The future of medicine may rest in altering our genes. That’s a constant refrain in the recent history of medical science. Over the past few decades, researchers and investors have pinned their hopes on experimental gene therapies with the potential to change…
The future of medicine may rest in altering our genes. That’s a constant refrain in the recent history of medical science. Over the past few decades, researchers and investors have pinned their hopes on experimental gene therapies with the potential to change the landscape of disease, from transplanting engineered stem cells into humans to injecting them with viruses. The most recent addition to the list: Crispr-Cas9, a powerful gene-editing technique that allows researchers to rapidly—and cheaply—cut-and-paste genes.
Crispr is still a long way from snipping disease-causing mutations from the cells of humans. Right now, it’s most successful as a experimental tool, editing the genomes of yeast cells and a worm here and there. But that’s not stopping a number of biotech companies from capitalizing on the technology: Crispr Therapeutics, Caribou Biosciences (and spinoff Intellia Therapeutics), and Editas Medicine all hope to use the technique to develop human therapeutics. And yesterday, Editas became the first to go public.
Backed by Bill Gates and GV (venture capital arm of Alphabet, Google’s parent company), Editas filed for an initial public offering in January, and began trading on the NASDAQ exchange at $16 per share. It sold 5.9 million shares, raising $94.4—and the stock rose nearly 14 percent yesterday, its first day of trading.
Despite that successful opening, the company has a long way to go. Editas promises to do a lot with science that’s still in its infancy. Founded in 2013, Editas probably won’t begin clinical trials for at least a few years, even as scientists and ethicists negotiate the rules for fundamentally changing someone’s genes. More crucially, though, its ability to develop drugs rests on the results of a weedy ongoing patent dispute over the Crispr technology. “There’s a graveyard full of gene-editing biotech companies that have gone public that are no longer with us,” says Jacob Sherkow, an associate professor at New York Law School who has written about the Crispr-Cas9 patent dispute.
The Patent Battle
Editas’ business is built on patents issued to co-founder Feng Zhang, who did pioneering work with Crispr-Cas9 in his lab at the Broad Institute and MIT. But another biologist, Jennifer Doudna of UC Berkeley, disputes Zhang’s ownership of the patents. She says she invented the technology first, along with European researcher Emmanuelle Charpentier.
The patent office is now working to figure out who invented what—a process that’s expected to take about two years. Patent law can get complicated, but this case is especially gnarly. Notably, the laws that determine patent ownership changed during the period in question: A 2013 law says that patents go to whoever filed first, not whoever invented the technology. Doudna filed her initial patent in March 2013; Zhang filed in October. But he requested that his application be accelerated, so Zhang’s patent was the first to be issued, in April 2014.
The dispute could end horribly for Editas. Zhang could get to keep his patents, but if he has to split credit with Doudna, or if Doudna gets sole claim, Editas would have to license technology from her—which might be impossible, or at least extremely expensive. “I don’t think it would end the company, because there are technical ways around the patent at issue now,” Sherkow says, “but it would still be a pretty serious blow.”
All of which raises a more pertinent question: Why go public now, while the dispute is still ongoing? Well, for one, the patent thing could take a few years to resolve, and meanwhile the technology could still advance. “The patent system lumbers on. But innovation is on its own timeline,” says Robin Feldman, a professor at the UC Hastings Law School. “It’s not going to wait, certainly not going to wait years, for an invention that could be so revolutionary. Everyone is afraid of missing out on something with so much potential.”
Other explanations, totally speculative: If Editas waits, the company risks losing the patent and the venture capitalists who first invested might not be able to get a significant return. Going public means Editas’ VC backers could get a return on their initial investment (though for now they seem to be holding onto their shares). Also, raising money on the public market means Editas can continue to grow without its founders’ shares getting further diluted.
(Zhang, Doudna, and Charpentier did not respond to requests for comment. The USPTO said it does not comment on patent applications.)
Even if the patent battle goes Editas’ way, no one knows if the company will bear fruit. With clinical trials put off until 2017, the IPO prospectus doesn’t draw a specific map for future profitability. “We may not be successful in our efforts to identify, develop, or commercialize potential product candidates,” it reads.
Regardless, investors continue to flood biotech with money. The potential rewards for something like a cure for blindness are too great to ignore. Patent question aside, Editas also faces fierce competition from dozens of researchers and other Crispr-based companies, including Doudna’s own Caribou, working on ideas for Crispr-Cas9. But judging by how Editas’ first day of trading went, that’s apparently a risk some investors are willing to take.
Click here to view full article