Daily Traders Edge

Breaking News: Breakthrough Technology Is about to Make These 3 Biotech Stocks Explode

May 17
10:23 2018

If you haven’t heard of CRISPR technology before, listen up. This potentially revolutionary technology enables scientists to essentially fix faulty genes. Such technology has been described as a medical miracle with transformative effects for countless diseases from blood diseases, genetic deafness, genetic blindness to neurological disorders.

However, to achieve this goal, companies have to fulfill multiple complex requirements. This includes: efficiently editing a wide range of mutations, reaching the site of the disease, precisely cutting the DNA, and achieving the right to repair. So which biotechs are paving the way?

Vertex Pharmaceuticals (VRTX)

For exposure to the CRISPR space without the risk, it’s worth checking out large-cap biotech Vertex. Symdeko, Vertex’s new-and-improved cystic fibrosis combo, is the company’s big money generator. But Vertex has also partnered with small-cap CRISPR Therapeutics (covered below) in the development of the promising CTX001 gene-editing therapy for β Thalassemia and Sickle Cell Disease. Given that this is a market of 360,000 births/ year, and the treatment could cost $450,000-$700,000 per patient, this could be a serious money-maker for both companies.

Currently CRSP and VRTX are splitting the R&D costs involved to develop this drug. The four-year deal involves Vertex paying CRSP $105 million—$75 million in cash, and $30 million via an equity investment. So where are we now? According to the company’s recent presentation, it expects to initiate Phase 1/2 clinical studies of CTX001 this year. This is from CRSP’s website:

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“As a company founded on innovative science, we’re excited to begin this collaboration with CRISPR, as it puts us at the forefront of what we believe may be a fundamental change in the future treatment of disease—using gene editing technologies to address the underlying genetic causes of many diseases,” Vertex’s CSO David Altshuler said in a statement back in 2015 when the deal began.

But this is just one pipeline in Vertex’s roster of robust offerings. And as far as Vertex is concerned, we could be just at the beginning of the upside story. This is according to top Oppenheimer analyst Hartaj Singh. He concedes that the stock looks expensive on various measures. But that’s missing the point. This is a company with immense potential.

Singh wrote: “We believe VRTX has the best sales/earnings momentum profile in large-cap biotechnology in 2017/20E and beyond. By 2020E, we should see a doubling of FY17 sales and a tripling of NON-GAAP EPS. By 2023E—depending on speed of triplet uptake—sales could quadruple and earnings sextuple.”

As a result, Singh reiterates his $190 price target (28% upside potential) on VRTX. But with his bullish analysis in mind, he adds “VRTX has potentially 30-50% upside to our current price target.” Note that our data ranks this analyst as an impressive #332 out of over 4,700 tracked analysts.

Overall, the Street shares Singh’s upbeat take on Vertex. This “Strong Buy” stock has received 10 recent bullish calls from the Street vs just 2 hold ratings. Given VRTX is currently trading at $149, the average analyst price target indicates 27% upside potential. You can click on the screenshot for further insights into the latest market activity on VRTX.

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