Is Crispr a buy?

It’s time to talk about a popular gene editing play. Here is the breakdown on $CRSP, otherwise known as Crispr Therapeutics.

Current Price: $170.00

52/Wk High: $220.20

52/Wk Low: $32.30

Market Cap: $12.4 Billion

Read below for the breakdown!

Crispr Therapeutics ($CRSP) is a Switzerland based company that focuses on the editing of genes. Crispr carries out its editing work using Short Palindromic Repeats, and the company is continually developing medicines for serious diseases.

Not only is Crispr’s work impressive, but one of the most popular ETF managers in the game Ark, is a big fan, maintaining Crispr as a top five holding in the Ark Innovation ETF ($ARKK).

Crispr has become quite popular amongst investors for the possibility that this new gene editing technology will lead to a cure for cancer and other major diseases, which if achieved, would be incredible.

Currently, Crispr has four main programs; Hemoglobinopathies, Immuno-Oncology, Regenerative Medicine, and In Vivo. Out of the company’s programs, two programs currently have segments in the clinical phase.

According to Crispr, the Hemoglobinopathies program is aimed towards the treatment of B-thalassemia and sickle cell diseases through the use of gene edited hematopoietic stem cells.

Furthermore, the Immuno-Oncology segment maintains the goal of “creating the next generation of cell therapies for cancer enabled by gene editing”.

For more on the individual programs, go check out Crispr’s core website, which provides breakdowns of all of their segments.

Shifting into the numbers Crispr missed expectations with an EPS of $-1.32, worse than the expected EPS of $-1.18. On a year over year basis, EPS declined 155%.

Crispr went on to report collaboration revenues of $148,000, much lower than the Q3 2019 level of $211.9 million. On the bright side, the company has maintained a strong cash position of $1.4 billion, better than the June 2020 cash position level of $945.1 million.

As for expenses, Crispr’s R&D expenses totaled $71 million for Q3 2020, more than the 2019 Q3 level of $57.2 million. Secondly, G&A expenses totaled $21.5 million for the quarter, also up significantly over the 2019 same time level of $15.5 million.

Rounding out the quarter, net loss totaled $92.4 million for Q3 of 2020, a major decline from the $138.4 million Q3 2019 net income.

As for positive clinical results, Crispr recently reported positive top-line results from the Phase 1 CARBON trial, received a rare pediatric disease designation from the FDA for CTX001, and received an orphan drug designation for Phase 1 clinical trials of the CTX120 program.

Shifting into the balance sheet, the numbers are not bad.

Total Debt: None

Total Liabilities: $142 Million

Total Assets: $1.485 Billion

Cash & Short Term Inv: $1.366 Billion

On a valuation basis, Crispr is trading at a significant premium.

Price to Sales: 156.64x

Price to Book: 8.62x

When it comes to management, leadership has done a solid job but could improve.

Return on Equity: -21.84%

Return on Assets: -19.16%

Return on Invested Capital: -20.70%

Given the numbers the analysts are mostly neutral with a mean price target of $156.55/share, representing a -6.49% downside.

It is also important to note that the high price target is $210.00/share, representing a 25.43% upside, while the low price target is $45.00/share, representing a -73.12% downside.

The big money is quite involved as well, with 74.57% of Crispr being owned by institutions. Top holders include Ark Investment Management, Capital International Investors, and Nikko Asset Management.

On a technical basis, Crispr could be presenting an opportunity. According to the six-month charts the MACD is moving to the downside with substantial momentum within a range of 10.16 down to 5.29.

The six-month charts are also indicating an RSI of 47.49 and CCI of -62.8356, both of which are on the low end.

In short, Crispr is developing revolutionary healthcare treatments and technology and likely has a bright future, but with a significant lack of revenues at the current moment, significant risk is present.

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Disclaimer: This is not direct financial advice, simply an opinion based on independent research.