Recent market fluctuations have created opportunities for investors, with some stocks underperforming over the past year and thus deserving the label of “bargains” regardless of future market conditions. Among these are CRISPR Therapeutics (CRSP 0.12%) and Merck (MRK -1.37%), both of which focus on innovative medical treatments.
CRISPR Therapeutics’ stock has fallen by 41% over the past year, while Merck has seen a decline of 22%. Despite facing some challenges, there are compelling reasons for investors who are willing to hold for the long term to consider buying at the current price levels.
1. CRISPR Therapeutics
CRISPR Therapeutics, known for its gene-editing technology, has struggled to perform well recently. While the company received approval for Casgevy, a treatment for two rare blood disorders, in late 2023, revenue generation has been limited. Gene-editing therapies are costly and lengthy to administer, and CRISPR will share profits from Casgevy with Vertex Pharmaceuticals, which retains 60% of the earnings.
Nonetheless, Casgevy has now been approved in the U.S., U.K., and European Union, as well as other Middle Eastern countries where market potential may be greater than in the U.S. The mid-cap company CRISPR Therapeutics likely would not have pursued such extensive approvals on its own due to costs, making this partnership with Vertex significant.
Although immediate contributions from Casgevy are minimal, it is expected to impact CRISPR’s financials positively in the future. Priced at $2.2 million per treatment, it holds a unique position as a one-time curative solution for severe conditions that significantly affect patients’ life expectancy and well-being.
CRISPR Therapeutics is also advancing other gene-editing treatments, including a potential cure for type 1 diabetes. Its CTX112, aimed at treating B-cell malignancies, has received Regenerative Medicine Advanced Therapy designation from the FDA, aiding its development for life-threatening conditions.
2. Merck
Merck’s top-selling product, Keytruda, has numerous approvals for various cancer types. However, last year, a new cancer treatment called ivonescimab outperformed Keytruda in a phase 3 trial with non-small cell lung cancer patients, raising concerns about future competition, especially as Keytruda’s patent exclusivity expires in 2028.
Despite this, Merck reported $64.2 billion in revenue last year, a 7% increase from 2023, with Keytruda alone yielding $29.5 billion, nearly half of the company’s total sales. The risk of losing Keytruda’s market dominance understandably worries investors.
However, Merck has been proactively planning for the period post-Keytruda. One strategy includes extending the drug’s patent life with a subcutaneous formulation that could retain applicability across its existing markets. Merck is also focused on developing new medications, partnering with LaNova Medicines on LM-299 and collaborating with Hansoh Pharma on a preclinical weight management candidate.
Furthermore, Merck’s stock offers a solid dividend yield of over 3.4%, having boosted its payouts significantly over the last decade. While the challenges it faces are valid, the company has successfully navigated similar issues throughout its extensive history and seems well-equipped to do so again. With more than a 20% decline in its stock over the past year, it remains a strong long-term investment choice.
