Investing in CRISPR: Which Gene Editing Stock to Buy?
We’ve talked before about gene editing and a technique called CRISPR or CRISPR Cas9 that allows us to start changing DNA such that we can do useful things like create nanobots or eradicate inherited diseases. A while back we highlighted 7 companies playing in the gene editing space and at the time we wrote that original article, none were publicly traded. Fast forward to today and we have 3 publicly traded stocks that are pure-plays on gene editing for investing in CRISPR technology:
The question everyone is asking no doubt is which of these stocks is the best one to pick for investing in CRISPR? We’re going to get around to answering that question but first let’s take a look at who some key backers were for each gene editing company along with our previous articles on their respective IPOs:
- Intellia – The Intellia Therapeutics IPO – Editas vs. Intellia
- Editas – Gene Editing Company Editas Files for IPO
- Khosla Ventures
- Google Ventures
- Juno Therapeutics
- Crispr – A Third Gene Editing IPO from CRISPR Therapeutics
- GSK (GlaxoSmithKline)
- Franklin Templeton
There were tons of big name venture capital firms we didn’t list above as we know most retail investors don’t keep a running list of “who’s who” in the VC world. Let’s just say that interest in these 3 companies was strong across the board with representation from big pharma, traditional asset managers, and of course VCs. This also aligns with who each company has partnered with and what they are working on:
- Intellia (NTLA)
- Novartis: New CRISPR/Cas9-based therapies using chimeric antigen receptor T cells (“CAR T cells”)
- Regeneron Pharmaceuticals: CRISPR/Cas-based therapeutic products primarily focused on gene editing in the liver
- Editas (EDIT)
- Juno Therapeutics: Engineered T cells that have been genetically modified to recognize and kill other cells.
- Adverum Biotechnologies: Explore the delivery of genome editing medicines to treat up to five inherited retinal diseases
- Cystic Fibrosis Foundation Therapeutics: Modification of the cystic fibrosis transmembrane conductance regulator gene
- Crispr (CRSP)
- Bayer HealthCare: Ceate a joint venture, Casebia Therapeutics LLP (50% ownership)
- Vertex: Strategic research collaboration agreement
Now let’s look at some basic financial metrics (numbers expressed in millions):
|Company||Revenue (Q3-2016)||Revenue (2016-YTD)||Cash||Shares Out|
|Intellia Therapuetics (NASDAQ:NTLA)||4.80||10.90||290.00||36|
|Editas Medicine (NASDAQ:EDIT)||0.96||5.20||200.00||36.7|
|Crispr Therapeutics (NASDAQ:CRSP)||1.5||2.8||228.00||39.8|
Looking at the above table, it’s remarkable how these 3 companies are so similar. While each company has been staffed with experienced executives to steer their respective ships, let’s look at the scientific minds behind each of them:
Intellia is the brainchild of Dr. Jennifer Doudna. “Jennifer, in collaboration with Dr. Emmanuelle Charpentier, led the team that developed the application of CRISPR/Cas9 and its use as a tool for genome engineering, including editing and repair, in eukaryotes and other organisms” (verbatim from the NTLA website).
Emmanuelle Charpentier co-founded CRISPR Therapeutics in Switzerland. “Her seminal research unveiled the key mechanisms of the CRISPR/Cas9 technology, laying the foundation for the use of CRISPR/Cas9 as a highly versatile and precise gene editing tool” (verbatim from the CRSP website).
In the Editas corner is Feng Zhang, the guy who has ownership over the CRISPR patent at the moment and that ownership is currently what is being disputed. In his bio on the Editas website, he has been careful to not make any mention of his work on CRISPR or his contributions to this technology.
Here’s an excerpt from FierceBiotech on what the dispute is all about:
Let’s go back to the beginning: Biochemist Dr. Jennifer Doudna, from the University of California, Berkeley, submitted her patent application for the core CRISPR technology back in May 2012 after creating the tech along with Emmanuelle Charpentier.
But then biologist Feng Zhang from the Broad Institute of Harvard and MIT submitted a similar patent application in 2013–but he requested a fast-track process and received the official patent in April 2014. Zhang has since been awarded additional patents on the technology.
The two both claim to have invented the tech, leading to a legal “interference” claim in January of this year between the two scientists’ patent apps to settle just who is right.
The one thing worth noting here is that Feng Zheng and Editas have George Church on their side, someone who is pretty much achieved deity status in the scientific community:
We’ve covered some of George Church’s other interesting endeavors like his genome interpretation company called Knome which was acquired in 2015 or his involvement with Joule, a company that created a genetically altered organism that uses the sun’s energy to literally sweat ethanol or hydrocarbon fuels. While the main actors in the CRISPR drama are Zhang/Doudna/Charpentier, George Church has remarked that “of all the researchers who might deserve more credit for developing CRISPR, he’s at the top of the list“. In other words, he doesn’t feel he’s been given the recognition he deserves and he’s allied with Feng Zhang because the two of them worked together on CRISPR.
While the mainstream news outlets continue to roll around in the mud these days, one of the most interesting intellectual property battles science has ever seen is unfolding right before our eyes in a drama that would rival a high profile murder case with how intense it’s getting. Check out this email sent to Jennifer Doudna by a student who worked with Feng Zhang that is now an exhibit in the ongoing trial:
The Broad Institute made a public response to this email which you can read at this link along with other comments they have about the whole situation. It really makes you wonder what sort of drama took place for us to get to this point. Are all parties involved on speaking terms? Will they go out for coffee together like old friends and have a laugh about the whole thing when it’s over? Just fascinating stuff. For those of you wanting to tuck into more detail, here is a link to all the documents relating to the case for you to sift through. A timeline of events is located at this link so you can see what’s next.
At this stage what to do is remarkably clear at the moment for retail investors who are thinking about investing in CRISPR. If someone twisted our arm and said “pick one”, we’d have to go with Feng Zhang because he’s the guy who holds the patent at the moment, he was first out the door with his IPO, and he’s got George Church on his side. It’s anyone’s game though, and trying to guess who will come out ahead is about as useful as rolling a 3-sided die and choosing the winner. The companies are alike enough that you could just buy equal number of shares in each. Yes, transaction costs may be prohibitive for smaller buyers but just do what we did and create a motif like the one seen below:
Investing in CRISPR becomes easy now because you can trade a basket of all 3 companies for just $9.95. This gives you the benefits of diversification and minimizes transaction costs. The right answer to the question that asks which of these 3 gene editing stocks to buy is to just create your own motif and buy all three.
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