Shares of CRISPR Therapeutics (NASDAQ: CRSP) recorded strong gains for the week despite the challenges currently facing the growth-dependent stock. According to S&P Global Market Intelligence, the biotech stock closed the week up 24.6% from the previous week.
Multiple pressures have pushed down the valuation of relatively risky and speculative stocks in the past week of trading. Among them, CRISPR shares rose sharply after CEO Sam Kulkarni was interviewed at Cowen's 42nd Annual Healthcare Conference. The executive provided an update on the progress of clinical testing and the general business outlook for the gene editing specialist, and his comments indicated a positive outlook for key drugs in the company's product pipeline.
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In addition to providing a general update on the company's clinical trial progress, Kulkarni said that the results of trials for his CTX001 drug will "speak for themselves" as a treatment for beta thalassemia and sickle cell disease. While not necessarily a clear indication that the treatment will be approved by the U.S. Food and Drug Administration, his language is encouraging and suggests that CRISPR Therapeutics is optimistic about the viability of CTX001. The CEO also said the company remains very confident in its CTX110 for B-cell malignancies and believes it has the potential to become a $1 billion drug.
What to do
CRISPR Therapeutics' stock could soar in the near future if the company's CTX001 therapy is approved for the treatment of sickle cell disease or beta thalassemia, and the outlook on these fronts appears increasingly positive following Kulkarni's recent review. Clinical testing and potential approval of CTX110 will take longer to complete, but approval of the cancer drug could have a huge positive impact on the company's stock. Despite the recent spike in the stock price, it is still down about 51% in the past year of trading.
CRISPR Therapeutics now has a market cap of about $4.7 billion, valuing it at about 393 times this year's expected sales. Because it is a clinical-stage biotech company working on potentially revolutionary treatments, the company's current lack of sizable revenues is not particularly worrisome. However, investors should continue to understand that the stock's explosive rise comes with a high degree of risk.