The biotech industry has lagged the broader market so far in 2024. The SPDR S&P Biotech ETF, an industry benchmark, is up 9% this year compared to 28% for the S&P 500. Will that trend continue in 2025? It’s hard to say, but many individual biotech stocks still look like solid long-term picks.
That includes CRISPR Therapeutics(NASDAQ: CRSP) and Exelixis(NASDAQ: EXEL). The former is well in the red for the year, while the latter has crushed the broader market this year. Despite moving in opposite directions in 2024, CRISPR Therapeutics and Exelixis have strong prospects. Read on to learn more.
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CRISPR Therapeutics is a gene-editing specialist with a major claim to fame: It created Casgevy, the first approved medicine that uses the Nobel prize-winning CRISPR technique. The company developed this therapy with the help of Vertex Pharmaceuticals.
Casgevy’s first approval came down in November 2023, but CRISPR Therapeutics’ shares have underperformed the market since. What gives? First, Casgevy has yet to contribute a single dollar in sales to the biotech due to the complexity of administering gene editing therapies. Second, CRISPR Therapeutics remains unprofitable.
That’s not unusual for a biotech company of this size, but investors have been less forgiving of unprofitable companies in recent years. Despite these issues, CRISPR Therapeutics looks like an attractive stock.
Consider Casgevy’s potential. The medicine treats two rare blood-related disorders: transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD). There are few treatment options for either. CRISPR Therapeutics has little competition to speak of in the U.S. and virtually none in other regions such as Europe, Saudi Arabia, and Bahrain. Their target market is about 58,000 patients.
Assuming they can treat 20,000 patients at an average price of $1.5 million, it could be a $30 billion opportunity. Casgevy will cost $2.2 million in the U.S., but we don’t know its price tag in other countries. At any rate, the medicine has massive potential even before we consider potential label expansions. And it could just be the beginning for CRISPR Therapeutics.
Despite Casgevy’s slow uptake, the biotech isn’t lacking in funds, thanks to its partnership with Vertex Pharmaceuticals. CRISPR Therapeutics ended the third quarter with $1.9 billion in cash and equivalents and several exciting phase 1 and phase 2 gene editing candidates.
It won’t happen overnight, but between Casgevy’s contributions and CRISPR Therapeutics’ innovative abilities and exciting pipeline, which will almost certainly land clinical wins in the coming years, the company can rebound from its terrible performance this year. That’s why CRISPR Therapeutics is worth investing in now.
There is one major reason behind Exelixis’ strong performance this year. The company earned an important regulatory win that will keep generic competition for its cancer medicine Cabometyx off the market until 2030.
Cabometyx, which treats forms of liver and kidney disease, is Exelixis’ most important product. The treatment has proven to be a pipeline in a drug, constantly grinding out new indications while remaining the top-prescribed therapy of its kind in some of its markets.
This formula, it seems, will continue to work. Exelixis is awaiting more label expansions for its crown jewel, including treatment of pancreatic neuroendocrine tumors (pNET). Cabometyx performed so well in a phase 3 study in pNET patients that, following an interim analysis, an independent monitoring board recommended that the trial be stopped early. It looks very likely that the medicine will earn yet another key label expansion.
Meanwhile, Exelixis’ financial results remain strong. The company’s third-quarter revenue increased by 14% year over year to $539.5 million. Exelixis’ adjusted earnings per share of $0.47 was much higher than the $0.10 reported in the year-ago period.
Cabometyx should continue driving steady top-line growth for a while. Further, Exelixis is developing other cancer medicines. It is running several phase 3 studies for zanzalintinib, a product it hopes will follow in the footsteps of Cabometyx. Exelixis has several early-stage programs, too.
The company’s shares might have soared this year, but there is still plenty of upside potential for investors who invest in it today, sit tight, and hold onto the stock for a while.
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Prosper Junior Bakiny has positions in Exelixis and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends CRISPR Therapeutics, Exelixis, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.
