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How Much Will the Nkarta Deal Help CRISPR Therapeutics?

By Brian Orelli, PhD and Keith Speights - Updated Jun 25, 2021 at 2:52PM

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Unfortunately, this isn't an endorsement by a big drug developer.

CRISPR Therapeutics (CRSP 0.75%) and Nkarta (NKTX 4.63%) recently formed a pact to use CRISPR's gene editing tool to create natural killer (NK) cell therapies. In this video from Motley Fool Live, recorded on May 10, Fool.com contributors Brian Orelli and Keith Speights discuss the highlights of the early stage deal and how it's not likely to move the near-term valuation needle for either development-stage biotech.

Brian Orelli: CRISPR Therapeutics and Nkarta are combining their expertise to develop cancer treatments. What do you think of that deal?

Keith Speights: This deal to me doesn't seem to move the needle very much. The company, I guess, it's Nkarta?

Orelli: Yeah, because it's NK.

Speights: To be honest with you, I'm not familiar with Nkarta, but it's a lot smaller than CRISPR Therapeutics. The company's lead candidate's still in phase 1 testing. But having said that, Nkarta does seem to bring expertise and natural killer, NK cell therapies, to the table, and that's something that CRISPR Therapeutics doesn't have. It's an interesting deal.

The companies are equally sharing all R&D costs as well as any potential profits. As far as I saw, there doesn't seem to be any up-front money changing hands, so not necessarily a lot of risk for CRISPR Therapeutics here with this deal. Nkarta also does get a license to CRISPR's gene-editing technology to edit five gene targets in an unlimited number of its own NK cell therapy products. That's a big plus for Nkarta out of this agreement.

I think this is one of those deals where we'll just have to wait and see if there's a big payoff for either party. It seems to be an OK move from my standpoint anyway, for CRISPR Therapeutics. But again, not anything that's moving the needle right now.

Orelli: CRISPR, I think, will get some money from the Nkarta -- the ones Nkarta will be working on its own, so there's potential for milestone payments.

Speights: Milestones and royalties.

Orelli: But you're right -- it's not the same as them doing a big deal with a big pharma and getting $100 million up front and potential for billions in milestone payments.

Speights: This deal isn't even in the same league as, say, CRISPR Therapeutics' multiple deals with Vertex Pharmaceuticals.

Orelli: Yeah, I agree.

Brian Orelli, PhD and Keith Speights both own shares of Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends CRISPR Therapeutics. The Motley Fool recommends Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.

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Stocks Mentioned

CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
CRSP
$79.25 (0.75%) $0.59
Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
VRTX
$298.27 (1.27%) $3.75
Nkarta, Inc. Stock Quote
Nkarta, Inc.
NKTX
$18.18 (4.63%) $0.81

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