CRISPR-The Next Big Thing in Biotech

By Aline Wealth Management on March 28, 2018

A family of DNA sequences discovered in bacteria could be the key to solving many of the world’s most pressing health issues. CRISPR-Cas9, short for Clustered Regularly Interspaced Short Palindromic Repeats, is a genome editing technique which allows scientists to essentially “hack” nature. CRISPR is considered by many to be a more simple, efficient, and affordable gene-editing tool than any other previously developed. Using CRISPR it is possible to insert a cut or break in the DNA sequence of an organism, thereby altering the various messages and instructions said DNA encodes. This technique uses a cell’s natural DNA repair mechanisms to trick the cell into introducing the desired changes (mutations) to the genome. CRISPR can also be used to activate and silence genes, regulate protein expression, identify the presence of cancer mutations, target and destroy specific viral and bacterial DNA or RNA, activate drug release at a specified trigger, and more (Source: ARK Investment Management LLC, 2017).

Possible Applications

Potential uses for CRISPR range everywhere from healthcare to agriculture. Gene editing could allow for gene therapy breakthroughs, such as Chimeric Antigen Receptor T-Cell (CAR-T) cancer therapy, to become viable. This immunotherapy modifies a patient’s T-cells to target and destroy malignant cancerous cells while doing no damage to their healthy cells. CAR-T therapy is estimated to become a $250 billion per year industry. Another possible avenue for CRISPR is the $75 billion monogenic disease market. Monogenic diseases are those that are caused by a single gene. It is estimated that CRISPR could address 10,000 such diseases, of which only 5% have viable treatment options available today.

CRISPR could also upend the agricultural industry. The technology can be used to breed-disease resistant livestock and crops, increase the milk yield of cows, and even raise pigs with lower fat content. This will allow the industry to meet the demands of a rapidly growing population.  Rising energy costs, climate change, and pest resistance are just a few of the pressing threats to the industry which can be combatted using CRISPR. The use of gene therapy instead of traditional GMO’s also avoids contaminating genes with foreign DNA. There is a tremendous market opportunity here. Research conducted by ARK Investment Management LLC estimates that by 2025 CRISPR could expand the agricultural market by approximately $170 billion. The tech should increase food yield by an excess of 500 trillion calories and allow the industry to increase agricultural productivity enough to feed an additional 800 million people.

CRISPR Future Applications

Source: Royal Society of Biology, 2018

Major Concerns/Obstacles

While the CRISPR technology may be sound and its potential applications plentiful, there still exist some concerns which could hinder future growth. There are concerns that the gene-therapy may not result in precise edits and could therefore lead to unintended genome alterations. Furthermore, the potential uses for CRISPR raises ethical concerns. Will there be unforeseen impacts on the ecosystem that if ‘let out’ cannot be contained? While germline editing could allow for the cure of genetic diseases, will it also lead us down a slippery slope where prospective parents make cosmetic enhancements creating so called designer babies? There exist fundamental concerns regarding the effects this could have on future generations and whether it will further increase disparities in access to healthcare whereby genome editing is only available to the extremely wealthy. Lastly, the biotech industry is heavily regulated, particularly for human applications. It can take years for scientists to move from research and animal testing to human clinical trials and finally to the marketplace. Gene editing should be considered still stuck in the R&D phase. The fate of the technology hinges on several unknowns with perhaps the most important being government oversight and regulations. As such, investing in biotech stocks using CRISPR is a speculative and long-term play carrying a relatively high risk.

Source: Pew Research Center, 2014

Market Outlook

In spite of the obstacles ahead for CRISPR, the possibilities of where this tech could lead to are reason enough for this to be on the radar of any well-informed investor. There is tremendous market potential in both the healthcare and agricultural sectors. The applications of the technology across several industries could mean greater revenue potential. As previously detailed, market potential is estimated to be in excess of $170 billion dollars in the agricultural sector alone. This is particularly significant because it is in this industry that CRISPR will face the least resistance in regards to regulations and development time. Outlook for the tech is also improved by expectations that the cost of DNA sequencing will decrease tremendously by 2022 to a mere $100 per genome. Decreased costs should allow for widespread adoption and a larger research base for scientists to build upon. This should accelerate the pace of innovation and would undoubtedly be a boon for biotech stocks. The efficiency and ease of use of CRISPR versus previous gene editing techniques such as TALEN has researchers feeling more optimistic about future prospects.  Lastly, for the SRI/ESG minded investor CRISPR represents an opportunity to directly contribute to a technology making a positive social and environmental impact. It is certainly something worth keeping an eye on.

Source: ARK Investment Management LLC, 2017