Patent twists and turns make Crispr no easier to value

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The first meaningful patent ruling in the ongoing squabble among the Crispr gene editing mob apparently saw round one going to The Broad Institute and its licensee Editas. The fight is far from over, of course, and surely anything that looks like a resolution can only emerge if the players agree to some sort of cross-licensing.

Until then the only real winners here will be the lawyers, given that this amorphous technology remains almost impossible to value. As such, the huge swings in market value yesterday by the three listed contenders cannot have been based on anything fundamental; the $200m boost to Editas looks particularly implausible.

True, the ruling removes an immediate worst-case-scenario for Editas – that the University of California’s patents were given priority and the Broad Institute’s “discoveries” considered not patentable.

By ruling that both parties’ claims are “patentably distinct”, the US Patent Trial and Appeal Board has essentially decided that both contain certain merits. But firm evidence of this technique’s utility and safety in humans is many years away.

Seeking the source

Yesterday’s interference hearing was brought to get a ruling on who has the right to claim they invented the Crispr/Cas9 gene-editing technology.

The University of California maintains that its academics – Jennifer Doudna and Emmanuelle Charpentier – were first, in all settings and in all cell types. Their earliest patent describing the technology in prokaryotes was filed in May 2012, and their IP claims are still pending.

The Broad’s earliest patent application was filed later, in December 2012, describing the technique in eukaryotic cells – work led by Feng Zhang. They secured a priority examination and were awarded the first Crispr-based patent in April 2014.

UC is fighting this, claiming that it invented the technology first and therefore should own the original IP, covering Crispr gene editing in all cell types. It argues that academics at the Broad built on its earlier work, and that the move into more complex organisms was obvious.

While an interference hearing is traditionally held to determine the first inventor, in this case the US PTAB needed first to decide what invention was at issue, and whether the interference should proceed any further.

The outcome suggests that the board was not swayed by UC’s attempt to define the original invention broadly, and agrees that extension into eukaryotes was a major leap forward. The technologies are therefore distinct and patentable.

The California institute – and the four companies backing its claims – must now decide whether to pursue another interference hearing with respect to only eukaryote claims, or appeal against the decision. It can also seek issuance of its original patents.

Whichever route emerges, expect further twists and turns. In a sign that the outcome is far from determined, the UK patent office yesterday seemingly ruled in the opposite direction, granting UC Crispr/Cas9 patents for all cell types, despite the Broad’s opposition.

The Crispr family tree
IP and licensees Market cap Change in value since float First IND application Partnerships
University of California
Intellia $470m -31% 2018 Novartis, Regeneron
Crispr Therapeutics  $667m 14% late 2017 Bayer, Vertex
The Broad Institute
Editas  $900m 52% late 2017 Juno

Without the ability to conduct gene editing in higher organisms Crispr technologies would clearly have limited utility for developing human therapeutics. This partly explains the falls in Intellia and Crispr Therapeutics’ stock yesterday – both rely on the UC’s technology.

However this ruling certainly does not block this route for these groups, given the potential for a licensing deal. But, until a resolution emerges, these companies will remain very hard to value, particularly as none has even applied to begin trials in humans.

Researchers in China have won the race in this respect – a team at Sichuan University began dosing lung cancer patients with Crispr-modified cells last October. And in the US it seems likely that a group led by Dr Carl June at the University of Pennsylvania will be first to use the technique, in a human trial of a Crispr-edited CAR-T therapy slated to start this quarter (First human Crispr trial is a go, but don’t ask about the IP, June 22, 2016).

In the long term, however, the race to get into clinical studies is likely to be just as irrelevant as these patent spats. The potential is clear, but proof of principle is still needed. Until that emerges, the staggering $2bn assigned to the Crispr space looks like throwing darts at a board.

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @ByAmyBrown on Twitter

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