An icy March wind was blowing across the Charles River, but in the laboratory of Intellia Therapeutics, the 1970s soft-rock hit “Summer Breeze” was blasting. Chief scientific officer Tom Barnes apologized. “Usually it’s heavy metal,” he said. He pointed out a window to a local tower, visible over the Cambridge, MA rooftops, rising from a nearby neighborhood. Intellia’s new offices were somewhere near there, out of our line of sight.
The two year old company’s more fateful impending move is a push to go public. Its IPO is scheduled for next week. That means the company, working to create new medicines with arguably the biggest biomedical innovation of the 21st century—the groundbreaking form of gene editing called CRISPR-Cas9—must convince investors to bet on its future even though it lacks what so many biotech investors crave: data from human clinical trials. What will CRISPR-Cas9 do when it gets into human cells and changes their DNA?
Intellia indicated in regulatory filings Wednesday it wants to raise $85 million in an IPO, plus a few million more if all goes well. There are indications that, beyond a small circle of sophisticated biotech investors, the public might be hesitant to buy into CRISPR-Cas9. Intellia’s competitor Editas Medicine, also of Cambridge, went public earlier this year. Also lacking human data—its first clinical trial is slated for 2017—Editas (NASDAQ: [[ticker:EDIT]]) netted $98 million in its February IPO. But more than half of the 6.8 million Editas shares purchased went to insiders—that is, groups that already owned significant blocks of shares before the IPO.
Intellia will likely sell to a lot of familiar faces, too. In its latest filings, the company said insiders want to buy about $30 million worth of shares in the IPO. Intellia will also sell $50 million and $5 million in stock, respectively, to its corporate partners Regeneron Pharmaceuticals (NASDAQ: [[ticker:REGN]]) and Novartis (NYSE: [[ticker:NVS]]) on the side.
Insiders wanting more isn’t necessarily a bad thing. In previous bear markets, some good companies have jumped through the IPO window with a little help from their friends. Problem is, it’s hard to tell if Intellia—and Editas before it—are companies that will pay off for investors. They are working about as far out on the cutting edge of biomedical science as possible. They, their corporate partners, and one other company, Crispr Therapeutics, are racing toward the clinic, though none has yet tested an experimental drug in humans. Crispr, with offices both in the U.K. and Massachusetts, might soon join the IPO queue, having raised nearly $100 million in private funds and sealed two big partnerships.
But betting on biotech without human data to provide even an early signal of how a company’s top product might perform is like betting on a flying rental car company without seeing a single prototype lift off. Not that it’s unprecedented. Every so often, a biotech manages to go public without clinical data. The bull run that finally ended last year saw a few, including Verastem (NASDAQ: [[ticker:VSTM]), Blueprint Medicines (NASDAQ: [[BPMC]]), and Dicerna Pharmaceuticals (NASDAQ: [[ticker:DRNA]]).
But the lack of clinical results from any CRISPR-Cas9 therapy widens the blind spot. Add to that the great scientific, medical, and ethical unknowns of gene editing, and it’s about as risky a bet a fund manager can make. One company so far, Sangamo Biosciences (NASDAQ: [[ticker:SGMO]]) has advanced a gene editing therapy into human clinical trials, but with a different technology than CRISPR. Sangamo has been working on its own method, called zinc finger nucleases, for two decades. By contrast, CRISPR-Cas9, as currently imagined, wasn’t discovered until 2012. (It stands for “clustered regularly-interspaced short palindromic repeats” and Cas9 for the “CRISPR-associated” proteins, or enzymes, that do the cutting.)
“We’re still at the tip of the iceberg in understanding double-stranded break repair,” said Intellia CEO Nessan Bermingham, referring to a cell’s process to fix breaks in DNA. That process lies at the core of how CRISPR-Cas9 therapies are supposed to work. Double stranded breaks happen naturally in our DNA all the time, and cells typically deal with them without a problem. When they go awry, however, bad things like cancer happen. The goal of gene editing—either with CRISPR-Cas9, zinc fingers, or another system called TALENs (short for or transcription activator-like effector nucleases)—is to artificially make a cut at the spot where a cell has a defective gene. The cut, it is expected, will trigger the cell’s natural processes to delete the defect or replace it with a healthy gene.
It’s not just our basic understanding of how cells repair themselves that’s new. Many key parts of the gene-editing toolkit to fight or cure diseases are recent developments. One example: scientists often use modified viruses to ferry genetic material into cells. Such viruses might also be candidates to deliver CRISPR-Cas9, too. The adeno-associated virus, or AAV, is the most widely used, but only in recent years have researchers teased out which types (there are 11) prefer to “infect” which kinds of cells. This kind of preference, called tropism, could be harnessed to aim drugs into specific tissues, once it’s well understood.
Even so, CRISPR-Cas9 development is moving faster than anyone ever expected, with startling jumps
