A Few Updates on the Progress of Gene Editing
Whenever an exciting technology comes along, people want to invest in it. Even if those people have never put a single red penny into the stock market, they will suddenly start buying stocks with no regard towards the basic principles of prudent investing like diversifying your holdings and not investing in over-the-counter (OTC) stocks. To make matters worse, the most exciting technologies are often the ones most likely to fail (anyone get rich on carbon nanotubes or graphene yet?). It’s just a fact that one in ten startups will fail, and even seasoned venture capitalists are unable to predict which companies will succeed.
One technology that could be one of the most exciting ever, gene editing, is on the cusp of being commercialized, and there are at least three ways to play the theme which we talked about before in our article on which gene-editing company to invest in. Here are three publicly traded gene editing pure plays, along with their performance to-date since their respective IPOs:
- Intellia Therapeutics Inc (NASDAQ:NTLA) – +30% vs. Nasdaq +57% = -27% net return
- Editas Medicine Inc (NASDAQ:EDIT) – +136% vs. Nasdaq +62% = +74% net return
- CRISPR Therapeutics AG (NASDAQ:CRSP)- +320% vs. Nasdaq +42% = +278% net return
Now we’re not implying that the share price performance for any one of these companies has any relevance on the future potential of the underlying technologies. That’s a mistake you will often see amateur investors make when they say things like “the stock price doubled a month after I bought it so it must be a great stock”. Rapid price appreciation often reflects short term volatility (especially in tech stocks), not the sort of long-term “Amazon-type” gains we’re looking to realize from a technology that changes the world. (BTW, Amazon has returned an incredible net return of +1,994% in the past decade, but of course, that doesn’t mean you should go out and buy it today.) Truly disruptive technologies need to be held for a long period of time while they “slowly” transform the world. Now that we’ve cleared that up, let’s get back to talking about gene editing.
The last time we checked in, there was a highly contested intellectual property battle taking place among various gene editing constituents. The latest update on this seems to be that “round one of the CRISPR patent legal battle goes to the Broad Institute” according to an article by Science which goes on to say that the “USPTO now has issued 50 patents related to CRISPR—14 have gone to Broad—and predicts many more will be issued”. (Feng Zhang, co-founder of Editas happens to be a core institute member of the Broad Institute so we can probably conclude that that decision should ultimately favor Editas.) Although with patents being filed and issued left and right, it’s also starting to look like there is no single gene-editing platform that will rule them all, but rather a bunch of people doing similar things, each method having its own competitive advantage – or one would hope anyways. This seems clear when you look at what Jennifer Doudna said about Broad’s recent “victory” in the Science article mentioned earlier:
“They have a patent on green tennis balls. We [likely] will have a patent on all tennis balls,” says Doudna. “I don’t think it really makes sense.”
As investors, it’s not a good sign when the subject matter experts say that things don’t make sense while using tennis analogies.
Everyone may be patenting tennis balls but how much money is there to be made in tennis if nobody is playing it? That’s what one newcomer might be thinking, another gene-editing startup called Inscripta, who wants to become the Illumina of gene editing (this is kind of what we thought shares of NTLA/EDIT/CRSP represented to be honest). Founded in 2015, Inscripta hails from Boulder Colorado where they’ve been able to attract $84.5 million in funding to give away gene-editing techniques for free, much to the chagrin of those who hoped they could pin down the holy grail of gene editing patents. According to the company:
At the close of last year, Inscripta introduced its MAD7 enzyme, which is fully available for commercial and academic researchers with no up-front licensing fees or “reach-through royalties” on products made using the technology. This unique approach was the first step in the company’s path to re-shape forward genome engineering and make it more accessible for the research community.
So now anyone can use gene editing as easily as anyone else and it’s essentially been open sourced? Does this mean that each company will now try to compete on the merits of their own platform going forward? Looking at a recent IPO filing leads us to believe that this may be the case for some.
Update 12/10/2019: Inscripta has raised $125 million in Series D funding to expand its manufacturing capabilities. This brings the company’s total funding to $259.5 million to date.
Founded in 2015, Homology Medicines took in $127 million in funding in a very short period of time from notable investors that include pharma giant Novartis, Arch Venture Partners, and Fidelity. Now they’re looking to raise $100 million in an IPO that plans to further their own gene-editing platform, AMEnDR™ (AAV-Mediated Editing by Direct Homologous Recombination), which is based on technology for which they alone hold an “exclusive worldwide license”. One of our MBAs was poking around in their latest IPO filing and found some interesting commentary on how Homology Medicines believes that all nuclease-based approaches like CRISPR, TALENs, suffer from the following limitations:
- Unwanted on- and off-target DNA modifications.
- Inability to efficiently and precisely introduce entire gene to the genome.
- Complexity of vector delivery and manufacturing to achieve gene insertion
Of course, their platform overcomes those limitations and that’s why they’re developing a drug with Novartis on it along with in vivo applications being teased (a topic we discussed in our article on Genetic Engineering in Humans on the Germline). Of course, Novartis isn’t putting all their eggs in one basket as they’re also working with Intellia Therapeutics who uses good-old bog-standard CRISPR.
When it comes to how far things are progressing with gene editing applications, we’re now seeing some pretty remarkable things being teased. We recently wrote about genetic circuit engineering and looked at a few startups in that space that are getting funded. When it comes to the research front though, researchers out of Duke University did something straight out of Drexler’s Engines of Creation and created what amounts to a bunch of nanobots that run around self-assembling. What’s even more impressive is that the sensors were communicating with each other about how most effectively to perform the task that they were instructed to do by a bunch of crazy professors over at Duke. Here’s a teaser from the paper they published on the topic:
We also interfaced curli fibrils with inorganic materials, such as gold nanoparticles (AuNPs) and quantum dots (QDs), and used these capabilities to create an environmentally responsive biofilm-based electrical switch, produce gold nanowires and nanorods, co-localize AuNPs with CdTe/CdS QDs to modulate QD fluorescence lifetimes, and nucleate the formation of fluorescent ZnS QDs. This work lays a foundation for synthesizing, patterning, and controlling functional composite materials with engineered cells.
While we aren’t scientists, we do have MBAs who believe that all that jargon means something great might be coming our way from discoveries like these. Stat News recently talked about how CRISPR gene editing is now being offered to change single “letters” in your DNA – which is relevant because according to the article “there are 32,000 known disease-causing, single-letter mutations”.
In perhaps more concerning news, we see that the first application of gene editing has been performed on a living human for the very first time. “Biohackers” are starting to modify themselves using gene editing and there is nothing we can do about it, says an article by New Scientist which asks the question “is it time to regulate CRISPR?”. Some mad scientists are even trying to genetically engineer our evening bowl of Afghan Kush, which of course raises concerns of the GMO type which we discussed before in our article on GMO vs Gene Editing vs Genetic Engineering.
Gene editing is exciting and everyone who understands how powerful it is will probably want to invest in it. Be careful about trying to stock pick. People who try to pick the winning stock in any market often end up as nothing more than speculators. You can see that by simply looking at the historical performance of active fund managers. If you want to invest in the gene editing theme, just pick up shares in all of the gene editing companies out there (using dollar cost averaging of course) and create your own diversified gene editing portfolio. Then hope that nobody else comes along with some superior gene editing technology and proceeds to beat them all. It seems like the most meaningful update about what’s happening today in gene editing is that there is even more uncertainty about who the winner(s) will be in the long run.
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