Editas stock jumps after Broad wins CRISPR patent fight

Shares in Editas Medicine rose 30% after the U.S. patent office sided with the Broad Institute in the legal tussle over CRISPR gene editing. The board ruled that the inventions claimed by the Broad and the University of California are distinct, triggering divergent reactions in the stocks of biotechs built on the work of each academic center.

Editas, which has licenses to the Broad’s patents, went on a tear, closing the day up almost 30%. The initial reaction of investors in CRISPR Therapeutics and Intellia Therapeutics, biotechs based on the work of UC Berkeley's Jennifer Doudna and her collaborators, was similarly decisive. The stock prices of CRISPR and Intellia plunged in the hour after news of the ruling broke, before rallying to close down 8% and 9%, respectively.

The Broad patents relate to the use of CRISPR-Cas9 in the cells of humans and other eukaryotes, while the UC Berkeley patents cover use of the gene-editing approach more generally. UC Berkeley argued use in eukaryotes was an obvious extrapolation of its work. The patent board disagreed.

It is unclear exactly what will happen next. UC Berkeley could appeal. But, as the university thinks its patent covers the use of CRISPR-Cas9 in all cells, including eukaryotes, it may take a different approach.

Whatever happens, it is unlikely to make or break any of the organizations involved in the way the initial stock price moves of CRISPR, Editas and Intellia would suggest. The yo-yoing share prices of CRISPR and Intellia show the dawning realization of the nuance of the situation in real time. After tanking initially, the share prices began to rebound an hour or so after news of the ruling broke.

It is rare for patent disputes to halt a biotech or program in their tracks. The CRISPR patent row has generated far more interest than most scraps over intellectual property, but ultimately it could end in the mundane way such disputes are typically resolved: licensing deals.

“We see cross-licensing likely to be the eventual path taken by both parties,” Jefferies analyst Gena Wang wrote in a note to investors. Wang expects mid-single-digit royalties.

Such a deal would see CRISPR and Intellia license CRISPR for use in eukaryotes from Editas, which, in turn, would pick up the right to use single-guide and tracrRNA from the UC Berkeley side. That would clear all the companies to get on with the task of applying the approach to the development of new therapies.