Crispr Therapeutics (Nasdaq: CRSP) stands at the forefront of gene-editing technology, aiming to develop revolutionary treatments for serious diseases.
The company recently achieved a significant milestone with the approval of Casgevy, the world’s first CRISPR-based therapy, which treats sickle cell disease and beta thalassemia. (CRISPR, short for “clustered regularly interspaced short palindromic repeats,” is a type of genetic sequence and was the namesake of Crispr Therapeutics.)
Beyond its flagship product, Crispr Therapeutics maintains a diverse pipeline with five clinical programs and 10 preclinical programs.
The stock has experienced dramatic price swings over the past year. Since climbing from below $40 in late 2023 to a peak near $90 in early 2024, shares have dropped sharply.
Currently trading around $40, the stock has fallen over 50% from its highs, reflecting investor uncertainty about the company’s path to profitability despite its cutting-edge technology.
From a financial standpoint, Crispr Therapeutics is still in its early commercial phase. The company has spent heavily on research and development while building out its pipeline across four therapeutic areas: hemoglobinopathies, an immune cell therapy called CAR-T, in vivo approaches, and Type 1 diabetes treatments.
With a robust cash position of approximately $1.9 billion, the company has a runway to advance its clinical programs, but revenue will likely remain limited until Casgevy and other potential therapies gain wider market adoption.
When analyzing Crispr Therapeutics through the Value Meter framework, some interesting metrics emerge. The company’s enterprise value-to-net asset value (EV/NAV) ratio sits at 0.97, meaning investors could theoretically acquire all of Crispr’s assets at a slight discount to their book value. This looks quite attractive compared with the average EV/NAV of 7.89 for similar companies.
However, the company’s cash flow situation tells a different story. Crispr’s free cash flow-to-net asset value (FCF/NAV) ratio stands at -2.52%, with the company having generated negative free cash flow in three of the last four quarters. This is slightly worse than the -2.23% average for companies with similar cash flow situations.
Crispr’s stock price seems to reasonably reflect both the enormous potential and the significant risks that lie ahead as the company works to transform its scientific breakthroughs into commercial success.
Balancing the company’s groundbreaking technology, diverse pipeline, and attractive EV/NAV against its negative cash flow and earnings, I’m hesitant to call this stock undervalued. And so is the Value Meter system.
The Value Meter rates Crispr Therapeutics as “Appropriately Valued.”
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