A Base Editing IPO from Beam Therapeutics

The ability to modify genes may be one of the most promising disruptive technologies there is today. As the general public learns about the potential of gene editing, retail investors will be looking for stocks that provide some exposure to it. In the case of gene editing, there are three stocks that would be considered pure plays on the theme – at least the last time we checked. That would have been last March when we wrote about A Few Updates on the Progress of Gene Editing noting that “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.” The following month, we wrote about 6 CRISPR Applications from Healthcare Startups which looked at how gene editing is being used in healthcare – from fighting cancer and infectious disease to discovering diseases and even new drugs. One of the companies in that article, Beam Therapeutics, has just filed for an IPO.

A Gene Editing IPO from Beam Therapeutics

Founded in 2017, Massachusetts startup Beam Therapeutics has taken in $222 million in funding so far to develop a technology called “base editing” which focuses on precision gene-editing which replaces single letters (C, T, G, A) without inducing a double-strand DNA break. Alex Lash over at Xconomy uses a great analogy to compare base editing to CRISPR gene editing. If we misspelled a single letter in a word, base editing would allow us to change the letter while CRISPR would only allow us to change the entire word. Also called “point mutations,” incorrect single letters are responsible for approximately 58% of genetic errors associated with disease.

Beam Therapeutics says that existing gene editing methods like CRISPR, Zinc Finger Nucleases, ARCUS, and TAL Nucleases “lack control of the editing outcome, have low efficiency of precise gene correction, and can result in unwanted DNA modifications.” Those thoughts are echoed in an article last year by New Scientist titled CRISPR gene editing is not quite as precise and as safe as thought which raised safety concerns about existing methods while claiming that base editors that alter specific DNA letters “may prove to be far safer.” Earlier this year, Sangamo’s stock sunk 30% as the company’s gene therapy which uses zinc-finger nuclease technology flunked early clinical tests.

Beam Therapeutics has a portfolio of twelve therapies based on their technology that they hope will result in an “initial wave of IND filings beginning in 2021.” Their initial focus is in hematology, oncology, and immunology, and diseases of the liver, eye, and CNS.

“If existing gene editing approaches are ‘scissors’ for the genome, our base editors are ‘pencils’ erasing and rewriting one letter in the gene,” says Beam Therapeutics. The value proposition is easy to understand, so what sort of intellectual property is protecting the technology? It’s such a complex question that even the company doesn’t know the answer.

Base Editing Intellectual Property

When looking at the founding team of Beam Therapeutics, we see that all three co-founders – Feng Zheng, David Liu, and Keith Joung – were also co-founders of CRSPR pioneer Editas Medicine (EDIT) and licensed their own intellectual property to the company. Co-founder Feng Zhang is also a core institute member of the Broad Institute of MIT which happens to be a key player in how the gene editing story is unfolding. “Round one of the CRISPR patent legal battle goes to the Broad Institute,” according to an article by Science which went 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.”

Beam Therapeutics has obtained “exclusive licenses from Harvard University, Broad Institute of MIT and Harvard, Editas Medicine, and Bio Palette,” that cover their base editing technology. (Bio Palette is a startup that’s commercializing base editing technologies licensed from Kobe University.) Seems likely that the founders of Beam Therapeutics would have taken notes from the last gene editing intellectual property battle and made sure they covered all the bases this time around.

Still, it’s becoming increasingly complicated to figure out who owns the rights to what. In November 2018, it was reported that 211 patent families and 1,835 patent family members worldwide referenced CRISPR or Cas in the title, abstracts or claims. Beam Therapeutics acknowledges that “the extensive patent filings related to CRISPR and Cas make it difficult for us to assess the full extent of relevant patents and pending applications that may cover our base editing platform technology.”

Financials

Beam Therapeutics is looking to raise $100 million through their initial public offering and it’s expected that they’ll need to continue raising lots more cash as they look to move their product portfolio to commercialization. It’s pretty much a given that early stage drug development efforts don’t generate meaningful revenues now, and won’t for a while. In the meantime, the company’s 100 employees – including many of the scientists who worked directly on inventing the base editing platform – don’t come cheap. In 2018, Beam Therapeutics burnt through around $45 million, and through the first 6 months of this year, another $31 million. Cash on hand today is around $128 million. As long as milestones are being met and these three high-profile founders stay on board, investors should be willing to throw more money at the company until the full potential is realized.

Conclusion

Gene-editing technology gives us the ability to manipulate every single recipe found in nature. We can remove fatal defects and enable optimal traits in plants, animals, and humans. It’s easy to see the potential of the technology, but not so easy to see a path to making money from it. Maybe “gene editing” is Betamax and “base editing” is VHS. Or perhaps all the gene editing and base editing methods in use today will prove to be entirely primitive when a new technology emerges. The Beam Therapeutics S-1 filing clearly spells this out by stating “other gene editing technologies may be discovered that provide significant advantages over base editing.” No matter how exciting any disruptive technology may sound, only time will tell if it turns out to be the next Illumina or the next Bind Therapeutics. If the IPO happens as expected, the company will trade under the stock ticker “BEAM.”

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