The story of the young boy whose sickle cell disease was cured with CRISPR isn’t just a medical marvel, it’s a beacon illuminating the incredible potential of next-generation biotechnology. It means a future where painful genetic ailments will bow before the precision of gene editing, and once-incurable diseases become a distant memory.

But before we get swept away by the euphoria of medical miracles, let’s remember: biotech is a double-edged sword. While CRISPR’s success is undeniable, translating such breakthroughs into profitable investments requires a delicate dance between revolutionary science and sound business practices. Let’s explore the divide.

The Science Side

Excitement for CRISPR is absolutely not unfounded. 

Companies like Bluebird Bio (BLUE) and CRISPR Therapeutics (CRSP) are at the forefront of gene editing, developing treatments for various diseases, including sickle cell. 

BLUE’s betibegogene autotemcel (beti-cel), recently approved by the FDA, is a prime example of CRISPR’s potential. It’s the first gene therapy to use CRISPR for treating sickle cell, offering hope to millions.

Similarly, CRSP, in partnership with Vertex Pharmaceuticals, is developing exa-cel, another potential CRISPR-based cure for sickle cell. These advancements are just the tip of the iceberg, with CRISPR holding immense promise for treating various cancers, heart diseases and even blindness.

The Business Side

However, science alone doesn’t guarantee financial success. Bluebird Bio (BLUE), for instance, despite its groundbreaking technology, has faced challenges. Recent setbacks with its gene therapy for beta-thalassemia, coupled with concerns about manufacturing scalability, have cast a shadow on its stock price.

This is where the “company” part of the equation comes in. A successful biotech company needs more than just cutting-edge science. It needs a robust pipeline, strong partnerships, efficient manufacturing and a clear path to commercialization.

Separating Hype from Hope

So how do we navigate this complex landscape of medical miracles and market realities?

Focus on Companies with a Diversified Pipeline

While CRISPR’s potential in treating sickle cell is undeniable, focusing solely on companies targeting that specific disease could limit your gains. Think about adding companies with broader pipelines, tackling diverse health challenges across different areas:

Editas Medicine (EDIT)
Beyond sickle cell, EDIT has programs in rare genetic diseases like Leber congenital amaurosis (LCA) and Duchenne muscular dystrophy (DMD), as well as collaborations in immuno-oncology with Juno Therapeutics.

Intellia Therapeutics (NTLA)
Intellia, partnered with Regeneron, is developing NTLA-2001 for transthyretin amyloidosis (hATTR), and NTLA-5001 for beta-thalassemia. They also have programs in oncology and liver diseases.

Vertex Pharmaceuticals (VRTX)
While they have their own cystic fibrosis drugs, Vertex is also collaborating with CRISPR Therapeutics on exa-cel for sickle cell and CTX001 for beta-thalassemia, showcasing their diversified approach.

Regeneron Pharmaceuticals (REGN)
Their partnership with Intellia on NTLA-2001 for hATTR highlights their commitment to gene editing, alongside their existing portfolio of antibody drugs for various conditions.

Beam Therapeutics (BEAM)
BEAM focuses on base editing, a CRISPR-related technology, and has programs in beta-thalassemia, sickle cell, and several cancers. Their diverse platform offers another angle on the gene editing revolution.

Track Their Business Fundamentals

While the allure of cutting-edge technology like CRISPR is undeniable, it shouldn’t cloud your investment judgment. Before entrusting your capital to any biotech company, a thorough examination of their business fundamentals is crucial. Here are some key areas to scrutinize:

Financial Health

• Revenue & Profitability: Has the company achieved consistent revenue growth, or are they still in pre-revenue stages? Do they have a clear path to profitability, or are they heavily reliant on funding rounds?
• Debt & Cash Flow: Is the company burdened by significant debt, limiting their flexibility? Do they have sufficient cash reserves to sustain operations and development?
• Valuation: Is the stock price reasonable compared to their financial performance and future prospects? Avoid companies with inflated valuations solely based on hype around their technology, which can be fairly common in biotech.

Leadership & Expertise

• Management Team: Does the leadership team possess relevant industry experience and a proven track record of success? Are they visionaries capable of navigating the complex and rapidly evolving biotech landscape?
• Scientific Advisory Board: Who are the scientists and advisors guiding the company’s research and development? Do they have expertise in the relevant disease areas and credibility in the scientific community?
• Intellectual Property: Does the company have strong patent protection for its technology? Are there potential legal challenges or competition from other companies with similar approaches?

Market Strategy & Execution

• Market Size & Target Audience: Are they addressing a large enough market with significant unmet medical needs? Is their product well-positioned within the competitive landscape?
• Regulatory & Commercialization Pathway: What are the regulatory hurdles for their treatments? Do they have a well-defined plan for navigating clinical trials, gaining FDA approval, and ensuring market access?
• Manufacturing & Scalability: Can the company manufacture their treatments efficiently and at a cost-effective scale? Are there potential supply chain or production risks that could hinder their commercial success?

The Bottom Line

CRISPR’s success in treating sickle cell is a testament to the transformative power of next-generation biotech. But we must remember that the path from scientific marvel to market success is often long and winding. 

As investors, we focus on companies that combine groundbreaking technology with sound business practices — remember that a great biotech company combines great tech with a great company — to navigate this exciting but volatile field. In 2024, let’s channel the hope ignited by CRISPR into a brighter future both for healthcare and for our portfolios and ourselves.