Better Buy: CRISPR Therapeutics vs. Editas Medicine – Motley Fool
You can’t use traditional means to compare CRISPR Therapeutics (NASDAQ:CRSP) and Editas Medicine (NASDAQ:EDIT) because they are emerging biotech companies with little revenue, and several years between their current efforts and any form of profitability.
Both of these companies are developing medicines that edit genes, using the same CRISPR technology. The system is capable of eliminating mutated DNA that cause a particular disease, such as sickle-cell anemia, some types of blindness, or Alzheimer’s.
The potential for CRISPR gene-editing is enormous. A study by Market Insights puts the global gene therapy market at $18.1 billion by 2027, giving it a compound annual growth rate (CAGR) of 25.7%. Figuring out which gene-editing biotech to invest in depends less on their fundamentals and more on which one seems most capable of developing marketable therapies based on the available technology.
The case for CRISPR
CRISPR Therapeutics has certainly been kinder to shareholders since January. Its share price is up over 37% year to date, while the share price for Editas has been flat. Much of the enthusiasm surrounding CRISPR Therapeutics stems from two of its therapies that have shown progress this year.
The first is CTX001, which CRISPR has been developing with Vertex Pharmaceuticals (NASDAQ:VRTX) as a treatment for two genetic blood disorders: severe sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT). According to CRISPR Therapeutics, CTX001 edits a patient’s stem cells from within their bone marrow and instructs those cells to produce high levels of fetal hemoglobin (HbF) in their red blood cells. HbF, a hemoglobin that carries oxygen, is present at birth but is replaced with the adult form of hemoglobin by the body as we age. The thought is fetal HbF will eliminate the need for transfusion in TDT patients and will help reduce the number of sickle crises experienced by SCD patients.
CTX001 is in two phase 1/2 trials: CLIMB-111 and CLIMB-121. CLIMB-111 involves five TDT patients and CLIMB-121 has enrolled two SCD patients. While the sample sizes are obviously small, the company says that all seven patients so far have achieved blood platelet engraftment. Based on those results, the U.S. Food and Drug Administration (FDA) has given CTX001 Orphan Drug and Fast Track Designation for both SCD and TDT.
CRISPR Therapeutics listed only $44,000 in collaborative revenue in the second quarter, but the important number is the company’s $945 million in cash reserves. At the company’s cash burn rate, these reserves can last nearly three years before the company needs an infusion of cash or a profitable therapy.
The case for Editas Medicine
On Aug. 25, the FDA granted Editas Medicine’s therapy, EDIT-301, rare pediatric disease (RPD) designation to treat sickle cell disease. That means the company gets a voucher from the FDA to receive a priority review on a different drug or therapy. The FDA does this to encourage research into medications that affect fewer than 200,000 people in the United States.
Like CRISPR, Editas is getting help from a larger pharmaceutical company on EDIT-301. Its collaboration is with Allergan (NYSE:AGN), which was bought by pharma magnate AbbVie (NYSE:ABBV) in May. Editas said that it plans to apply for an investigatory new drug (IND) application with the FDA by the end of the year, allowing the company to start human trials. Editas also said that it sees potential for EDIT-301 as a treatment for TDT.
The company also is continuing its BRILLIANCE phase 1/2 trial with EDIT-101 to evaluate the therapy as a treatment for Leber congenital amaurosis, a rare eye disorder that affects one in 40,000 newborns.
Another therapy, EDIT-201, according to Editas, is an healthy-donor NK (natural killer) cell medicine, implanted into patients for the treatment of solid tumors. The company said it plans to file an IND application with the FDA for the therapy by the end of the year.
In the second quarter, Editas announced it had $599 million in cash and cash equivalents. With the company losing a reported $23.5 million last quarter, it can go another six years before it needs an infusion of cash at its current burn rate.
On a positive note, the company did have a reported $10.7 million in collaboration revenue in the quarter, up from $2.3 million in the year-ago period.
At this point, the choice is easy
In the long term, it’s impossible to tell which of the two companies will be the better stock.
In the short term, CRISPR is far ahead of EDITAS in the development of its therapies.
Clinical-stage biotechs are a risky play, but CRISPR is a lot closer to the finish line of making a profit because of its multiple therapies in trials. Editas has less cash, and though its burn rate is smaller at this point, that will change when it ramps up production of its therapies. However, if you’re a risk-taker, there’s plenty of upside to Editas, since the stock down about 2% year to date.
Published at Wed, 30 Sep 2020 10:45:00 +0000