Gene editing based on the CRISPR (clustered regularly interspaced short palindromic repeats) platform has started to capture the imagination of the investing world in a big way. This emerging technology, after all, is widely believed to be the key to curing numerous life-threatening diseases.
Equally important is that Editas Medicine (EDIT -1.07%), Intellia Therapeutics (NTLA -0.84%), and CRISPR Therapeutics AG (CRSP 1.08%) have all been gearing up to advance their lead candidates into the clinic later this year. As a result, Wall Street has been warming up to these three names in a significant manner lately, causing their shares to steadily march higher over the past 12 months.
Image source: Getty Images.
The party may be over before it even starts
A new scientific paper published last Friday on bioRxiv (that's yet to be peer-reviewed), however, appears to contain some exceptionally bad news for the shareholders of Editas, Intellia, and CRISPR. In fact, Intellia's shares are already down by a hefty 11.9% in pre-market trading today, and Editas' shares are also under pressure this morning with the stock falling by nearly 5% before the opening bell. At the time of this writing, CRSPR's shares remain unchanged.
What's all the fuss about? The big-ticket item is that this journal article reported that most humans probably have pre-existing immune defenses against the "cutting element" in CRISPR known as Cas9. If true, the CRISPR-Cas9 gene-editing system may be toxic to the vast majority of the population.
The underlying problem is that this cutting element is actually an enzyme derived from two highly infectious strains of bacteria, Staphylococcus aureus and Streptococcus pyogenes. As humans have co-evolved with these two pathogens over the eons, the idea is that there's probably a good chance that we've also developed a targeted immune response to them.
And not surprisingly, the paper in question reported that a high percentage of individuals do, in fact, sport circulating antibodies that target the two most commonly used forms of the Cas9 protein employed in CRISPR. Put simply, CRISPR-Cas9 gene editing might not work in humans.
Why does this study matter for gene-editing stocks?
The long and short of it is that Editas, Intellia, and CRISPR all need to validate their gene-editing platforms by launching human trials soon. The market, though, is notoriously impatient with clinical-stage biotechs that take too long in terms of progressing toward a regulatory filing.
Unfortunately, this new study, if it stands up to peer review, strongly implies that the Food and Drug Administration may not allow human trials to proceed for any of these companies just yet. In other words, the gene-editing revolution may be put on hold until a viable workaround can be developed. That equates to at least another few years of preclinical work before CRISPR is ready for human trials. That being said, there's also no guarantee that a workaround will ever be developed.
Bottom line: The current generation of CRISPR therapeutic platforms may be far too risky to explore in human trials, and this unexpected revelation might spell disaster for the shares of Editas, Intellia, and CRISPR this year.
