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Here's Why CRISPR Stocks Rose as Much as 18.7% in August

A hand holding up a piece of DNA.

What happened

Shares of all three major CRISPR gene-editing companies rose double digits in August following the release of second-quarter and first-half 2018 earnings from each company. Reporting early in the month, the gene-editing pioneers reminded investors of recent progress as they advance their respective pipelines toward the clinic. Then, on the final day of August, it was announced that the first clinical trial for a CRISPR therapeutic had officially begun in the United States.

It wasn't exactly a secret, as all three stocks delivered most of their monthly gains in the final week of the month. According to data provided by S&P Global Market Intelligence , shares of CRISPR Therapeutics (NASDAQ: CRSP) led the pack with an 18.7% gain. That's not too surprising considering the company's CTX001, which is being developed with Vertex , was the drug candidate that entered clinical trials. Intellia Therapeutics (NASDAQ: NTLA) and Editas Medicine (NASDAQ: EDIT) followed with stock gains of 16.2% and 10.4%, respectively.

A hand holding up a piece of DNA.

Image source: Getty Images.

So what

On Aug. 7, CRISPR Therapeutics reported it had received approval for clinical trial applications in multiple countries for CTX001 in beta-thalassemia and sickle cell disease. The trial that began at the end of last month was for treating the former, although the first trials for the latter indication are expected to begin before the end of the year.

CRISPR Therapeutics also reported that preclinical trials evaluating CTX110 as a tool for engineering chimeric antigen receptor T cells (CAR-T) was now underway. That's the company's approach to building a platform for engineering next-generation immunotherapies for treating cancer in a broader population of patients than current methods allow.

Meanwhile, Intellia Therapeutics is waiting to begin clinical trials until it has enough data from its novel lipid nanoparticle delivery system (read: a really small capsule for delivering therapeutic payloads into cells), which it thinks will provide an edge in safety and efficacy in the long run. As a result, the gene-editing pioneer's first drug candidate, a potential treatment for a metabolic disease called transthyretin amyloidosis, isn't expected to have an investigational new drug (IND) application filed until the end of 2019.

Company Cash Balance, End of Q2 2018 Next Pipeline Milestone
CRISPR Therapeutics $320 million Initiate CTX001 clinical trial in sickle cell disease
Intellia Therapeutics $306 million Collect data on lipid nanoparticle delivery platform
Editas Medicine $344 million IND filing expected in October 2018 for EDIT-101

Data sources: Company press releases.

That leaves Editas Medicine, which has been by far the worst-performing CRISPR stock on the market in 2018. Shares have posted year-to-date gains of only 7.4%, compared to 151% for CRISPR Therapeutics and 62% for Intellia Therapeutics. There's no significant reason for Wall Street's pessimism, except perhaps that the company had plans to develop treatments for the two diseases CRISPR Therapeutics is starting off with.

Despite the lagging stock performance, the company recently announced that Allergan exercised its option to develop EDIT-101, which will be studied as a treatment for certain eye diseases. Editas Medicine exercised its option to co-develop the therapeutic, and the pair expect to file an IND application in October 2018. That means the company will be right behind CRISPR Therapeutics in the clinic, although it has other technology catalysts on the horizon.

Now what

CRISPR stocks have generally treated investors pretty well since their IPOs, but there has still been an above-average level of volatility. That's to be expected for any group of young biopharma companies, especially one developing a biotechnology with all the potential -- and hype -- of CRISPR gene editing. That said, as the first clinical trials get underway, investors finally will have real data in hand to evaluate and analyze. That means things could get interesting in 2019.

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of CRISPR Therapeutics. The Motley Fool recommends Editas Medicine and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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