Important Update on Our Genetic-Editing Stocks
As I’ve written about in the past, there has been an ongoing patent interference case levied by the University of California, Berkeley against the Broad Institute (Harvard & MIT) over the foundational patents for the genetic-editing technology CRISPR-Cas9.
The case has been complex, and there is far too much detail to possibly share in this update. (You can read more about the case in the October issue.) But at a high level, UC Berkeley claimed that its patents were expansive and covered all applications of CRISPR-Cas9… including all of the work that the Broad Institute has patented.
This case has been affecting the valuations of Editas, Intellia, and CRISPR because Editas has exclusive licenses to the Broad Institute’s patents while Intellia and CRISPR have access to the patents issued by UC Berkeley. In short, the patent interference has been holding back the industry. This is one of the key reasons we have been able to establish positions in these transformational companies so cheaply.
When I recommended these companies, I told you the case could potentially take a few years to work itself out. But a ruling has come much sooner than expected. On Wednesday, the U.S. Patent Trial and Appeal Board ruled that both parties did not have overlapping claims.
I believe this is the best outcome for all three parties. It essentially means that each company can pursue its current line of research and move on from the patent interference case.
The initial reactions from Intellia and CRISPR were that they will pursue other means to defend their patents. But I feel even more strongly about my original prediction than ever. I believe the three companies will enter into a cross-licensing deal for their intellectual properties, settle the disputes, and get on with their businesses.
In the short term, the market has reacted strongly in Editas’ favor. The stock closed up 28.7% on the day. Meanwhile, CRISPR and Intellia were down for the day, by 7.5% and 7.3% respectively. But I don’t expect the weakness to last long. The market is so massive that there are billions of dollars of opportunity for each of the three players to pursue. I estimate the total market opportunity for therapies derived from CRISPR-Cas9 genetic editing to exceed $1 trillion. In short, there is much more to come in the genetic-editing story. We are just getting started.
So use the current weakness to buy CRISPR and Intellia if you haven’t already.
Editas Medicine (EDIT) is a hold.
CRISPR Therapeutics (CRSP) is a buy up to $20.
Intellia Therapeutics (NTLA) is a buy up to $22.
Editor, Exponential Tech Investor