CRISPR cuts out $90M IPO bid as another gene editing biotech goes public

Finally following in the wake of Editas and Intellia, CRISPR Therapeutics has decided to buck the tumultuous 2016 IPO trend by going public with its highly sought-after tech.

Back in Februrary, and after a fairly prolonged biotech IPO drought, Cambridge, MA-based upstart Editas Medicine ($EDIT) raised $94.4 million by pricing 5.9 million shares at $16--although this was at the bottom of its anticipated range of $16 to $18.

A few months later in May the more bullish, Novartis-backed and also Cambridge, MA-based Intellia Therapeutics ($NTLA) raised $108 million, with both drawing on their preclinical CRISPR-Cas9 gene editing tech to whip up some fairly major investor interest.

Basel, Switzerland-based CRISPR Therapeutics (although much of its work is done in Massachusetts), has already made millions in private funding, but is now looking to join this group of publicly traded gene editing biotechs, saying in its SEC filing posted late Friday that it wants raise up to $90 million, and plans to list under the ticker $CRSP on the Nasdaq.

It booked around $2 million in sales for the year ending June 30, 2016, although it made an operating loss of nearly $30 million in the first half of 2016.

Caribou Biosciences, which raised $30 million in a Series B financing round back in May, remains one of the last big CRISPR biotechs to not go public.

Each group is using CRISPR in slightly different ways (and each has an interesting, interlocking but messy origin story), but the fundamental aspect sees the tech used to edit genes by leveraging an RNA guide molecule to enter in specific cells.

A protein called Cas9 then attaches to the DNA and essentially cuts it, all of which either gets rid of, completely removes or replaces a gene with a better strand of DNA. It could be used in a host of diseases, but oncology appears to be the favored early target.

CRISPR hasn’t yet entered into the lab for in-human testing, but American academic researchers are in a race with Chinese scientists to be the first to start--with the world’s first-ever test earmarked to begin before the end of the year. Of the publicly traded gene editing biotechs, Editas still appears to be in the lead for its first Phase I, which it has previously said is slated for 2017.

In its SEC filing, the 77 employee-strong CRISPR says: “We believe that our scientific expertise, together with our [gene editing] approach, may enable an entirely new class of highly active and potentially curative treatments for patients for whom current biopharmaceutical approaches have had limited success.”

It said it is pursuing a “two-pronged product development strategy” using both ex vivo and in vivo approaches.

“Our most advanced programs in hemoglobinopathies use an ex vivo approach, whereby cells are harvested from a patient, treated with a CRISPR-Cas9-based therapeutic and reintroduced into the patient.

“Beyond these lead programs, we are pursuing a number of additional ex vivo applications, as well as select in vivo applications whereby the CRISPR-Cas9 therapeutic is delivered directly to target cells within the human body. Our initial in vivo applications will leverage well-established delivery technologies for gene-based therapeutics”

It has already set up a JV with Germany’s Bayer to create CRISPR spin-off Casebia Therapeutics as well as a collab with Vertex Pharmaceuticals ($VRTX). Bayer’s venture arm owns around 8% of the biotech, with Celgene ($CELG) and Glaxo’s ($GSK) venture businesses owning 12.4% and 9.7% respectively.

The biotech notes that the four-year pact with Vertex gives it the right to option up to 6 programs, with Vertex and CRISPR sharing the development cost on hemoglobin-related programs, such as sickle cell anemia. CRISPR is keeping the U.S. commercialization rights for sickle cell disease.

It is also working on programs independently, including in immuno-oncology using ex vivo and various gene editing approaches, as well as an in vivo disruption approach to Duchenne Muscular Dystrophy. More details on these programs were not however published.

“We have assembled a team with extensive experience in drug discovery and clinical development to successfully bring CRISPR-Cas9-based therapeutics to patients,” the company concluded. “We believe our highly experienced team, product development strategy, partnerships and intellectual property position us as a leader in the development of CRISPR-Cas9-based therapeutics.”

Patent battle

There are however still lingering questions over who owns the patents to these technologies and how, should this change, it will impact those biotechs who have signed up to use these tools.

Dr. Emmanuelle Charpentier, a founder of CRISPR Therapeutics (and advisory board member to the biotech) originally developed the tech with biochemist Dr. Jennifer Doudna, from the University of California, Berkeley, around 5 years ago, and Doudna submitted the patent application for the core CRISPR technology back in May 2012.

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, who later founded Editas, has since been awarded additional patents on the technology. Dr. Doudna, who herself helped launch Caribou, was in fact originally credited as a co-founder of Editas--before splitting away and later joining Intellia.

This increasingly messy dispute has now entered into the legal realm where the patent battle will need to be resolved, but the future of these companies may hinge on any major decision made.

Just last month, an email from Shuailiang Lin, a junior scientist formerly at the Broad Institute, to Doudna was published by the MIT Technology Review that disputed MIT-Harvard institution’s claims to CRISPR. The battle is still ongoing.

Editas, Intellia and a tough market

Even outside of patent disputes, CRISPR Therapeutics may well also find itself struggling on the public market as Editas and Intellia have done over the past few months. Editas is currently trading at $16.50 with a market cap of just over $500 million, and was down 4% on Friday close.

Intellia meanwhile, down 3.2% on Friday’s close to $21.09, has a slightly bigger market cap of $734 million, but both has suffered drops over the summer, notably after it appeared neither would be the first to trial this tech in humans.

The technology, and how well it can help certain diseases, also fundamentally remains an unknown. It’s touted as being next-gen and potentially able to cure major diseases from cancer to DMD, but until there are some hard data to hand from a series of well-conducted human studies, betting on CRISPR will remain a risk.