What happened

Shares of Crispr Therapeutics (NASDAQ:CRSP) jumped nearly 19% today after the company announced its core development partner was expanding the scope of its gene-editing ambitions. Vertex Pharmaceuticals (NASDAQ:VRTX) announced the acquisition of Exonics for $245 million. The start-up is focused on developing gene-editing therapeutics for Duchenne muscular dystrophy (DMD) and other neuromuscular diseases.

After the acquisition closes, Crispr Therapeutics and Vertex Pharmaceuticals will expand their collaboration beyond blood diseases to develop gene-editing therapies for DMD and myotonic dystrophy Type 1 (DM1). The additional responsibilities come with an up-front payment of $175 million for the CRISPR pioneer, with another $825 million in milestone payments up for grabs. It exited March with more than $437 million in cash on hand.

As of 10:49 a.m. EDT, the stock had settled to a 14.4% gain.

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So what

Publicly traded CRISPR gene-editing companies have primarily focused on blood disorders and cancer immunotherapies to date. Today's news expands the promise of gene-editing tools into neuromuscular diseases typically targeted by gene therapies. It provides new competition for DMD-focused companies such as Solid Biosciences and Sarepta Therapeutics, which should be great news for patients.

Of course, the acquisition first has to be finalized, which is expected to occur in the third quarter of 2019. Assuming that happens, Vertex Pharmaceuticals will foot the cost of essentially all development, commercialization, and marketing activities. Crispr Therapeutics is eligible to receive an additional $825 million in milestone payments plus tiered royalties on future potential sales of gene therapy products. However, it also has the option to forgo milestone payments and royalties and instead co-develop the experimental treatments -- and therefore split all revenue and profits should products be approved -- but it has to decide before clinical trials start.

Now what

The move into neuromuscular diseases puts even more distance between Crispr Therapeutics and its CRISPR gene-editing peers Editas Medicine and Intellia Therapeutics. It significantly expands the investment in gene-editing tools by Vertex Pharmaceuticals. And it continues a recent spree of acquisitions in the field of genetic medicines.

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