should start to see some momentum.

Oncology and autoimmune diseases

Meanwhile, CRISPR Therapeutics is working on chimeric antigen receptor T-cell (“CAR T-cell”) therapy candidates in clinical trials for oncology indications, and is expanding into autoimmune diseases as well. CAR T-cell therapy involves altering a person’s T cells so they’ll attack diseased cells. The company expects to report initial phase 1/2 trial data from its candidate CTX-112 in certain types of cancers later this year.

CRISPR Therapeutics also has developed a lipid nanoparticle technology to deliver its gene-editing treatments directly to the liver. The first two candidates in this program treat cardiovascular disease. But the company just expanded the use of the delivery platform to include candidates for refractory hypertension (difficult-to-treat high blood pressure) and for a group of rare genetic diseases that start in the liver.

Similarities and differences

Now, let’s get back to our question. Could this smaller biotech follow in the footsteps of its bigger partner? Their paths are a bit different: Vertex focused on CF for a number of years, building a billion-dollar business that’s allowed it to fund programs in other areas. CRISPR Therapeutics has been applying its technology across treatment areas in preclinical and clinical studies for some time.

However, both companies have produced solid results in most clinical trials, and they’ve shown they can expand into various treatment areas. Another similarity: Even though CRISPR Therapeutics isn’t yet bringing in major product revenue, the company, like Vertex, has a strong cash position. In the most recent quarter, CRISPR Therapeutics reported about $2.1 billion in cash. This should help the company advance its pipeline — and potentially move closer to having multiple sources of product revenue.

As for share price and market value, CRISPR Therapeutics still has a long way to go to reach its bigger peer:

VRTX Market Cap data by YCharts.

I could see the smaller player becoming a Vertex several years down the road if, like Vertex, it launches a portfolio of products with at least one or two bringing in blockbuster revenue. Considering the strength of CRISPR Therapeutics’ technology and its pipeline candidates, this is possible — but it takes years to bring treatments to market, so that growth won’t happen overnight.

Investors will have to be patient. But if all continues to go smoothly for CRISPR Therapeutics, it could be on its way to becoming a Vertex Pharmaceuticals down the road — and early investors could reap the rewards.