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Rewriting the Code of Life with CRISPR-Cas9

November 12, 2018

 

Last week, Editas Medicine, CRISPR Therapeutics, and Intellia Therapeutics released their third quarter financial results.

 

All three of the biotech companies are currently developing treatments using CRISPR-Cas9 gene editing technology. They are also all still preclinical, with no commercialized products available yet.

 

Editas Medicine was the obvious leader of the group, with a $0.50 increase in EPS; $337.5 million in cash, cash equivalents, and marketable securities; revenue increases from their partnership with Allergan; and progress on their Investigational New Drug (IND) application for their EDIT-101 treatment.

 

Below is an overview of the Q3 financials for all three biotech companies:

 

Editas Medicine (NASDAQ: EDIT)
  • Cash and cash equivalents

    • $111.7 mm* (Q2 change: -$20.2 mm)

  • Total current Assets:

    • $342.6 mm* (Q2 change: -$6 mm)

  • Total current liabilities:

    • $26.1 mm* (Q2 change: +$2.1 mm)

  • Accumulated deficit:

    • -$391.2 mm* (Q2 change: +$15.2 mm)

  • EPS:

    • -$0.32* (Q2 change: +$0.50)

  • Market cap:

    • $1.37B (Q2 change: +$51 mm)

  • CRISPR-Cas9 patent license:

    • MIT Broad Institute

 

CRISPR Therapeutics (NASDAQ: CRSP)
  • Cash and cash equivalents:  

    • $487.3 mm* (Q2 change: +$167.6 mm)

  • Total current assets:

    • $496.7 mm* (Q2 change: +$166.2 mm)

  • Total current liabilities: 

    • $32.3 mm* (Q2 change: +$13.8 mm) 

  • Accumulated deficit:

    • -$244 mm* (Q2 change: +$50.7mm)

  • EPS: 

    • -$1.07 (Q2 change: -$0.25) 

  • Market cap: 

    • $1.876B (Q2 change: -$9 mm)

  • CRISPR-Cas9 patent license: 

    • Regents of the University of California, the University of Vienna and Dr. Emmanuelle Charpentier (collectively “UC”) 

 

Intellia Therapeutics (NASDAQ: NTLA)
  • Cash and cash equivalents:

    • $293.2 mm* (Q2 change: -$12.3 mm)

  • Total current assets: 

    • $299 mm* (Q2 change: -$18.6 mm)

  • Total current liabilities:

    • $26 mm* (Q2 change: -$800K)

  • Accumulated deficit:

    • -$182 mm* (Q2 change: +$22.7 mm)

  • EPS

    • -$0.53 (Q2 change: -$0.01) 

  • Market cap:

    • $815.4 mm (Q2 change: -$229.6 mm)

  • CRISPR-Cas9 patent licensed from:

    • UC (licensed directly from private company Caribou Biosciences, founded by Jennifer Doudna in 2011)

 

*As of 9/30/18, SEC filing Form 10-Q

 

Genetic Engineering

 

Before I fully understood genetic engineering, I was pretty against it. I associated it with Monsanto taking advantage of farmers, unlabeled genetically modified foods in grocery stores, and the creation of Franken-fish GMO salmon.

 

But as I started learning about its very beneficial applications in improving human health, my views became a lot more positive (I do still think GMO foods should be labeled for consumer consent).

 

The rapidly expanding universe of scientific advancements

 

 

The potential that recent progress in genome editing holds is astounding. If we mapped out the rate of advancement in medical and scientific discoveries over the past few hundred years, it would appear like a rapidly expanding Fibonacci spiral.

 

With every breakthrough, such as the Human Genome Project’s successful sequencing of the human genome in 2003, an exponential amount of additional discoveries are made, multiplying advances at an ever-expanding rate.

 

Passion fuels motivation

 

Though I’m a firm believer in not letting emotions get in the way of investing, there is one caveat where I think emotionality can be beneficial. In order to be motivated to conduct the thorough, ongoing research and tracking necessary for successful investing, having an interest in the industries or products you’re taking a stake in can be hugely beneficial.

 

The potential impacts these rapidly growing scientific advancements can have on human health and wellbeing is why I find the biotech industry so exciting. I love reading journal publications, books by scientists and doctors, and trial results to deeply understand what the companies I’m tracking are developing.

 

This is just my area of interest as I’ve always been really into human health, but obviously everyone is different!

 

The key with this, though, is to not form such an attachment that you can’t cut the investment if it’s not working out.

 

Genome Editing

 

Gene editing is one area of the biotech industry I find particularly interesting. I recently finished a book by Jennifer Doudna, scientist and co-discoverer of genome editing technology CRISPR-Cas9, called A Crack in Creation. Doudna is also a founding member of Intellia Therapeutics and was a co-founder of Editas Medicine.

 

This book allowed me to begin to comprehend the depth of the impact that CRISPR-Cas9 and genome editing could have on humanity. Although there are a multitude of companies leveraging CRISPR-Cas9, U.S. human clinical trials have not yet begun.

 

In my last post on genetic engineering, I gave an overview of genome editing as a whole, what makes it the next generation of gene biotechnology, and how it differs from existing gene therapies.

 

In this post, I’ll focus more specifically on CRISPR-Cas9, one of the newest tools used for genome editing. I am not making any investment recommendations; just sharing what I’ve learned so you can make your own better-educated decisions.

 

CRISPR-Cas9 is just beginning it’s ascent into the medical industry

 

Officially discovered in 2012 by scientists Jennifer Doudna and Emmanuelle Charpentier, CRISPR-Cas9 is an incredibly powerful and precise gene editing technology.

 

It has been lauded as the "the biggest biotech discovery of the century" by the MIT Technology Review, and in 2015, the pair won the Breakthrough Prize in life sciences (sponsored by tech stalwarts such as Mark Zuckerberg and Anne Wojcicki) along with $3 million each.

 

Additionally, a three-year patent battle between UC Berkley, led by Doudna and Charpentier vs. the Broad Institute of MIT and Harvard, led by scientist Feng Zhang, over who owns CRISPR-Cas9 rights recently came to a conclusion in September of 2018. Zhang and the Broad Institute of Cambridge, Massachusetts were awarded crucial intellectual property spoils to the CRISPR-Cas9 technology.

 

Although Doudna and Charpentier first discovered and used CRISPR-Cas9 and filed their patent first, a premium was paid on the patent Zhang filed so it could be fast tracked.

 

The Broad Institute’s legal fees have exceeded $10 million, which is an indication of how valuable, and potentially lucrative, MIT believes the technology is.

 

What exactly is CRISPR-Cas9?

CRISPR-Cas9 can be used to edit the DNA of any species, including humans.

 

Based on the natural defenses used by bacteria when they detect viral DNA, their system produces two sequences of RNA, one of which matches that of the invading virus.

 

The system is made up of two components: The replica single guide RNA (sgRNA) and a Cas9 nuclease. Together, the replica sgRNA acts as a guide to target the invader and unwind the double helix, while the Cas9 then cuts the targeted virus DNA to disable it.

 

In addition to having the ability to disable the DNA, the CRISPR-Cas9 complex can also make edits by interfering with the cell’s repair process. Once the cut is made and the cell tries to repair the DNA, the complex deploys a new repair template, which results in altered DNA carrying the new sequence.

 

Over the past few years, researchers studying the system discovered that by changing the guide RNA to match that of the target DNA, CRISPR-Cas9 could be engineered to cut not just viral DNA, but any genomic DNA sequence.

 

Why is CRISPR-Cas9 so prolific?

 

Two of the features of CRISPR-Cas9 that make it so groundbreaking are its cost effectiveness and precision.

 

Low Cost

 

Before this RNA interference system was uncovered, previous gene editing methods were very expensive, limiting how many experiments researchers could conduct.

 

The low cost and relative simplicity of CRISPR-Cas9 has even led to DIY gene editing companies that sell kits allowing anyone to edit DNA (most are instructional kits used by classrooms, etc. for educational purposes).

 

Precision

 

The other prolific aspect of the CRISPR-Cas9 system is its precision.

 

A big piece of the gene editing puzzle was accurately finding a specific ~20 base pair sequence amongst the 3 billion+ DNA base pairs in the human genome, which was eventually overcome using the system’s guide RNA.

 

Precision is one of the most important factors in gene editing as a wrong cut or replacement could lead to dangerous mutations within the body that could have detrimental results, such as cancer formation.

 

Control in ensuring accuracy

 

Doudna explains the importance of having a long enough guide RNA sequence for accuracy. If the sequence is too short, say just a few bases, it matches with too many targets and make cuts all over the cell.

 

CRISPR-Cas9 does its work within the nucleus of a living cell on any unique ~20 base DNA sequence present immediately adjacent to a Protospacer Adjacent Motif (PAM).

 

This sort of accuracy is integral for achieving the desired results in a highly controlled manner.

 

Rewriting the Code of Life

 

The science behind these companies is truly astounding. It's so fascinating how we've come so far using technology to edit machines that we're now moving on to the code that makes up living things.

 

There are, of course, many ethical and moral debates surrounding the implications gene editing tools such as CRISPR-Cas9 could have on humanity, some of which I touched upon in my last post.

 

As Doudna said, “we had validated our new technology that offered scientists the remarkable ability to rewrite the code of life with surgical precision and astonishing simplicity.”

 

Since many of these concerns will be non-issues until far down the road, for now, I'm focusing on the positives of the potential these technologies hold in debugging faulty genetic wiring that's causing disease and suffering.

 

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