About a month ago, CRISPR Therapeutics (NASDAQ: CRSP) had its IPO, and it didn’t perform as expected. However, the recent success involving its gene-editing technology, CRISPR-Cas9, has turned things around for the company.
Here is a brief look into its initial public offering and the progress it’s made in the month after its market debut.
IPO Details
- IPO Date: October 19, 2016
- Industry: Biotech
- Price: $14
- Shares Offering: 4 million
- Underwriters: Citigroup, Piper Jaffray, Barclays
- Market Cap: $11.05 million
- Estimated $ Volume: $56.0 million
- Revenues: $1.3 million
- Net Income: -$44.2 million
CRISPR went public on October 19, 2016. It ended up raising $56 million through its public offering, which was 25% below from where the company wanted to be. In addition to that, Bayer AG bought 2.5 million shares for $35 million in a private placement transaction.
The company closed out its first day on the market at $14.09, only $0.09 up from where it opened — a lackluster start to its public trading.
Intellia Therapeutics, one of CRISPR’s competitors, earned $124 million for its offering in May.
Another rival, Editas Medicine, received $109 million for its February IPO.
CRISPR was only able to raise about half ($56 million) of what each of its competitors raised on their market debuts.
CRISPR has been the eighth biotech company to go public this year. The IPO market has been at an all-time low, but there has been some resurgence within the market, especially in the second half of 2016, which could be one reason the company felt like it was a good time to go public.
For biotech IPOs, timing is crucial for success. Another factor that determines a company’s success in the market is any promising news within the company. For example, if a company is conducting clinical trials that are coming to a close, or if it’s expecting a treatment to go public, that kind of news would greatly affect the way the company is perceived and would likely bring in more investors.
It’s Happened! First-Ever Edited Genes in a Human
A brief description of CRISPR: It’s a company that works with the development of transformative gene-based medicines using its CRISPR-Cas9 gene-editing technology.
CRISPR-Cas9 technology lets geneticists and medical researchers edit parts of the genome by adding, removing, or altering sections of a DNA sequence.
The technology is highly precise and allows for direct changes to the genomic DNA, which makes it an ideal tool for gene editing.
On October 28th, a group led by oncologist Lu You at Sichuan University in Chengdu became the first to inject a patient with modified genes using the CRISPR-Cas9 technique. The patient who received the first injection has been diagnosed with an aggressive form of lung cancer and is part of the clinical trial at the West China Hospital in Chengdu.
The procedure was a success, and the patient is due for a second injection. This is a huge breakthrough for CRISPR and for gene editing. And it isn’t the last step towards research.
Carl June, a scientific adviser who specializes in immunotherapy at the University of Pennsylvania in Philadelphia, has planned the first U.S. clinical trial that’ll use CRISPR to target three genes in participants’ cells, with the objective to treat various cancers. Those trials are expected to start early in 2017.
Carl June said:
The introduction of CRISPR, which is simpler and more efficient than other techniques, will probably accelerate the race to get gene-edited cells into the clinic across the world.
On November 15th, CRISPR saw a jump in its stock when it was announced that its gene-editing technique was tested on a person for the first time. Shares ended the day at $18.15.
On November 16th, a little less than a day after breaking the news about its success, CRISPR’s stock closed at $21.58 — 18.9% gains in just one day.
The movement that’s happening now is the kind of movement that would have been beneficial during the company’s public offering, or at least the type of movement it was hoping for when it planned its IPO.
Legal Issues
While the company is embracing its success, it’s also undergoing a legal battle over the patent of its gene-editing technology.
November 17th began the oral arguments for the lawsuit over the technology.
The University of California at Berkeley, the Broad Institute of MIT, and Harvard are all arguing over who created the technology.
Berkeley had first reported using CRISPR in 2012, while the Broad Institute secured the patent for it in 2014 after publishing research on it. However, Berkeley reported its study on the technology seven months before the Broad Institute.
Ultimately, the biggest question is who exactly owns the patent for the technology… and this battle could be a very long one for all parties involved.
Plans for CRISPR
In addition to the clinical trials that are happening in China and the soon-to-be U.S. trial, CRISPR has a pipeline of diseases that it aims to cure, including treatments for:
- Hemophilia
- Sickle cell disease
- Duchenne muscular dystrophy
- Severe combined immunodeficiency (SCID), also known as “bubble boy disease”
- Beta thalassemia, a rare blood disorder
This technology is revolutionary, and it will without a doubt change the world as we know it. But it’s hard to gauge what’s in store for CRISPR, especially if you’re thinking short term. I recommend thinking long term with this company. The estimated market for CRISPR’s gene editing technology will be at $5.5 billion by 2021.
While it’s hard to predict when a drug or treatment will be on the market/commercialized for production, it’s important to recognize that biotech companies can be excellent long-term investments.
Especially a company like CRISPR — it continues to work with groundbreaking technology that has the potential to treat and possibly cure genetic diseases. Not to mention, it’s already begun using its technology to edit genes in human clinical trial, which is the ultimate leap in the right direction.
Until next time,
Jennifer Clark
Pro Trader Today