The toughest animals in the world are tardigrades. They’re found everywhere and can prosper in temperatures ranging from −459 °F (−273 °C) to 303 °F (151 °C). The Atlantic tells us that tardigrades can even tolerate New York, and perhaps their hardy nature is because they absorb DNA like a sponge. Observing the advantages other creatures possess in their own DNA gives the tardigrade inspiration for its own evolution over time.
The ability to edit DNA allows for mankind to begin playing God. Turns out that’s remarkably tough, and synthetic biology companies like Ginkgo Bioworks (DNA) are finding that out the hard way. While methods used to edit genes today like CRISPR are seeing some success, perhaps the best technology hasn’t even been invented yet. That’s why it’s important we see some wins that help prove the concept, and that first big win is coming from CRISPR Therapeutics (CRSP) with their historic first approval of a CRISPR-based medicine – CASGEVY.
CRISPR Gets CASGEVY Approval
CASGEVY is the first approved therapy in the U.S. that uses CRISPR and it’s no quick fix for sickle cell disease (SCD), a group of inherited blood disorders affecting approximately 100,000 people in the United States. Stem cells are collected from patients and sent to a lab where the actual CRISPR editing is done, and the entire process takes months, even up to a year. That’s according to an article by STAT news that hints at what revenues to expect in the coming years:
According to Bloomberg consensus estimates, CASGEVY sales aren’t expected to reach $1 billion until 2027, or more than three years after approval. Peak sales in 2030 and beyond could rise to more than $2.2 billion, according to Bloomberg.
STAT News
Vertex will report all sales of CASGEVY worldwide with profits made from the drug to be split with 60% to Vertex and 40% to CRISPR Therapeutics. That’s right, profits, so without understanding what margins look like we won’t know what that will do to CRISPR’s balance sheet. This is a $2.2 million a pop treatment that isn’t technically easy so it’s not just a matter of stamping out some pills.
Fierce Pharma tells us that “as of mid-April, five patients had their cells collected in the three regions where CASGEVY is currently approved: The United States, Europe and the Middle East.” So that’s the first $11 million, but what about the other 32,000 eligible patients (according to Vertex) that represent $64 billion in potential revenues? Patience young jedi. We’re told that revenues are only recognized when patients are infused, and that this year is only expected to bring in $84.4 million worth of CASGEVY revenues. At least then we’ll be able to see what margins look like. In the meantime, CRISPR has plenty of runway having burned $260 million last year with $2.1 billion in cash and short-term investments on the books.
While CRISPR Therapeutics is doing the work outside the body, Intellia (NTLA) is poised to bring the first-ever in vivo (inside the body) CRISPR therapy to market.
Intellia Targets ATTR
Developing drugs is expensive business which is why the first revenue stream from a commercialized therapy is critically important. It proves the platform and allows analysts to better value a company when therapies are being sold (not just one-off milestone payments) and some revenue cadence becomes established. Intellia hopes to bring the first in vivo CRISPR therapy to market – a one-time shot that sorts out ATTR Amyloidosis, a disease which can lower life expectancy to just two years in some cases.
Curing ATTR is a much better solution than treating it with expensive therapies that only provide temporary benefits. This year Intellia plans to release more data on patients from their Phase 1 study while also embarking on a pivotal Phase 3 study which will likely be one of the last steps before requesting marketing approval for commercialization. Their arrangement also differs from CRISPR in regards to downstream upside. From the latest Intellia 10-K:
The Company is also eligible to earn royalties ranging from the high-single digits to low teens, in each case, on a per-product basis, which royalties are potentially subject to various reductions and offsets and incorporate the Company’s existing low- to mid-single-digit royalty obligations under a license agreement with Caribou.
Intellia 10-K
One interesting takeaway is that Caribou (CRBU) is expected to receive upside from Intellia’s success in the form of 1-5% royalties that will be included in the implied 7-12% royalties that Regeneron pays Intellia. Speaking of Caribou…
Caribou’s Depressed Valuation
With only $329 million in cash on the balance sheet, Caribou has about three years runway left having burned through about $90 million during each of the past two years. Their current market cap of $145 million means the market doesn’t think the cash will be sufficient to fund operations and the company will need to raise more capital at extremely depressed prices or take on more debt. With their furthest candidate in Phase I trials, Caribou will likely face heavy expenses if they move forward with the planned “pivotal” Phase III trials in the second half of next year as their investor deck promises.
The pedigree of the founder made us like the company, but the stock is becoming dangerously small, and the arrival of some royalties may provide a much-welcomed non-dilutive source of capital.
Intellia’s kickback to Caribou isn’t the only example of how incestuous this space has become. Editas (EDIT) seems poised to benefit from the commercialization of CRISPR’s CASGEVY.
Enter Editas
Even legal experts can’t decipher the state of intellectual property in the gene editing space, so the ground truth will always be when the royalties start flowing. An Editas press release from late last year implies that Vertex needed to license some technology for CASGEVY.
Vertex will obtain a non-exclusive license for Editas Medicine’s Cas9 gene editing technology for ex vivo gene editing medicines targeting the BCL11A gene in the fields of sickle cell disease and beta thalassemia, including CASGEVY™ (exagamglogene autotemcel).
Credit: Editas
The $387 million company exited last quarter with $377 million in cash which – when combined with expected revenues from Vertex – is expected to fund operating expenses and capital expenditures into 2026. Why Editas continues to pursue a therapy (reni-cel) that addresses the same indications as Intellia is rather puzzling, and the only other promising stuff happening in their pipeline involves some work with pharma giant BMY.
Merely keeping the doors open while capturing royalties on the back of others successes could be a viable strategy, but Editas seems bent on continuing to progress pipeline candidates, even without a development partner. We exited our Editas position just over two years for reasons given in this piece.
Newcomer in CRISPR
That about rounds up our CRISPR OG coverage, but before we move onto other editing methods, it’s worth mentioning a newcomer – Metagenomi (MGX). We opted to cover this company in a video because the inevitable conclusion would be that they’re just too early stage. The road to pharma is paved with the best intentions of developers who ran out of money with no options to exit. We’re trying to avoid another Bind Therapeutics, so we’ll wait until Metagenomi progresses their pipeline a bit more before taking another look.
In the meantime, this $160 million company has $327 million in cash providing yet another example of how investors are valuing early-stage drug development companies less than the cash they hold. While Metagenomi’s business model sounds good on paper, they’re just too small to consider right now. The more time goes by, the more likely some new technology might come along that’s superior to CRISPR – like base or prime editing.
Beam’s Base Editing
“What if we could develop better one-time therapies for patients with SCD?” asks Beam in their latest investor deck. Their in vivo delivery method would “overcome need for transplantation, lower
infrastructure requirements, and unlock wider patient access and geographies,” which implies a lower price tag. This lead pipeline candidate, BEAM-101, is a direct challenge to CASGEVY, so we’ll want to keep an eye on how this progresses. Alongside this priority focus is a second candidate, BEAM-302, which addresses a genetic liver disease called AATD.
These two candidates are said to be a priority for the company following a portfolio review last year. That’s a good segue into our last gene editing company, Prime Medicine (PRME), which was working with Beam last time we checked.
Prime’s Prime Editing
Described as a simple “search and replace” editing technology that can address 90% of known disease-causing mutations, Prime was said to be co-developing an SCD treatment with BEAM before that entry vanished from their pipeline. Today, their focus is on a disease called Chronic Granulomatous Disease (CGD). Last quarter they announced, “FDA clearance of the first-ever IND application for a Prime Editing product,” with “initial data from a planned Phase 1/2 clinical trial expected in 2025.” With $211 million in cash on hand and $165 million burned last year, this $645 million company enjoys a premium over their cash position unlike other names we’ve discussed today. Maybe Google knows something? They have a 12% position in Prime which was said to have increased earlier this year.
Conclusion
Another year, another gene editing check in. Our positions in three gene editing stocks – Intellia, CRISPR, and Beam – seem well placed for now. A rising tide lifts all boats, so any positive news will have a broader effect across all these names. So will negative news, and the first time a patient grows two heads, the gene editing community will immediately be under regulatory scrutiny while everyone screams for a moratorium on further development.
That’s just one of many problems that can befall an industry that’s only in its infancy. Perhaps the biggest concern is that large pharmaceutical companies build or buy technologies superior to CRISPR and all these companies slowly slide into irrelevance as they’re quickly replaced by more superior technologies. We’ll check back in a year to see how much money CASGEVY has poured into everyone’s coffers.
