There exists a website from which anyone can order a supply of human DNA. In fact, for under a few thousand pounds, an amateur scientist can kit him or herself out with all the tools necessary to perform gene editing in their own kitchen. Now, that’s not to say that anything will be achieved from such home experiments but, thanks to recent progress in the efficiency of biological tools, technically anyone can have a go.
What’s more exciting is what real scientists can do with these tools. Since sequencing the human genome in the early 2000s, academics have gained a good understanding of certain genes that can cause various diseases. Now, they can use biological tools to correct genetic faults.
Michael Specter, a scientist and journalist at The New Yorker, had a go at doing just that. He ordered a human DNA sample and a specialised tool, which he used to cut a bad gene out of the sample, before replacing it with a good one.
The technology he used for this experiment is called CRISPR-Cas9. Put simply, CRISPR are segments of bacterial DNA that can be programmed to hunt out specific genes. In Mr Specter’s experiment, he sent CRISPR in search of a gene that increases the chances of a person developing Alzheimer’s disease. After CRISPR tracking, the Cas9 part of the tool sets to work cutting the bad gene out of the DNA, which Mr Specter was then able to replace with a gene known to decrease the likelihood of Alzheimer’s. Technically this ‘repaired’ DNA sample could then be fed back into the human body and may have decreased the chance of that individual contracting Alzheimer’s.
The use of CRISPR gene editing as a potential cure or prevention for human disease is not a distant pipe dream. The technology has achieved positive results in animal studies undertaken by universities and pharmaceutical companies around the world and, in November last year, the prestigious scientific journal Nature reported that a university in China had become the first to test CRISPR in a human.
Three companies are hot on the heels of the Chinese. US-based Editas Biotechnologies has said it wants to use CRISPR in a clinical trial for a rare form of blindness. CRISPR Therapeutics – a French company founded by one of the pioneers of the technology – is close to human trials to treat a blood disorder called beta thalassaemia. And Intellia, which operates out of the University of California, is focused on developing treatments for various rare diseases.
A budding business
As might be expected from a tool with the potential to cure a massive range of diseases, CRISPR is hot property. In fact, its ownership has been the subject of a lengthy legal battle in the US, which came to a head in February.
CRISPR – as a natural molecule – is difficult to patent. But the group of researchers who pioneered its development claim they should exclusively own the intellectual property (IP). Others disagree and argue that as these researchers didn’t actually ‘invent’ CRISPR, there should be no single owner. The Broad Institute, The University of California and researcher Emmanuelle Charpentier all claim CRISPR IP. The latter two have fought against the former’s ownership, but in February the US Patent Trial and Appeal Board ruled in favour of the Broad Institute keeping its IP.
This was a relief for British biotech group Horizon Discovery (HZD), which licenses CRISPR’s patent from the Broad Institute amongst others. The listed group has developed a big suite of cell lines that can be used – for a fee – by pharmaceutical companies and universities to improve the outcome of their scientific trials. For example, Horizon has created cell lines with CRISPR that can be used instead of animal models in the early stages of drug development. CRISPR can be moulded into genetic strains identical to those found in humans, which can then be used to test new drugs.
But Horizon could soon face British competition in the CRISPR engineered cell line market. Private company Oxford Genetics has recently agreed a similar licensing deal with Emmanuelle Charpentier’s company, ERS Genomics. Oxford Genetics plans to use the technology to provide genome engineering services and to support its cell line development efforts. Judging by Horizon Discovery’s success as a public company, this is one to watch if it ever decides to list.
Meanwhile, MaxCyte (MXCT) is making a name for itself as a key gene editing delivery vehicle. The group is listed in the UK, but based in the US, where it has relationships with some of the leading innovators in gene editing therapeutics. Gene editing – although still an incredibly complex phenomenon – has been made a lot simpler by the discovery of CRISPR. What remains challenging is the delivery of new, good genes into cells to replace the bad ones that have been carved out. MaxCyte helps that process with its electroporation technology. The group earns revenue from its deals with some of the top companies developing new drugs that use CRISPR, including CRISPR Therapeutics.
Oxford BioMedica (OXB) has a similar partnership with pharmaceutical giant Novartis (CH:NOVN). The Swiss giant is in the process of trialling its novel cancer treatment, CTL019, which operates in a similar way to CRISPR. Oxford BioMedica’s LentiVector platform transports the genetically corrected cells into the human body. CTL019 is close to launch and Oxford BioMedica has invested heavily in readying its manufacturing capabilities for commercialisation.
Making medicines better
But CRISPR and gene editing in general isn’t the only medical advancement being helped along by biological tools. In fact, the UK boasts an impressive market of companies that all sell or license tiny such tools for a wide range of medical applications.
Abzena's (ABZA) tagline says it all: enabling better biopharmaceuticals. Alongside its portfolio of tools for use in drug discovery, immunology and protein engineering, the group provides services to increase the efficiency of drugs development and manufacturing. One of the key problems with the biotech and pharmaceutical industry is the high number of failed drugs trials. Abzena aims to reduce that.
C4X Discovery (C4XD) is a bit different. At its core, its scientific expertise is physics and maths, rather than the biology and chemistry commonly associated with biopharmaceuticals. Using its proprietary nuclear technology, the group can build three-dimensional models of various molecules, which makes them easier to study from a medical point of view than just using 2D diagrams.
Abcam (ABC) – the original British biotech tools company – has an enormous catalogue of antibodies, which are purchased by scientists for research, drug development and diagnostics purposes. For example, as a university student, I studied the movement of certain immune cells during a period of intense exercise. To spot the specific cells in a blood sample, I used antibodies that attached on to known markers on the cells and made them easy to spot. Abcam provides about 64 per cent of the world’s research antibodies. Avacta (AVCT) is hoping to take some of that market with its novel Affimers, which are expected to be both more efficient and easier to develop than antibodies.
Antibodies are also crucial for diagnostics and Bioventix (BVXP) is a leader in providing those antibodies for big diagnostics machines. The group grows its antibodies in sheep, which make them more effective for human diagnostics than using antibodies from rodents as, genetically, sheep are a closer match. The recent launch of a new test by Siemens for troponin – a key biomarker used in heart attack diagnostics – was significant for Bioventix as the test uses antibodies created by the group. Accordingly, the company will receive product royalties based on Siemens’ activities in this area.
IC VIEW:
Biopharmaceuticals is arguably one of the world’s fastest-moving sectors, and investing here could be incredibly lucrative. Take, for example, the now exclusively US-listed GW Pharmaceuticals (US:GWP), which saw its share price rocket 140 per cent after it received approval for its novel pain relief medicine that uses marijuana as a key ingredient.
But the biotech industry is plagued with risks: for every GW Pharma, investors are likely to have to stomach several disappointments. In recent years, the allure of investing in novel drugs developers has been downtrodden by drugs pricing concerns, huge clinical trial disappointments and corporate scandals. That said, the underlying potential hasn’t wavered.
But for those for whom the drug discovery industry is just too risky, investing in biotech tools could be the prime solution. These companies offer exposure to the fast-growing biotechnology world, without the risks of clinical trial failure.
Favourites
Abcam pioneered the biotech tools sector in the UK and remains on firm footing. It's fair to question the group's valuation - the shares trade on an eye-watering 39 times forward earnings - but Abcam is yet to disappoint and we continue to expect impressive growth. MaxCyte and Horizon Discovery are following in the footsteps of Abcam's catalogue business. Both are generating revenue to support their cell line development and although both don't yet generate a profit - which makes them tough to value - we think there's further growth to come.
Outsiders
Oxford BioMedica does not have the benefit of sidestepping risks. Its future growth is almost entirely predicated on the approval of Novartis's therapy. Without the revenue from CTL019 royalty sales, there isn't a lot to the group. True, the technology is impressive, but the field is full of such expertise. With such a massive debt burden, we recommend that investors steer clear.
