Expanding Green Signal Boosts for CRISPR Therapeutics' Shares
CRISPR Therapeutics (CRSP 1.84%) isn't lacking in justifications to invest in, boasting a successful launch of its initial commercialized therapy and a prospering pipeline. Moreover, investors have been given an additional motivation to invest in its stock.
Let me provide some insights.
This new development depicts a prosperous future
As CRISPR Therapeutics presented at the American Society of Hematology's (ASH) annual meeting on Dec. 9, the Food and Drug Administration (FDA) granted its cell therapy program, known as CTX112, a Regenerative Medicine Advanced Therapy (RMAT) designation.
In case you're not informed, CTX112 is developed to treat certain relapsed or refractory B-cell malignancies like follicular lymphoma and is currently being scrutinized in phase 1/2 clinical trials. And when it comes to cell therapies as promising as CTX112, receiving an RMAT designation from regulatory bodies is significant.
Here's why. Similar to all of the FDA's unique designations, RMAT designations offer certain privileges and advantages to businesses that receive them.
For one, it grants businesses expedited access to discussions with regulators as well as the option for prompt review of any applications for commercialization or to progress into the next clinical trial stage. Furthermore, rather than requiring 100% of the clinical data necessary for a full approval up front, as is the case for nearly all medicines, programs with an RMAT designation can potentially be preliminarily approved on the basis of partial data, with post-approval trials producing the remaining information necessary for final approval.
So it also grants holders financial flexibility, as there's a possibility of generating sales revenue in advance of obtaining full approval, which traditionally requires costly late-stage clinical trials.
For CRISPR Therapeutics specifically, financial flexibility isn't necessarily a necessity even if it's a plus. As of the most recent quarter, Q3, it reported having around $1.9 billion in cash, equivalents, and short-term investments, and just $402 million in trailing-12-month operating expenses.
Its first drug, a cell therapy called Casgevy, which it developed with the help of Vertex Pharmaceuticals, is in the process of being rolled out. Nevertheless, there's no scenario in which it's negative news for a biotech to have a shorter pathway to approval for its next most advanced candidate, to which it fully owns the rights.
Nothing is set in stone
While this new development is positive, unfortunately, CRISPR is not assured of success with CTX112 simply because it received the RMAT designation. The FDA won't approve any medicine without convincing data regarding safety and efficacy, even if it is willing to extend more lenient terms under some conditions. Therefore, there remains a substantial risk of a late-stage clinical trial failure if CTX112 doesn't perform as well as it has so far.
Nonetheless, there's an additional factor that makes CTX112 particularly crucial for this biotech's long-term outlook. Unlike many modern cell therapies, which require patients to donate a portion of their own cells to use as the raw material for manufacturing the medicine, typically involving some genetic engineering along the way, CRISPR's process with CTX112 is intended to be produced as an "off-the-shelf" intervention.
Therefore, it can be centrally manufactured and distributed to patients without needing to do the expensive and inherently small-scale manufacturing of each patient's individualized dose. Put differently, the company's logistics for the candidate's cell therapy manufacturing process are likely to be far simpler, which may equate to the drug product being cheaper.
Another advantage is that an off-the-shelf approach could make for a more reliably performing medicine. Patients who are eligible for CTX112 are already experiencing relapsed or refractory cancers, meaning that their cells would be in poor condition, which would ultimately make for a less effective therapy.
With the off-the-shelf method, there's no variability in the health of the cells that are raw materials, so patients likely respond more consistently relative to each other, which is a big plus when it comes to obtaining regulators' approval for commercialization.
Overall, the new designation is another indication that CRISPR's stock is worth investing in. If the risks associated with biotech stocks don't discourage you, it's ready for purchase today, provided you're willing to hold it for a few years.
This RMAT designation for CRISPR Therapeutics' CTX112 cell therapy program opens up financial opportunities, allowing potential sales revenue before full approval, thanks to the program's potential preliminary approval on partial data (Finance, Investing).
The off-the-shelf manufacturing approach for CTX112 could make the drug product cheaper and more reliably performing, potentially enhancing its chances of obtaining regulatory approval (Money, Finance).
