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Vertex Pharmaceuticals Raises Bet on CRISPR Therapeutics

The relationship between Vertex Pharmaceuticals (NASDAQ: VRTX) and CRISPR Therapeutics (NASDAQ: CRSP) is taking another big step forward. On Tuesday morning, the collaboration partners amended their agreement regarding CTX001 in a way that places more risk on Vertex's shoulders.

CRISPR Therapeutics and Vertex had already agreed to co-commercialize and co-develop CTX001, an experimental gene therapy for patients with sickle cell disease (SCD) or transfusion-dependent beta-thalassemia (TDT). This new amendment raises Vertex's share of development expenses and potential profits to 60% while lowering CRISPR Therapeutics' share to 40% in return for a big up-front sum.

Image source: Getty Images.

If the experimental gene therapy earns approval to treat severe sickle cell disease (SCD) or transfusion-dependent beta-thalassemia (TDT), CRISPR Therapeutics could receive a $200 million milestone payment.

CRISPER Therapeutics wasn't starved for cash going into this amendment, but it could be a long time before the company has any approved products to sell. CTX001 uses a patient's own stem cells after they've been engineered to produce high levels of functional hemoglobin.

The SCD and TDT patients treated in clinical trials relied heavily on blood transfusions before receiving CTX001. So far, the treatment appears capable of eliminating their reliance on transfusions for at least a few years following a single administration.

Unfortunately, just a few patients have long-term data, so it's going to be years before we can expect steady revenue from CTX001. In the meantime, CRISPR Therapeutics has a great big cash cushion to rest on.

When the deal completes, CRISPR Therapeutics will add the $900 million up-front payment to a balance sheet that finished 2020 with $1.7 billion in cash. This gives the company more than two years to develop its early clinical-stage cancer therapies before it needs to ask investors for more capital.

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


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