Europe outpaced in race to commercialise gene-editing technologies

23 Feb 2017 | News
Companies working to commercialise the use of Crispr–Cas9 in human therapies are choosing the US over Europe to raise money

It is one of the biggest scientific advances of recent years and Europe is trailing in the funding race to bring Crispr–Cas9 gene-editing technology to the market.

All told, Crispr–Cas9 companies set up to apply the technology in humans have raised more than $1 billion of venture capital and seen three splashy public offerings in the US – even as credit for the technology remains the subject of a simmering dispute.

Last week the US Patent and Trademark Office upheld the patent claims of the Broad Institute of Harvard and MIT in Cambridge, in a blow to the University of California, Berkeley, which had filed rival patents and took legal action against the Broad Institute.

The science behind the DNA-altering technique, potentially a cheap and quick way to fix anything about a genetic code, has advanced rapidly over the past five years ago and this progression has researchers buzzing about the potential for editing out genes that cause inherited diseases such as muscular dystrophy or cystic fibrosis.

Each of the key Crispr patent holders has granted exclusive rights to a spinoff company formed by the institution and one of its principal researchers.

The three companies that have licensed the technology for human therapeutics and floated — Editas Medicine, Intellia Therapeutics, and Crispr Therapeutics — have their R&D operations in Cambridge, Massachusetts, about a mile apart from each other.

Editas, cofounded by Feng Zhang of the Broad Institute, and backed by Bill Gates, raised $94.4 million in February last year when it listed on the Nasdaq market in New York. It was the first IPO specialising in Crispr and the company is set to begin to test it first treatment on humans sometime this year.

Rival Intellia Therapeutics went public just three months after Editas, raising $108 million.

Crispr Therapeutics, a Basel-headquartered company, jumped ship to list on the Nasdaq. It raised plenty of cash when private, but the company came up with half the money of its competitors – $56 million – when it went public.  

That is not to say there is no activity in Europe. In 2015, Crispr Therapeutics partnered with Bayer to launch a joint venture, with the German pharma giant pledging to invest at least $300 million over five years.

Also, an Irish company called ERS Genomics, is licensing French microbiologist and Crispr co-inventor Emmanuelle Charpentier’s work for research and other non-therapeutic applications.

Not a CRISP performance

Experts point to some long-standing reasons to explain why Europe trails in the field.

Without the same pool of experienced biotech investors you find in the US, it is a tougher place to raise funds, said Barbara Freischem, executive director of European Biopharmaceutical Enterprises, based in Brussels.

“There’s simply not enough specialised funds here. You can travel around and see all the European funds in five days. Spend five days in New York and you still haven’t left Fifth Avenue,” she said.

Firms raising money in Europe rely more heavily on generalist and small-cap investment funds, many of which have traditionally had little appetite for early-stage biotech businesses.

Venture capitalists and possible investors may not yet be sold on something that has yet to be tried on patients.

While red-hot, gauging the true value of Crispr surrogates, as with any newly public companies, is difficult without a long-term track record of revenue or profits.

A run of poorly received offerings in 2016 and political turbulence in the UK and US may also have deterred many companies from pushing ahead with listings.

European expertise in the field, or a lack of it, is another issue raised by Corinne Le Buhan, founder of consulting firm IPStudies near Lausanne, Switzerland.

“Basel-headquartered Crispr Therapeutics staffed its R&D in Boston rather than in Switzerland. Are we missing biotech PhDs in Europe? Or did they specialise in the wrong science subfield as opposed to their MIT or Berkeley counterparts? I only have questions, no answers there,” she said.

A smaller risk appetite – an observation often made about European investors – may make backers here pickier than their US peers too.  

“In Europe, the risk of new technology is perceived higher than the opportunity,” said Le Buhan. “Above all, we may be missing positive storytelling, to motivate both investors and researchers to engage into such ventures, make them dream and share their dream around.”

Which horse to back?

The pitched battle over who ultimately owns the patent to the breakthrough technique may also help explain some of the wariness for new companies coming into the field.

The verdict from the US Patent Office last Wednesday upheld a series of fiercely-contested patents granted to the Broad Institute, giving it control on applications in plants, livestock and humans. Berkeley, whose patent will cover all cells, may appeal.

For the moment, Editas, with an exclusive licence from Broad, looks like the biggest winner: its stock jumped over 30 per cent following the news.

By contrast, Intellia's and Crispr Therapeutics’ stock dipped, although both recovered ground after Berkeley pronounced it would go on to eventual victory.

The competing claims for the keys to the kingdom could still drag out for years. Berkeley and Broad are still battling for IP rights in Europe: both have filed similar patents with the European Patent Office.

“In Europe, it may well be another five years before a clearer picture of the patent landscape evolves,” said Catherine Coombes, senior patent attorney with UK-based IP specialists HGF.

The dispute over credit can only dim some of the enthusiasm for Crispr-Cas9, experts say.

“Uncertainty regarding the validity and scope of patents tends to devalue them,” says Jacob Sherkow, an associate professor of law at New York Law School. “To that end, companies looking for licenses to the Crispr-Cas9 tool are, on the whole, going to pay less for those licenses than they would otherwise.

“If surrogates [such as Intellia and Editas] are unwilling to license their technology cheaply, that may complicate whether and to what extent other biotech companies are interested in pursuing commercial research in that area.”

It is unclear whether that is currently the case because no one has announced that they are forgoing development because they are unwilling to pay for a license, but time will tell, Sherkow said.  

Last week’s verdict certainly adds more cost and complication for anyone looking to commercialise the tool.

“Any sensible company that aims to make a serious business using Crispr discovery will need rights from both Berkeley and Broad,” said Jorge Contreras, associate professor of law at the University of Utah. “I suspect that early on, some of the big players were betting on just one of the university groups. But now it's pretty clear that they both have necessary rights in the technology.”

Cross-licencing is not necessarily a big deal and happens all the time in telecoms, said Contreras. “While this does lead to lots of licensing negotiations, telecom standards groups have imposed rules requiring that all licenses of patents that are ‘essential’ to key standards such as Wi-Fi and 4G must be licensed on ‘fair, reasonable and non-discriminatory’ terms. 

“This kind of requirement might be a good idea with Crispr, assuming that more and more patent holders will emerge as time goes on,” he said.

Never miss an update from Science|Business:   Newsletter sign-up