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The gene-editing tool on every drugmaker's wish list this year

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(Bloomberg) — In a single year, Rodger Novak’s gene-editing startup raised $89 million in venture funding, got $105 million to enter a partnership with big drugmaker Vertex Pharmaceuticals Inc. — and, this week, announced a deal with Bayer AG worth $335 million.

Crispr Therapeutics Ltd. won’t start human trials of its therapies until 2017, but the company is at the forefront of one of the hottest technologies in biotech. Investors and drugmakers from Johnson & Johnson to Merck & Co. are flocking to a potent tool called Crispr, saying its precise DNA editing capabilities could yield treatments for conditions as diverse as blood diseases, cancers, auto-immune disorders and genetic eye disorders.

Gene-editing companies have drawn more than $1 billion in venture dollars since 2013, according to Boston Consulting Group, from traditional biotech venture capitalists like Deerfield Management Co. and Polaris Partners, and names better known in in the tech world, such as Bill Gates and Khosla Ventures. Demand to participate in Crispr Therapeutics’ funding round was so strong that the company turned away some blue-chip investors, Novak said in an interview.

“Coming late to this party is not very smart,” he said by telephone.

Like many promising new technologies that came before it, Crispr has yet to prove it will be effective at creating new medicine. And the idea of editing genes has made some ethicists queasy, though the companies getting funding aren’t making alterations in human sperm, eggs or embryos, which would be controversial.

Tough disorders

Still, researchers and investors are excited by the prospects of the technique to treat diseases that have stymied the field of medicine for ages. Crispr’s most obvious application is in repairing mutated genes that are linked to disease. Basel, Switzerland-based Crispr Therapeutics, along with Editas Medicine Inc., Intellia Therapeutics Inc., and Poseida Therapeutics Inc., all closely held biotech companies, are tackling disorders including sickle cell anemia, the blood disorder beta thalassemia, and inflammatory and autoimmune diseases.

While gene-editing technology has existed for more than 10 years, older methods were expensive and slow. Crispr, which scientists began to use in human cells about two years ago, has impressed researchers with its low cost and ease of use.

Crispr, often called Crispr-Cas9 by researchers, stands for clustered regularly interspaced short palindromic repeats. It acts like a pair of molecular scissors, allowing scientists to precisely cut out faulty sections of DNA that can lead to serious illnesses and replace them with healthy ones. In a two- part process, an RNA “guide” molecule first locates the targeted part of the genome, then a Cas9 protein attaches to the DNA to make the cut. In some cases, researchers just want to remove a bad section; in other cases, they can replace it with a new, good strand of DNA.

“The old technology was clunky and it literally might take us a year to get to a point that Crispr could do in a month — the difference is an order of magnitude,” said Paul Knoepfler, an associate professor of cell biology at the University of California at Davis. “I’ve never really seen something spread that fast and become so ubiquitous in science.”

‘Knock-out’ animals

Beyond fixing mutations directly, Crispr and other gene-editing technologies have far broader applications. Researchers use Crispr to make “knock-out” animals to study what happens when specific genes aren’t working. Merck and AstraZeneca Plc use Crispr to produce cells in which certain genes are switched off, letting the drugmakers test new treatments or learn more about the repercussions of a gene variant.

Crispr can also be used to help fine-tune therapies that work at the cellular level, such as immune-system modifying cancer treatments called CAR-Ts. Here’s a sampling of the deals drugmakers have made with Crispr startups to develop treatments for a wide array of diseases:

Complicating the race to apply Crispr is a heated fight over who invented the approach and owns the right to use it — and the outcome may determine who gets royalty payments. Its repeating genetic pattern was first described by a team at Osaka University in 1987, and a Spanish group began further characterizing it in the 1990s. Breakthroughs in the U.S. and other countries followed, resulting in more than 380 patents filed by at least 29 institutions, according to a report by intellectual property analyzer IPStudies.

There are also looming questions about how the industry will be regulated. The spending bill signed by President Barack Obama last week includes a ban on regulatory approval of treatments that use gene editing in reproductive cells, known as the germline. Even though many drugmakers have said they aren’t interested in modifying the germline, any change in regulation – - or public perception — could affect their work.

Editas, Crispr Therapeutics and Poseida all expect in-human trials to start in 2017. Still, it’s not too early to think about going public given the interest from investors, according to Crispr Therapeutics’ Novak, who said, “For sure we’ll look into it” if there is a “fantastic window” in the coming year. Editas and Intellia declined to comment on plans to debut on the public market.

Whatever the pace of innovation, UC Davis’s Knoepfler is convinced that gene editing’s widespread use is inevitable.

“We’re in the beginning of an new era where genetic modification becomes much more mainstream,” he said. “Things are moving much faster now and you have to be ready for a lot of headlines. I’d encourage people to learn more about it — don’t necessarily freak out, but some big things are coming.”

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