Biotechnology has always been one of the most relevant sectors. But with the onslaught of the novel coronavirus pandemic, more people have tuned into this vital segment of the economy. Hopefully, as Covid-19 fades permanently away, we may end up turning to companies like CRISPR Therapeutics (NASDAQ:CRSP) for resolving chronic issues instead of addressing acute ones. That, in short, is the upside narrative for CRSP stock.
As the brand name implies, the biotech firm specializes in CRISPR (Clustered Regularly Interspaced Short Palindromic Repeat) technology, an innovation that allows “researchers to easily alter DNA sequences and modify gene function.” According to a LiveScience.com article, CRISPR features “many potential applications include correcting genetic defects, treating and preventing the spread of diseases and improving crops.”
To be sure, myriad ethical concerns exist, as our own Matt McCall explained earlier this year. Notably, McCall wrote, “a Chinese doctor ignited worldwide attention (and wound up arrested) for creating ‘designer babies.’” And many spiritual advisors will quickly argue that playing God may dehumanize our species, with such genetic tech commoditizing us.
However, McCall stresses that as it relates to CRSP stock, the underlying company focuses on somatic cells. One critical advantage here is that they can’t be passed down from patient to progeny. Further, the emphasis for Crispr Therapeutics is really on the treatment of deadly diseases. McCall wrote:
CRISPR Therapeutics’ most advanced product is CTX001, which aims to treat sickle-cell anemia. Three other candidates rely on CAR-T (chimeric antigen receptor T-cell) technologies, which promise to fight cancer. CRISPR Therapeutics is researching treatments for Duchenne muscular dystrophy and cystic fibrosis as well.
These are all diseases with significant human tolls and often high mortality rates. And if CRISPR’s broader gene editing technology works, the hope is that it will work to at least some degree against all of these diseases.
So, CRSP stock should be clear of any ethical concerns, then, right? Actually, the ethical backdrop is even more problematic in the post-Covid era.
CRSP Stock Might Be a Cynical Investment for the Rich
When assessing the longer-term narrative for CRSP stock, I can’t help but think about the duality of the blockchain. Obviously, one of the biggest stories in the financial markets is the rise of cryptocurrencies. Usually, people speculate on these digital assets, then later justify their decision (perhaps to an angry spouse) by waxing poetic about decentralization protocols.
But the harsh reality is that the fundamental utility of a blockchain network and the market value of the underlying coin/token are two separate concepts. A particular blockchain can be brilliant yet the associated coin or token could crumble in value. That’s something to keep in mind when deciding if CRSP stock is right for you.
For instance, it’s very easy to get caught up in the technology and innovation that undergirds CRSP stock. Crispr may very well be on the precipice of a paradigm-shattering breakthrough. Yet medical breakthroughs and market valuations may not necessarily align because there’s another factor at work: the economics of biotech.
According to the Innovative Genomics Institute, companies like Novartis (NYSE:NVS) already offer gene-editing solutions for various conditions. But the catch with Novartis’ gene therapy in particular is that it costs $2 million per treatment.
Naturally, CRSP stock carries significant risks because of the unknown. First, the underlying company must produce a therapy that’s effective. Second, it must make sure that it’s safe and won’t cause other problems down the line. And then, the therapy itself has to be accessible to the public.
So far, gene therapy has not proven to be cost-effective, which may end up biting CRSP stock in the rear.
I’m not going to get into the details but let’s say there’s been an awakening in society about class and community injustices. Introducing a life-saving therapy — but only for the rich — is not a narrative that’s going to pass today’s sniff test.
While the ethical implications is the main point I wanted to explore regarding CRSP stock, there’s also the very important matter — as I briefly alluded to — about whether gene therapy is safe. As we’ve seen from the Covid-19 vaccination rollout, nothing biotech related goes perfectly well without hiccups.
But with gene editing, the hiccups could result in severe, perhaps even generational consequences. Therefore, investing in CRSP stock will probably require patience — and the bullish narrative might not even pan out. Before placing your wager, I’d give a second thought on the longer-term implications.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.