The pharmaceutical sector in general and biotechnology in particular play a central role in the fight against the Corona pandemic. With Biontech and Moderna, representatives of the second segment have developed Covid-19 vaccines at lightning speed and delivered them in large quantities. In the slipstream of the duo specialising in mRNA technology, the Crispr Therapeutics share price soared until the beginning of the year. Although the Zug-based company is not working on therapies or vaccines against the coronavirus, its research in Cambridge, Massachusetts, focuses on a technology that is considered to be as revolutionary as mRNA technology. Crispr Therapeutics is dedicated to its namesake gene manipulation process, "Crispr". Simply put, this form of therapy makes it possible to exchange individual components of DNA. In addition to the development of pest-resistant plants, the so-called gene scissors should above all help to combat serious diseases.
Crispr could be on the verge of a breakthrough in the treatment of sickle cell anaemia and beta thalassaemia. The drug CTX-001 to treat these insidious blood diseases is in clinical trials. Crispr is collaborating with US pharmaceutical company Vertex to develop the drug. In recent months, the partners have published positive data on CTX-001. Patients who had received infusions with the active substance showed a consistent and lasting benefit. The ongoing studies are expected to reach their targeted size in the third quarter. The companies aim to file for regulatory approval within 18 to 24 months. On the way there, Crispr recently received a lavish cash injection: in June, Vertex transferred an upfront payment of USD 900 m to Zug.
Crispr shares, which have been listed on the US technology exchange NASDAQ since 2016, have nevertheless gone off the rails. Compared to the all-time high of USD 220.20 reached on 15 January, the biotech stock slumped by more than half. It was only in the USD 100 range that Crispr was able to form a bottom in May. In the course of the subsequent countermovement, the share bounced off the horizontal resistance at USD 160. Currently, it is once again moving in an overarching sideways movement that has been intact for about half a year. The 200-day line has emerged as a kind of pivot point, with Crispr currently trading below the moving average. Naturally, the outlined zigzag course affects the volatility of the NASDAQ stock. So far this year, the stock has shown a price volatility of close to 60%. This compares to less than 20% for the broad NASDAQ Composite Index.
The relatively high volatility is clearly reflected in the terms of the Softcallable Barrier Reverse Convertible on Crispr Theraupeutics. Irrespective of the further performance of the underlying, the new issue launched by Leonteq yields a double-digit percentage coupon. While the payout in the product currency CHF amounts to 10% p.a., the USD version pays 100 basis points more. The barrier is uniformly set at 65% of the initial level. As long as Crispr does not fall to or below this level, investors receive the nominal back in full at maturity. Indicatively, the barrier is in the range of USD 80, so the underlying would have to fall back significantly into the double-digit price range to jeopardize the yield opportunity. Please note: Due to the soft callable feature an early termination of the Barrier Reverse Convertible is possible. The opportunity to do so exists for the first time after six months and subsequently quarterly.
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