After a few years of explosive hype and no shortage of controversy, the gene editing system known as CRISPR-Cas9 has finally made its way to the public markets. This evening, Editas Medicine, of Cambridge, MA, priced its IPO. When Editas debuts on the Nasdaq tomorrow, public investors will have their first chance to buy into the therapeutic future of CRISPR. Will they bite—and, more importantly, hang around for the twists and turns that typically occur with a new, unproven biotechnology?
The early signs for Editas, which will trade under the ticker symbol “EDIT,” are good. The company sold 5.9 million shares at $16 apiece, in line with the projections it set last week. That means Editas has raised $94.4 million and is valued at close to $600 million right off the bat, even though it’s still likely a year away from testing its first experimental treatment in a human clinical trial.
Major biotech indices are down double digits this year, continuing to deflate the sector-wide bubble that began leaking last summer. The IPO market, which had been the lifeblood of biotech’s three-year bull run, has been shaky ever since. It would have added to the worry if Editas, with high-profile backers and a seasoned management team led by former Avila Therapeutics CEO Katrine Bosley (pictured), had struggled to complete a deal or withdrew its IPO altogether.
The Editas deal doesn’t cure all that’s ailing biotech, of course—not in an election year where drug pricing continues to be a hot topic—but its breakthrough in a tough environment, even at the low end of its projected $16 to $18 per share range, is something the sector needed. Editas is the first biotech to go public in 2016.
And that was the easy part. Editas must now turn CRISPR-Cas9—a bacterial defense system being harnessed to edit genes—into treatments for genetic diseases.
As Xconomy’s Alex Lash has written, the technology has taken the scientific world by storm. It’s an easy-to-use tool that researchers apply to create genetically altered organisms. But even as Editas and its Boston-area rivals, CRISPR Therapeutics and Intellia Therapeutics—IPO candidates in their own right—continue to get more funding and attract industry partnerships with large pharmaceutical companies, the field is still early in its development. One need only look at the bumpy trajectories of other promising drug-making strategies, like RNA interference or gene therapy, to see what could be in store. It took decades of research, clinical testing, and some devastating setbacks for gene therapy to be where it is today—and it’s still got just one approved product in Europe. RNAi was discovered in 1998, and is still at least a year away from its first product, a therapy being developed by Alnylam Pharmaceuticals (NASDAQ: ALNY).
“To me it feels like Groundhog Day,” Alnylam CEO John Maraganore told Xconomy recently, referencing the 1993 film in which the main character relives the same day over and over again. “We had these same questions in 2004 when we went public—there were people saying ‘this is too soon’ and ‘shouldn’t you wait longer.’ CRISPR-Cas9 is really exciting. I think it’s going to become important as a new frontier for medicine in the future for sure. But it’s got delivery challenges that have got to get solved.”
Indeed, as with RNAi and gene therapy, a big challenge for CRISPR-Cas9 is safely and effectively delivering treatments into the human body. It’s a different type of challenge, though, in that Editas and its rivals have to deliver these therapies in precise enough fashion to avoid off-target “cuts”—meaning, snipping the wrong piece of DNA.
Some of that road has been paved already. Editas, for instance, is delivering its first treatment, for a genetic form of blindness, to the eye. That’s where Alnylam started out; its first experimental program, more than a decade ago, was for age-related blindness before competition caused it to abandon the effort. Spark Therapeutics (NASDAQ: ONCE), which could be the first company to win FDA approval of a gene therapy, is delivering its own treatment to the eye, for a form of genetic blindness different than the one Editas is targeting. Editas said in its IPO prospectus it is considering using adeno-associated viruses and lipid nanoparticles—two delivery approaches used in gene therapy and RNAi, respectively—for its blindness treatment.
A patent fight between some of Editas’s founders and a group aligned with the University of California, Berkeley, also hangs over the CRISPR-Cas9 field. (Check out this story from January for the latest on the CRISPR IP battle.)
Editas’s top shareholders are Flagship Ventures (16.6 percent before the IPO), Third Rock Ventures, and Polaris Partners (each with 15.6 percent). The Bill Gates-affiliated vehicle Bng0, owns nearly 9 percent, while Viking Global, Fidelity, and Deerfield Management each held 5.7 percent of the company before the offering.