Why Is Editas Going Public?
Editas, the gene-editing company founded by several of the scientists who developed CRISPR technology, announced on January 4th that it had filed preliminary paperwork for a public offering of stock. The filing with the Securities and Exchange Commission is extremely long, but lacks certain vital details, For instance, some clearly unanswered questions are:
- How much cash does Editas hope to raise? There is a placeholder number of $100 million, but that is very likely to change dramatically.
- When will this take place? "As soon as practicable after this Registration Statement is declared effective."
- Will anyone be cashing in? "A significant portion of our total outstanding shares is restricted from immediate resale but may be sold into the market in the near future."
The Economist response seems acute:
As difficult sales pitches go, this one is hard to beat. This biotech company has burned through $75m in the past few years and has not yet started clinical work on a drug candidate. It says it will be many years, "if ever", before it has something ready to commercialise. If this were not enough, not only is there a thorny patent thicket to manage but the firm must fight and win a case seeking to overturn its own intellectual-property claims on the ground that it was not the first to invent them.
The prospectus does include some new information, including the gossipy history that the company was originally incorporated as Gengine. (Gene-engine? Could we have been spared the whole "editing" metaphor? Probably not.) There is certainly more detail about its product plans and, if you can read the tables correctly, current shareholders, the largest of which, per Xconomy's summary, are all venture capital funds:
16.6% Flagship Ventures
15.6% Third Rock Ventures
15.6% Polaris Venture Partners
9% Bng0 (a Bill Gates-affiliated fund)
5.7% Viking Global
4.8% CEO Katrine Bosley
The prospectus confirms that Editas hopes to begin clinical trials on a therapy for Leber congenital amaurosis in 2017. That disease, which affects 2–3 per 100,000 newborns, is listed by NIH as being associated with at least 14 genes. Mutations in CEP290 (the Editas target, also known as LCA10) account for 15–22% of cases.
Being able to claim that the blind shall see is of course a great selling point, but even if the proposed treatment works, no price has been set for it. (Spark Therapeutics, which may be a competitor, has in the pipeline at least one gene therapy product for LCA blindness that seems likely to cost $500,000 per eye.) Presumably this is more of a proof of concept for Editas than a big moneymaker.
Editas is not the only gene-editing firm considering raising money on the stock market. Intellia, one of the companies founded by Jennifer Doudna, co-author of the first published paper on the technology, has been rumored to be "IPO-ready." CRISPR Therapeutics, founded by Doudna's co-author Emmanuelle Charpentier, is at least considering one, according to CEO Rodger Novak, who noted wryly that
Coming late to this party is not very smart.
Meanwhile, the patent wars are coming to a head. In headline terms, that's a fight between Feng Zhang of Editas on one side, and Doudna (and Charpentier) on the other. Doudna was also a co-founder of Editas, along with Zhang, George Church and others, but withdrew when the patent dispute arose. The Patent Office has officially declared an "interference" and Doudna seems to be a slight favorite at present. (UC Berkeley is favored over the Broad Institute and MIT.) Both sides have stated that the technology will be freely available to researchers, but commercial licenses could be very, very lucrative. When this all ends is unclear.
The business of business is, of course, business, and far be it for those not expert in such matters to criticize decisions about going public. But Editas is said to have at least two years' cash on hand, and the current investors might even snap up the shares on offer.
So why now? Is this all about striking while the publicity is hot?
Previously on Biopolitical Times: