Vertex Pharmaceuticals (NASDAQ:VRTX) and its partner, CRISPR Therapeutics (NASDAQ:CRSP), have achieved significant progress with their drug targeting rare blood diseases beta thalassemia and sickle cell disease. But the big biotech isn't limiting its options in developing gene-editing therapies. In this Motley Fool Live video recorded on Oct. 27, 2021, Motley Fool contributors Keith Speights and Brian Orelli, PhD discuss why Vertex is striking another gene-editing deal with a company not named CRISPR Therapeutics.

Keith Speights: Brian, one more story for us before we get to questions. Vertex Pharmaceuticals has moved further into gene editing, this time through a deal with Mammoth Biosciences.

Mammoth is a privately held biotech that's co-founded by CRISPR gene editing Pioneer Jennifer Doudna. What do you think of this deal by Vertex?

Brian Orelli: Vertex gains access to Mammoth gene-editing tools for two different genetic diseases, which I don't think they named. Mammoth is developing next-generation CRISPR systems.

They have smaller Cas enzymes, which are one of the two enzymes that are involved in the CRISPR system. The idea here is having a smaller enzyme allows it to be put into an adeno-associated virus. There's a limited amount of space that you can use the AV viruses that you can insert genes in there.

Those AVs are used for gene therapy. But you can just as easily put the CRISPR information in there, assuming that genes are small enough. I mean, you can put the enzymes in there and then you can infect the cells with the DNA for those enzymes and the enzymes getting expressed, then they go and do their work to edit the genome. The idea is having smaller Cases will allow them to use AVs to infect the cells and make the generic changes.

Vertex's paying 41 million upfront and that includes an investment in the form of a convertible note. Then there's up to 650 million in potential future payments based on meeting research development and commercial milestones. Then Vertex will earn tiered royalties on sales of the drug, any of the two drugs and they would get developed.

I think 41 million upfront for access to the technology seems pretty reasonable. But I think it's just another move by Vertex to get further into gene editing. I mean obviously, they have a deal with CRISPR Therapeutics. I think they did a deal recently with another start-up that's working on CRISPR. Then they have now this deal with Mammoth, which has become a fairly Mammoth size private company.

I expect Mammoth would probably end up going public fairly soon. Other than now, they have another $41 million to work with.

Speights: You don't think this puts any distance between Vertex and CRISPR Therapeutics by Vertex pursuing these other side deals, so to speak, do you?

Orelli: I think if I was CRISPR or CRISPR shareholder, I would be worried, except that within the last year, they went and bought a bigger stake. I think they had a 60-40 split and where they had the smaller amount and then they bought another 10 percent so to get a bigger stake in the drug that they're developing with CRISPR Therapeutics. I think that if that hadn't happened, I would be more concerned than I'm right now.

I think that they're just looking for other options and looking for next-generation technologies. CRISPR Therapeutics doesn't have them. Maybe CRISPR Therapeutics is not going to be getting more deals from Vertex. I think that's a reasonable conclusion from Vertex during these two deals with other companies but I don't think they're going to abandon CRISPR Therapeutics anytime in the near future.

Speights: I'm totally in line with you on that, Brian. I think Vertex has certainly let its money do the talking by increasing its stake in that partnership with CRISPR Therapeutics. I think the company certainly has confidence in its partner there.

But these other smaller companies just have some different twists on CRISPR gene editing. You mentioned the smaller Cas enzyme, so they just have some other things to offer. To me, I think it makes sense that Vertex is exploring some other opportunities, but it in no way diminishes the company's relationship with CRISPR Therapeutics, I don't think.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.