**CRSP Investment Thesis**
**TLDR**: Innovative biotech company that is currently ramping up sales of its new innovative medicine, which is the new standard of care in sickle cell disease. Large pipeline may lead to 50X growth from here according to CEO’s lofty goals. Several catalysts are expected in April/May and June/July timeframe, including updates Q1 earnings (updates on Casgevy sales) and data readouts on clinical programs. Outstanding question: is the healthcare system ready for curative one-time therapies, as compared to daily or weekly treatments.
*My Credentials:* I have a MS in Biotech and wrapping up my MBA in healthcare. I have worked in Pharma business development for a few years now. I have been following CRSP since its IPO in 2018.
*My position:*
[Adding more on dips](https://preview.redd.it/5if8gtja9jpe1.png?width=2156&format=png&auto=webp&s=308e2ceb065c32bcc0f5a67050baa8e65715c77e)
**Background**
CRSP is a company developing medicine for genetic diseases using CRISPR gene editing technology. The scientists who discovered this technology won the Nobel Prize in 2020. CRSP has one marketed product, Casgvey, that was developed via a collaboration with Vertex Pharmaceuticals to treat sickle cell disease. They have a profit sharing arrangement, which entitles them to 40% of all profits from Casgevy, while Vertex manages the commercialization. This is great because they have a built-up commercial team which has shown success at getting reimbursement from insurance and getting doctors to prescribe expensive treatments.
The CEO says that they hope to be $100B biotech one day!!
**Financials (**As of 3/18/2025)
Market Cap = $3.67B; Enterprise Value = $1.8B
Net Cash = $1.9B
Short interest = 24.7% of the float (significant short squeeze potential)
\~70% Institutional Investors (Smart Money)
They have an average operating expenses of \~$130M/quarter, so absent any revenue from Casgevy we can expect them to have funding to last at least the next three years and by then it is highly likely that there will be significant profits from Casgevy. This means that at the very least the dilution risk very low, which is common among pre-revenue biotech companies and is the main reason why they are often heavily shorted.
**Macro**
Rate cut/growth scare means biotech boom.
**Commercial Success**
The CEO has said that there is tremendous patient interest in the therapy, and more will be convinced as additional long-term safety data is generated. CEO also says that they are currently ramping up approved treatments center - both the number of centers and how many patients each can treat.
Several analysts have projected that Casgevy could reach $1B in sales as of 2026 and reach peak sales of $3.5B in 2030, per typical drug sales ramps. As EOY24 there are 50 patients undergoing the Casgevy therapy process, as more treatment centers continue to open. This therapy costs $2.2M and these 50 patients equate to sales of $110 million, but it is unknown when that will be collected and if that is enough for profit to begin flowing to CRSP. It only takes a few dozen patients to be treated for this therapy to yield serious revenue, for example, that $1B target equates to 450 patients being treated, out of a US patient pool of around 30k, who are healthy enough to receive the treatment and have access through insurance. However, this can’t continue forever and once you treat all the available patients, you are only able to treat this disease at the incidence rate (# of babies born with sickle cell) but remember that if Casgevy treats only half of that 30k patient population, it will have made over $33B.
Recently there has been significant process at negotiating access for this therapy on both Medicare/Medicaid and private insurance companies. The consensus insurance approach is outcomes-based agreements (OBA), which would tie a portion of the payments to how well the treatment provide clinical benefit to patients ([Link](https://www.cms.gov/priorities/innovation/innovation-models/cgt)). This is critical in providing access to patients and increasing commercial uptake.
Now let’s take a look at my NPV projections based on the analyst estimates above.
Projected NPV of $6B, considering the enterprise value of $1.8B, this implies upside of \~233% or a share price of \~$132. For reference the average analyst price target is \~$77.
**Assumptions**
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|· Assumes 50% FCF margin|
|· Discount rate of 12%|
|· Perpetual growth of 3% (very conservative, given pipeline)|
|· 40% profit sharing in Casgevy|
|· Peak sales for Casgevy in 2030 estimated to be $3.5B|
|· Only values company on Casgevy |
**Competitors**
There is one other gene edit therapy in sickle cell develop by BlueBird, but they essentially just went bankrupt and sold to a private equity for pennies [(Press Release Link)](https://investor.bluebirdbio.com/news-releases/news-release-details/bluebird-bio-announces-definitive-agreement-be-acquired-carlyle). Not to mention their therapy also has a black box warning for hematological malignancies, which is the kiss of death for therapies where there is a suitable alternative. Who would want to risk getting cancer? Their therapy also costs $1M more than Casgevy.
Since traditional medicine aka the previous standard of care only addressed the symptoms of sickle cell, we expect almost no competition from the current market landscape.
There are likely to be several similar therapies from other gene editing competitor coming to market in the next 3-5 years, but the first-to-market usually secures a solid market share.
**Clinical Pipeline**
CRSP also has a solid extensive pipeline of moderately de-risked assets in development. CEO says that commercial success in Casgevy will fund them to make strategic bets to fill their pipeline with 1-2 new drugs per year.
· **CTX310; CTX320** = Two candidates in vivo liver editing programs targeting LPA and ANGPTL3, which expects data to be release in 1H 2025 (recent presentations suggest between early April and early May). The CEO stated that they will benefit from economies of scale. The first program in their liver editing platform will cost \~$100M and each subsequent one will only cost $15M to develop because it’s a modular platform.
· **CTX112; CTX131** = Two allogenic CAR-T cell therapy candidates targeting CD19 and CD70, which expect data to be released in mid-2025 and Q4 2025, respectively. Low COGS on allogenic CAR-Ts make them a very attractive business model, even if clinical data is only OK. AstraZeneca reached paid $1B for EsoBiotec, an allogenic CAR-T platform that is in the clinic. ([Link](https://www.reuters.com/business/healthcare-pharmaceuticals/astrazeneca-buy-esobiotec-upto-1-billion-2025-03-17/))
· **VCTX210; VCTX211** = Two regenerative medicine cell therapy replacement candidates for Type 1 Diabetes, which expects an update in 2H 2025. We should be cautious about expecting much from this because their partner, Vertex, has opted out of ownership and we do not know if that is because they plan to focus on their own cell therapy replacement or if something went wrong in the trial. CEO seemed upbeat about it in a recent presentation.
It's also important to note that CRSP wholly owns all the clinical programs above, so contrary to Casgevy, they will receive 100% of the profits. Feel free to look at their [pipeline](https://crisprtx.com/pipeline) for more in depth analysis, but that is not the focus of this research. There are also several pre-clinical programs, but those will materially affect the stock price in my view because they are about *at least* 6 years from revenue generation.
**Risks**
· Patients may not want to go through the cell depletion conditioning process required for this treatment - it is like chemotherapy.
· Insurance companies may not want to pay for the high price tag of Casgevy ($2.2M), despite the long term clinical and cost benefits. Developing gene editing medicines is not a validated and proven business model (very different economics from small molecules and biologics)
· Unknown new clinical data could come out which suggests that there are risks associated with CRISPR based medicine compared to more novel and targeted gene editing approaches like base editing or prime editing. Not sure what these would be, but it’s definitely possible.
· Competitors still in the clinic could deliver better data that would be the new standard of care in sickle cell, which limits long term growths for Casgevy
· Cathy Wood is one of their main investors