Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Editas Medicine Fell as Much as 15.7% Today

By Maxx Chatsko – May 30, 2017 at 4:17PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

All three CRISPR stocks are down considerably following a broad study pointing out clinical drawbacks of the early-stage technology.

What happened

Shares of gene editing pioneer Editas Medicine (EDIT 1.76%) dropped nearly 16% today after a new study published in Nature Methods drew attention to unintended effects of using the highly touted genetic engineering tool known as CRISPR. Shares of genome-editing peers CRISPR Therapeutics (CRSP 0.97%) and Intellia Therapeutics (NTLA 2.90%) were down as much as 6.9% and 14.9%, respectively, on the news.

The study, conducted by a team from Columbia University Medical Center, provided data showing that the technology can "introduce hundreds of unintended mutations into the genome," according to Genetic Engineering & Biotechnology News. That contradicts one of the better-known characteristics of CRISPR: precision.

Simply put, it's not sitting well with investors, who are (in knee-jerk fashion) adjusting the value placed on early-stage platforms, especially Editas Medicine, which will be the first of the group to enter clinical trials. As of 3:31 p.m. EDT, the stock had settled to a 11.3% loss. 

A drawing depicting DNA and molecular research.

Image source: Getty Images.

So what

The study is among the first to quantify the specificity of CRISPR tools, which work by delivering gene editing enzymes to specific parts of the genome through the use of synthetic guide RNAs. Or that's how they're supposed to work. The authors of the study show that although intended edits can be made with respectable efficiency, such as correcting a mutation in a gene that causes blindness in mice, there are also unintended secondary edits made to the genome.

This may seem like a bombshell report, but it's a matter of optics. Researchers have never shied away from the reality that CRISPR gene editing tools can stray off target and make unintended edits to genomes in mammalian cells (i.e., humans). Many labs -- including Editas Medicine, CRISPR Therapeutics, and Intellia Therapeutics -- are working on increasing the efficiency and specificity of the technology. This is how science works. By quantifying these off-target mutations, which the paper attempted to do, researchers can begin to better understand how to improve the technology.

Investors and traders did not take the same cool-headed approach to the news, instead giving into a knee-jerk reaction to adjust the value of each pre-clinical technology platform. While off-target edits could prove troublesome for a CRISPR therapeutic used in humans, it's important to remember that there are currently no clinical trials underway in the United States. Editas Medicine will become the first to initiate a clinical trial later this year.

The sharp contrasts in reactions from researchers and investors is likely driven by how CRISPR is perceived by the media. Unfortunately, there is a generous amount of hyped-up science journalism that sticks to simple narratives -- "CRISPR has arrived and will cure all diseases!" -- instead of more nuanced takes that give equal weight to each current obstacles and future potential facing an emerging technology. Just remember: Biology is never quite so simple.

Now what

The results from the study don't really change anything, except for bringing more attention to the already existent clinical risk inherent to the development of early-stage CRISPR therapeutics. There is still plenty of work and new technology left to be developed before gene editing fulfills its promise in treating and curing human diseases. Hopefully, this can be a long-term positive for investors in CRISPR stocks by forcing them to listen to the fundamental hurdles for the technology. Hopefully.

Maxx Chatsko has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Editas Medicine Stock Quote
Editas Medicine
$12.75 (1.76%) $0.22
Intellia Therapeutics Stock Quote
Intellia Therapeutics
$62.69 (2.90%) $1.77
CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
$65.26 (0.97%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/06/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.