Biotech start-ups burn through piles of investors' cash, so anything that delays development of their first potential revenue streams tends to get a big reaction. Crispr Therapeutics AG (NASDAQ:CRSP) investors learned this the hard way after the company announced a clinical hold placed on its lead candidate recently.
As one of several well-funded start-ups attempting to bring the first CRISPR-based gene therapies to patients, timing is important. Luckily, there are a few good reasons to suspect the Food and Drug Administration's (FDA) request will look more like a little speed bump than a Detroit pothole.
1. Sooner's better than later
Crispr Therapeutics AG's market value has swelled far past that of its peers partly because it's moving awfully fast. Unfortunately, it looks as if the company tried to rush an experimental therapy into human studies before it was ready.
According to Crispr and Vertex Pharmaceuticals (NASDAQ:VRTX), the FDA has certain questions it needs to see resolved before it will approve an investigational new drug (IND) application that the partners submitted in April for CTX001. If the FDA had let whatever deficiency it encountered slide, the partners probably could have begun human studies in the U.S. before Editas Medicine (NASDAQ:EDIT) or Intellia Therapeutics (NASDAQ:NTLA) even submitted their first INDs.
Clinical holds that interrupt hundreds of patients' dosing schedules can be disastrous, but Crispr and Vertex hadn't even begun recruiting patients before the FDA hit the pause button. If I had to venture a guess (and I do because such communications with the FDA aren't subject to disclosure), I'd say the company needs to run another animal study that will delay its IND filing by several months at best.
2. First clinical trials are still on track
Although it could be a while before any American patients with beta-thalassemia or sickle cell disease receive a dose of CTX001, the experimental gene therapy's European tour is still on schedule. Earlier this year, Crispr announced the candidate's first clinical-trial application had been accepted, and the company recently reiterated its intent to begin dosing patients with transfusion-dependent beta-thalassemia in the second half of 2018.
The company hasn't announced the acceptance of the necessary applications, but it expects to introduce CTX001 to European patients with sickle cell disease by the end of the year as well.
3. Off-the-shelf is where it's at
Although CTX001 may be Crispr's first candidate to produce human proof-of-concept data, the company's oncology candidates are arguably a larger source of value for the company at the moment. New cellular cancer therapies Kymriah and Yescarta carry list prices of $475,000 and $373,000 per patient, respectively, in part because they're awfully expensive to manufacture.
These treatments involve harvesting a patient's immune cells, then training them to recognize and attack when they see a protein on the surface of cancer cells called CD19. Crispr thinks it can skip a step and make batches of off-the-shelf immune cells trained to attack CD19. That's the same target Kymriah and Yescarta aim for, and success in a clinical study would draw plenty of attention from cash-laden drugmakers eager to bolster oncology pipelines. For example, Gilead Sciences shelled out $12 billion to get its hands on Yescarta last October.
Crispr's on track to file an IND application for its CD19 targeting therapy, CTX101, by the end of the year, and a couple more could be on the way. Recently presented data from animal studies suggest the company has a chance at advancing off-the-shelf cellular cancer therapies aimed at CD70 and BCMA, two lesser-known targets often found on cancer cells.
4. There's never been a better time to develop gene therapies in the U.S.
Complex treatments like CTX001 and CTX101 present huge issues for regulators used to reviewing simple tablets, but the agency appears up to the task. Recently appointed FDA Commissioner Scott Gottlieb outlined the agency's ongoing approach to a tsunami of gene therapies currently in development.
In the case of a rare bleeding disorder, Gottlieb has stated the agency will probably be willing to approve a gene therapy that can prove it raises production of a clotting factor that these patients lack in advance of outcome data that would take years to generate. It stands to reason that the agency might bend in a similar direction for CTX001 if it can help its target populations produce adequate levels of functional hemoglobin.
A bigger reason to worry
Years down the line, most investors probably won't even remember Crispr's latest regulatory setback, but that doesn't mean they shouldn't be concerned. The company has no products to sell, which means its market cap at recent prices is a $3.2 billion house of cards that could come crashing down if the first human studies for CTX001 or CTX101 give off the slightest whiff of trouble in the months ahead.
The odds of today's preclinical-stage candidates eventually generating enough revenue to support the company's present valuation are just too slim to comprehend. Some cash-laden drugmaker itching to buy its way into the gene therapy party could make a huge buyout offer in the near future, but any investment strategy that requires such luck to avoid a loss seems doomed to underperform.