How a $70 investment could soon be worth $1 billion

The Crispr technique for gene editing is the subject of a high stakes legal battle.

In this week’s Breakthrough Biotech Alert Tom Bulford reported from his “pilgrimage” to the Doudna Laboratory at the University of California, Berkeley.

Dr Jennifer Doudna is the brilliant scientist behind what the MIT Technology Review calls “the most important biotech discovery of the century” – the Crispr technique for gene editing.

Now today, I don’t want to talk about Crispr itself. I’m interested in the legal battle over the rights to use it, and the billions of investor dollars at stake.

In case you’re interested, here’s a quick digression: Crispr stands for clustered regularly interspaced short palindromic repeats. It’s a new technique for very precisely editing and writing DNA.

That’s important because DNA is the source code of life. It’s the code which tells our cells what to be, what to do, how to work. Being able to cheaply edit DNA opens up massive new opportunities for medicine, agricultural science, industrial biotech, genomics… you name it. It could touch on almost anything to do with biology. They’re using it to bring back the wooly mammoth (and expect to hear it in connection with designer babies).

Black tie affair

Last year Dr Doudna won a $3m award for her work on Crispr. The Breakthrough Prize was organised by Facebook CEO Mark Zuckerberg to award outstanding achievements in science. The ceremony was a black-tie affair held at a giant Zeppelin hanger, and the great and good of Hollywood turned up.

Dr Doudna’s certainly gotten most of the glory over Crispr. But that’s looking less and less important now. Because not long after Dr Doudna accepted the Breakthrough Prize, the US Federal Government awarded an exclusive patent for the commercial use of Crispr to a researcher by the name of Dr Feng Zhang.

It’s all well and good having the respect of Mark Zuckerberg, but without the patent Dr Doudna won’t be able to fund research on real medical treatments based on Crispr (and she, and UC Berkeley, won’t get rich off it.) There’s a lot at stake here.

Now the two camps are getting stuck into each other in the courts. Harvard and MIT are backing Dr Zhang’s camp. Berkeley is backing Dr Doudna. They’re arguing over the patent: who got to Crispr first, who filed the patent first, who got the patent first.

A $70 investment

Zhang and Doudna both made important breakthroughs at close to the same time. Doudna got published before Zhang and filed her patent seven months before him. But Zhang paid $70 to have his claim expedited. $70 made the difference – his patent was awarded first.

Three federal judges will hear an appeal this November. Doudna and Zhang both have to testify. Billions of dollars are at stake. And both camps are spinning the story for their own ends. In January, the president of the Broad Institute (a joint venture between MIT and Harvard which hosts Dr Zhang) published a detailed history of Crispr in a scientific journal. It didn’t give Dr Doudna much credit for her input; she said the article was “factually incorrect”.

Companies have been founded and floated on the stock market based on the competing patent claims. Some are based on the Doudna patents and some are based on the Zhang patents. Some are going to be worth billions once the court case is settled, some could be worthless. Intellia Therapeutics (Nasdaq: NTLA) and Editas (Nasdaq: EDIT) have already IPO’d, before the question is settled. Together they’re currently worth more than a billion dollars.

Jacob Sherkow, a New York Law School professor, had this to say: “Every investor in the Crispr space thus far is essentially betting on a horse race.

“If you’re paying Caribou Biosciences for a license on their technology, you’re essentially gambling on them winning. And if Caribou loses, then you never had to pay that money. But you know, it’s a transformational piece of technology. So it’s better to get in on it now than to wait. There’s that Warren Buffett quote—‘If you wait for the robins, spring will be over.’ ”

This idea, of buying a stake in a company which has a chance of developing a hit drug, is common in biotech. Maybe this Crispr case is the ultimate high-stakes example of it. It’s not a type of investing I like.

I don’t like to punt on something I don’t understand, such as a Federal Judge’s interpretation of obscure biological science. In the long run, you lose more of those bets than you win.

That’s my view and it’s the view of Tom Bulford. Tom understands biotech about as well as anyone. And he’s a true believer in biotech’s power to change society. But he’s figured out a way to invest in the area which doesn’t depend on risky long-shot bets on drug discovery, or patent filings.

He’s been in on the biotech boom more or less from the start. So if you want to go deep on this, you should click here and learn more about Tom’s service.

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