Here’s why CRISPR therapeutics stock is up 54% in the last year.

stock CRISPR therapeutics (CRSP -0.91%) It will increase by 54% in 2023, according to data provided by S&P Global Market Intelligence. The biotech company is developing several promising gene therapies for serious diseases, but currently has no products for sale on the market.

CRISPR Therapeutics passed several important milestones last year, and its stock price rose when the news was announced. The company is navigating the challenging and costly regulatory approval process for its first commercially available treatment. Until there is regular cash flow from product sales, stock valuations must reflect significant uncertainty and speculation about the company’s future sales and profits.

Image source: Getty Images.

CRISPR has made some significant news this year.

Last April, CRISPR announced that it had submitted its first biological product license application to the U.S. Food and Drug Administration (FDA). There is no guarantee that your application will be approved, but it is an important step in the right direction. These submissions are typically supported by significant clinical data, and this announcement provides a rough timeline for potential sales that was previously unknown. As a result, the stock price rose 40% during April and May.

That promising news was followed by a few difficult months for the stock. Famous investor Cathie Wood ARK Innovation ETF (NYSEMKT: ARKK) Sold a CRISPR position. This has caused some hesitation among investors at a time when macroeconomic conditions are discouraging risk.

CRISPR did not report particularly bad financial results or updates on clinical trials or regulatory approvals during the middle of the year. A company that is wasting cash and has yet to bring a treatment to market. This tended to shift market forces and investor sentiment, and sentiment for biotech and innovative genomics stocks was poor during the period. CRISPR’s relatively high risk profile prompted a sell-off as market conditions worsened.

IBB, GNOM, CRSP total return level data from YCharts.

That all changed in November and December when the company released two very optimistic updates. CRISPR received regulatory clearance in the UK for its first treatment, Casgevy, on November 16. This comes after positive developments in the regulatory process with the FDA, leaving investors optimistic that the company’s pending approval in the US will be more positive. There is a high probability of success. These hopes were confirmed on December 8, when the drug was approved in the United States for the treatment of sickle cell anemia and beta-thalassemia.

What’s next for CRISPR therapeutics?

Huge steps have been taken toward earnings and cash flow this year, justifying the stock’s gains. There are still many uncertainties in this story, which may result in investor risk. Even if it receives regulatory approval, CRISPR still needs to agree on pricing with government and private health payers, a step that has frustrated colleagues in the past. partnership with Vertex Pharmaceuticals (VRTX 0.77%) While it should be very valuable at this point, it means CRISPR only gets 40% of the product’s sales, with the lion’s share going to its partners.

This could be the first step toward major market disruption driven by CRISPR. Gene editing treatments could improve the safety, efficacy, and cost of treating a variety of diseases. The company has a pipeline with several candidates in various stages of development, including cancer, cardiovascular disease, and neurological diseases, among their target areas. Establishing CRISPR as a self-sufficient biotech company will require significant money and time, but the potential is enormous.