The (gene) fix is in
02/26/19

●Gene-editing company CRSPR Therapeutics (CRSP) rallied 25% on Monday

●Company announced it was treating its first human patient in a clinical trial


 

It wasn’t quite as big as Spark Therapeutics’ (ONCE) 120% gain yesterday, but CRSPR Technologies (CRSP) early 25% rally was nothing to sneeze at:

CRSPR Technologies (CRSP), 12/19/18–2/25/19. CRSPR Technologies (CRSP) price chart. 25% jump.

Source: Power E*TRADE


And there was an important difference between the two moves: ONCE flew to the moon on news it was being purchased by Swiss healthcare/pharma giant Roche Holdings.1 It’s fellow gene-therapy company CRSP, by contrast, took off after news it had treated the first human with its namesake gene-editing technology2—Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR).

That mouthful refers to the process of physically editing the genetic sequence in much the same way (we’re simplifying here) you would edit a sentence in an online document—dragging and dropping words or letters, except in this case the letters are genetic code. The dream is to be able to fix human diseases at the DNA level—to repair the genetic “errors” that cause them.

The possibilities have the scientific and medical fields understandably excited, along with lots of investors who have bought CRSP and other gene-editing startups.

It’s been a bumpy ride, though, both in the lab and on the ticker tape—advances followed by setbacks. For example, the following weekly chart of CRSP shows the stock started out 2018 around $25 before nearly tripling to $73.90 in May, only to fall all the way back to $22.73 in late December:

CRSPR Technologies (CRSP), 10/20/16–2/25/19. CRSPR Technologies (CRSP) long-term price chart. Peaks and valleys.

Source: Power E*TRADE


The revolutionary promise of the CRISPR technology has been offset by what many investors see as a slow rate of progress. But that’s why yesterday’s CRSP headlines provided such a jolt—it appeared to be evidence of a concrete step from promise to practice. And it could be.

But aside from the obvious risk of chasing a stock that just jumped 25% in a single day (and which is also approaching resistance around its October-December highs), experienced traders likely noted the details of the announcement, which included the following statement from the company’s CEO: “Treating the first patient in this study [emphasis added] marks an important scientific and medical milestone and the beginning of our efforts [emphasis added] to fully realize the promise of CRISPR/Cas9 therapies as a new class of potentially transformative medicines to treat serious diseases.”

Bottom line: This was news about a clinical study that’s just beginning, and it’s the first person being given the treatment. Results are yet to come.

No doubt it’s an important step, and it may turn out to be a watershed moment in the long term. The excitement yesterday played out beyond CRSP—other stocks in the gene arena, including Editas Medicine (EDIT) and Intellia Therapeutics (NTLA), also rallied—but clinical trials are not the same as deliverable treatments.

CRSP is closer to its all-time lows than its all-time highs, so the longer-term downside risk may appear to be much smaller than the upside potential, but savvy bulls are likely to consider waiting for the immediate excitement to ebb before making their move.

Today’s numbers: Housing Starts, S&P Corelogic Case-Shiller HPI, FHFA House Price Index, Consumer Confidence. Fed Chairman Jerome Powell’s congressional testimony.

Today’s earnings include: AutoZone (AZO), Cheniere Energy (LNG), Home Depot (HD), J.M. Smucker (SJM), LGI Homes (LGIH), Macy's (M), TRI Pointe Homes (TPH), Worldpay (WP),  GW Pharma (GWPH), Palo Alto Networks (PANW), Toll Brothers (TOL), Weight Watchers (WTW).

 

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1 TheStreet.com. Spark Therapeutics Rockets as Roche Pays $4.3 Billion for Gene Therapy Experts. 2/25/19.

2 Bloomberg.com. Crispr Infuses First Human in Landmark Gene-Editing Study. 2/25/19.