Aug 19, 2021

Watershed Moment in Biotech: First-in-Human Gene Editing Proof of Concept

By Alex Munns

Watershed Moment in Biotech: First-in-Human Gene Editing Proof of Concept

At Driehaus, we believe life sciences innovation unleashed by genomics, proteomics, life science tools, bioengineering tools, and computational tools has set the backdrop for extensive improvement in human health and explosive opportunities for value creation. One need look no further than companies developing mRNA vaccines to see the type of impact that innovation in the life sciences can unleash under the right circumstances. Another technology earlier in its life cycle but potentially just as disruptive is CRISPR-based gene editing technology.

As a quick reminder: proteins are the machinery of cells. They are translated from instructions encoded in RNA, which itself is transcribed from DNA. Nearly all diseases are caused by aberrant protein function, and most approved drugs inhibit, activate, reduce, or replace specific proteins. Advances in molecular engineering in the early 21st century introduced to the pharmaceutical armamentarium therapies that deliver RNA to replace or improve missing proteins, forming the foundation of multiple $10 billion+ companies. Therapies that safely and effectively modify DNA have heretofore proven elusive, given the permanence of the changes and the risk from getting it wrong. Most companies pursuing earlier generation DNA gene editing before 2010, such as zinc finger endonucleases, gave up on it, finding the approaches too inefficient, cumbersome, or unpredictable. The discovery of CRISPR/Cas9 was a breakthrough discovery in the early 21st century that raised hopes that DNA gene editing could be accomplished – if it could be harnessed and safely delivered.

While limited successes with CRISPR/Cas9 gene editing were seen previously from a handful of companies editing cells outside of a patient’s body (e.g. ex vivo gene editing) and then transplanting those cells, the true promise of the gene editing modality lies in editing DNA inside cells that reside in a patient’s body (e.g. in vivo gene editing). Results from the first real test of this modality were released recently by a gene editing company employing CRISPR/Cas9 with an optimized organ-specific delivery technology enabled by lipid nanoparticles (LNPs).

Despite high expectations, the gene editing company delivered promising initial results in June that were concurrently published in the New England Journal of Medicine and presented in the late-breaking session at a medical conference. The results showed deep, consistent, dose-dependent reductions in the pathogenic protein that was targeted by the editing complex. Just as importantly, the patients in the study showed no significant adverse effects in the first 28 days after treatment.

Though there are still many unresolved questions and a long way to go to understand whether this iteration or any CRISPR-based gene editing therapy will become a widely used therapeutic, these data are rightfully viewed as a watershed moment, driving considerable value appreciation for the gene editing company and other gene editing companies, and considerable volatility for companies now expected to face competition from liver-targeted gene editing technologies like those from the company.

This information is not intended to provide investment advice. Nothing herein should be construed as a solicitation, recommendation or an offer to buy, sell or hold any securities, market sectors, other investments or to adopt any investment strategy or strategies. You should assess your own investment needs based on your individual financial circumstances and investment objectives. This material is not intended to be relied upon as a forecast or research. The opinions expressed are those of Driehaus Capital Management LLC (“Driehaus”) as of August 2021 and are subject to change at any time due to changes in market or economic conditions. The information has not been updated since August 2021 and may not reflect recent market activity. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Driehaus to be reliable and are not necessarily all inclusive. Driehaus does not guarantee the accuracy or completeness of this informa­tion. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.

About Alex Munns

Alex Munns is an assistant portfolio manager and a senior analyst on the US Growth Equities Team with a focus on the health care sector.

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