CRISPR Therapeutics Raises $56M In IPO, Half Its Rivals’ Haul

CRISPR Therapeutics has raised $56 million in an initial public offering, making it the third company developing human medicines with the gene editing system CRISPR-Cas9 to make the IPO leap in 2016.

Split between Switzerland and Cambridge, MA, CRISPR Therapeutics sold 4 million shares at $14 apiece, raising about 25 percent less than the target it had set earlier this month. However, in a side deal that was inked well before the IPO, the company’s development partner Bayer has bought an additional 2.5 million shares for $35 million.

CRISPR Therapeutics shares are slated to start trading on the Nasdaq Wednesday under the ticker symbol CRSP. The firm joins rivals Editas Medicine (NASDAQ: [[ticker:EDIT]]) and Intellia Therapeutics (NASDAQ: [[ticker:NTLA]]), both of Cambridge. Editas raised more than $100 million with its February IPO and saw its shares rise above $40 each before steadily declining to the current $13.26, less than its IPO price. Intellia debuted in May, also topping $100 million. Its shares flirted with $30 apiece before a retreat brought them to the current $12.37.

CRISPR-Cas9 is a defense system that bacteria use to ward off invading viruses. It has been repurposed for relatively easy-to-use DNA editing, and in a few short years, the technology has been deployed in biology labs across the world to make genetic changes in a wide range of organisms, including yogurt-making bacteria, mosquitoes, agricultural crops, and animals used for medical testing.

But no form of CRISPR-Cas9 has been tested yet in people. All three public firms are pushing toward clinical trials, either solo or with bigger partners. Editas wants to start a trial for a rare form of blindness in 2017. Intellia wants first to target liver diseases, such as the rare transthyretin amyloidosis.

CRISPR Therapeutics’ most advanced work is for the blood diseases beta-thalassemia and sickle cell disease, in collaboration with Vertex Pharmaceuticals (NASDAQ: [[ticker:VRTX]]). It could ask the FDA for permission to start its first trial by the end of 2017. (All three companies could be trumped by investigators at the University of Pennsylvania, who this summer took a step toward starting a clinical trial with CRISPR-modified T cells in cancer patients.)

CRISPR Therapeutics and its peers will have to prove not only that their programs are relatively safe—a big question overhanging the gene editing field—but that they are as good as or better than other experimental treatments in the hands of biotech companies like Alnylam Pharmaceuticals (NASDAQ: [[ticker:ALNY]]) and Bluebird Bio (NASDAQ: [[ticker:BLUE]]).

The cost of therapies that promise one-shot cures for genetic diseases, if they eventually get the green light from regulators, could become a point of contention for insurance companies and national health systems.

In an onstage exchange at a conference last year, the VP of medical affairs at Michigan-based insurer Priority Health asked a drug industry executive a few pointed questions: “What if the treatment fails? Am I on the hook for another one? If your therapy doesn’t last as long as you thought it would, what’s your skin in the game?”

Another element of the CRISPR-Cas9 race for investors to watch is the U.S. patent fight between the Broad Institute of MIT and Harvard and a camp led by the University of California, Berkeley, vying for the right to claim ownership of the technology’s underpinnings. Editas is aligned with the Broad. Intellia has exclusive license to use Berkeley’s intellectual property for human therapeutics. And CRISPR Therapeutics is founded upon the work of Emmanuelle Charpentier, a French scientist who published key work in 2012 with Berkeley’s Jennifer Doudna. The battle, which could last years, is currently before a special court at the U.S. Patent and Trademark Office, with the occasional document or accusation causing a public stir.

Each of Editas, Intellia, and CRISPR Therapeutics was backed by different venture firms and formed partnerships with different drug makers. Editas was formed by Third Rock Ventures, Flagship Ventures, and Polaris Partners, and has an alliance with Juno Therapeutics (NASDAQ: [[ticker:JUNO]]). Intellia, formed in part by Atlas Venture, has deals in place with Novartis and Regeneron Pharmaceuticals (NASDAQ: [[ticker:REGN]]). And CRISPR Therapeutics, started by Versant Ventures, inked big partnerships with Vertex and Bayer, including a joint venture called Casebia Therapeutics to develop gene editing drugs for cardiovascular diseases.

The Bayer and Vertex partnerships could give CRISPR Therapeutics over $400 million in non-dilutive cash to work with, assuming it hits a variety of milestones.

Some of the firm’s treatments will be infused directly into the body (in vivo), and others will involve harvesting cells from a patient, modifying them in a lab (ex vivo), and returning them to the body. In addition to the sickle cell and beta thalassemia programs, the CRISPR Therapeutics pipeline also lists experimental treatments for cystic fibrosis, hemophilia, severe combined immunodeficiency (an immune disorder known as “bubble boy disease”), glycogen storage disease 1a, cancer, and Duchenne muscular dystrophy.

CRISPR Therapeutics was initially formed as Inception Genomics in October 2013. Before the IPO, Versant was the firm’s largest shareholder, with a 20.74 percent stake. Others included Celgene (12.4 percent), Bayer (8 percent), and Vertex (7.6 percent), and venture firms SR One (9.7 percent), New Enterprise Associates (9.7 percent), and Abingworth (7.8 percent).

The company’s bankers have the option to buy 600,000 more shares, which could bring CRISPR Therapeutics’ gross haul in the IPO close to $65 million.

Ben Fidler contributed to this report.