Insight on one of the most compelling science stories in recent memory.
CRISPR technology has been in the news quite a bit these days. Newsweek looked at its potential to eradicate malaria. The Washington Post examined its safety. And Vox Media called it one of the "biggest science stories of the decade."
In light of all this, I wanted to pass my thoughts on CRISPR to our shareholders. I sat down with my colleague Matt Trogdon for an informal interview. Here's our discussion, which I hope you find interesting and educational:
Matt: What is CRISPR and why is it important?
Nate: CRISPR is a new technology that allows scientists to more accurately and easily edit the DNA of pretty much anything. It’s important because it has many potential applications, ranging from enhanced food yield or enhanced meat production on animals, to ways to attack cancer or address defective genes. It has many applications that could help extend life or improve life.
We decoded the genome around the turn of the century. So we know how to read the code of life. CRISPR is a way to edit that code and potentially make life better.
Matt: How did you come to be interested in CRISPR? Is it part of something that companies you're studying are working on?
Nate: I originally came across it in a magazine article about four years ago, so that was mostly just hobby interest. But I have been very closely following since then, and I’ve started seeing some companies working with it.
One of the companies in the funds, Horizon Discovery*, takes a more picks-and-shovels approach to it. They get hired by pharmaceutical companies and research labs to create cell lines with specific mutations in order to present, for example, certain cancers so scientists can test their drugs or treatments for specific types of cancer or medical conditions. So you can think of Horizon as a store with shelves full of specific gene mutations, and the labs just buy the one they want to do the tests on.
There's a lot of other companies starting to do some things in a more pharmaceutical style: Editas Medicine, Intellia Therapeutics, and CRISPR Therapeutics. Those companies are attempting to use CRISPR to create drugs or treatments for diseases. They’re kind of the next step up. They would be Horizon Discovery’s customers. They're going after the home run hit, where they release some sort of drug treatment that cures or treats a disease or disorder or allows us to stop cancer in its tracks.
Matt: Let’s go back to the science of it for people who don't know. How does the science work?
Nate: CRISPR utilizes, essentially, molecular “scissors” taken from viruses. The way viruses spread is they invade a cell and then use that cell to grow more of themselves. So they essentially hijack the cell replication process to make more virus cells and invade the body.
So CRISPR is using a portion of the virus’ process to cut the DNA where the scientists want it to be cut and then replacing that DNA with whatever coding they're trying to add to the cell. That could be a cancer-killing code or a growth-enhancing code or glow-in-the-dark code and maybe even a life-extension code. Envision a molecular pair of scissors that splice and then reconnect the DNA code in the new manner so that they can take a normal cell and make it do whatever they want to do.
Matt: What do you see as potential short-term, mid-term, or long-term investing implications?
Nate: Short term, it's still very experimental. The pharmaceutical companies that we talked about are very early stage. I don't think any of them have actually completed a phase 1, so like most early-stage pharmaceuticals it’s very speculative. The process is less than a decade old. Using CRISPR to edit cells is very new technology, and it’s still evolving.
At this stage I am more comfortable with companies like Horizon Discovery, who are supplying raw materials to the labs that are doing these tests and trying to make these great discoveries. There's a lot of trial and error, and there are a lot of consumables, and you have to keep going back to your supplier for more. So it seems like a pretty good place to be right now.
Down the road it has significant implications for drug companies. Current cancer treatments could be obsolete if we can do what people think we can do. On the population front, food is going to become a bit of a concern. And if we are able to generate more productive, higher yields without significant additional resources like water or fertilizer, then that's an amazing step forward for future generations who will be facing overcrowding. We're already reaching some water restraints around the world, so if we can make less water-intensive food, that would be fantastic, too.
So there are lots of new companies or new applications that could come down the road that would increase productivity and reduce resource intensity. That has implications for commodity producers, for farming equipment, for hospitals. That’s all down the road, though. The theory and the science is very interesting, but we’ve yet to see true delivery of any solid product.
Matt: Thinking more about CRISPR, what are some of the reasons it might get hung up? What are some of the potential negatives? How is this better than typical GMOs?
Nate: That’s a good question. It remains to be seen how regulatory bodies differentiate between GMOs and cells that have been edited within themselves. That could be a major hurdle particularly in European countries which don't allow many GMOs on the market. It’s still a very new technology, and there are some questions about unintended negative consequences.
There are some reports that have claimed that the technique does unintended edits through the cell, which can cause mutations and potentially death if you're putting it in people. Those have been downplayed, and it does seem like that’s a relatively small chance. But again, we're talking about editing cells that are going into people, so you want that to be pretty sure they’re error free.
And they're still learning different techniques around CRISPR, so there may be better ways to do it that make it easier and safer. That's not to say the companies working on it right now will be obsolete in a few years, but they may have a limited lifespan as far as their efficiency and superiority.
Matt: If you were to give an executive summary about what a typical investor on the street should know about CRISPR at this point, what would you say?
Nate: I would say it’s a young technology with immense possibilities that could improve life for many people. I would say it's still speculative. For an investor on the street, I wouldn't expect to get rich off CRISPR technology anytime soon.
*Horizon Discovery Group is a holding in the Global Opportunities Fund. For a full list of fund holdings, click here.