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The 3 Frameworks for Evaluating Gene Editing Stocks

Most investors have heard about gene editing, but there are many differences between the major technology platforms. 7investing Lead Advisors Maxx Chatsko and Dan Kline introduce three simple frameworks to better understand these genetic medicines.

August 3, 2021 – By Samantha Bailey

When Caribou Biosciences (NASDAQ: CRBU) became the seventh publicly-traded CRISPR stock in July 2021, I saw an exchange on social media. One person asked why the company sported a market valuation of $900 million when another newly-public CRISPR stock, Verve Therapeutics (NASDAQ: VERV), was valued near $2.3 billion.

“Is there any reason for this other than the timing of the IPOs?”, asked the individual. The thread received multiple responses confirming the seemingly large valuation difference between the two companies, with others “agreeing” or responding that they were buying Caribou Biosciences because of it.

That was 100% the wrong take.

I’ve observed similar arguments among individual investors within the gene editing space. However, it’s important to acknowledge that there are significant differences between gene editing approaches and technology platforms. Caribou Biosciences and Verve Therapeutics might both be using CRISPR systems, but that’s where the overlap ends. They’re developing completely different tools that have almost nothing in common.

Individual investors don’t necessarily need to have a deep technical understanding of gene editing tools, but I would argue that there’s a minimum level of information required to responsibly invest in the field. Unfortunately, the way the internet works means most investors aren’t provided with the information they need. Let’s fix that.

In this episode of the podcast, 7investing Lead Advisors Maxx Chatsko (me) and Dan Kline introduce simple frameworks for evaluating opportunities and challenges in gene editing. These can be summarized as follows:

  • The Emerging Approaches: There’s first-generation tools (gene editing), second-generation tools (base editing), and third-generation tools (prime editing). These approaches are not limited to any specific system. For example, there are CRISPR, TALEN, ARCUS, and other tools capable of performing base editing.

  • The Major Applications: There are knock outs, insertions, activations, precise corrections, knock ins, and other uses of gene editing tools. Each has advantages and disadvantages.

  • The Major Administration Routes: This primarily comes down to in vivo (inside the body) and ex vivo (outside the body). Each has advantages and disadvantages.

In addition to this podcast introducing the three frameworks, 7investing Lead Advisor Maxx Chatsko has written an in-depth article explaining these frameworks and how each gene editing stock fits into each — and it’s free to read!

Publicly-traded companies mentioned in this podcast include Alnylam Pharmaceuticals, Beam Therapeutics, Caribou Biosciences, Cellectis, CRISPR Therapeutics, Editas Medicine, Graphite Bio, Intellia Therapeutics, Precision BioSciences, Sana Biotechnology, and Verve Therapeutics.  7investing Lead Advisors may have positions in the companies that are mentioned. This interview was originally recorded on August 2nd, 2021 and was first published on August 3rd, 2021.


00:00  Introduction

00:43 Why are we talking about gene editing?

03:12: Framework #1: The three emerging approaches

05:45: Which are the leading first generation companies?

09:48 Some companies are pursing multiple approaches.

10:27 What is prime editing?

15:21 Where are we currently when it comes to developing gene editing?

18:47 Framework #2: The major applications

21:51 The different ways to edit genes (knockouts)

23:50 Gene editing: Insertions

26:23 Gene editing: Activations

27:23: Gene editing: Precise correction

28:50 What are the risks of gene editing?

32:05 Framework #3: The major administration routes

32:45 What are the advantages of in vivo administration?

36:00 Is in vivo better than ex vivo?

38:08 When will we see life-extending gene editing treatments?

42:44 Recap, wrap-up and an investing takeaway


Dan Kline  0:03

Thank you for tuning into the 7investing podcast. My name is Dan Kline. I’m being joined today by Maxx Chatsko. And when I say join today, I am really just here to facilitate Maxx Chatsko. Maxx did the document. This is his topic, we’re going to talk about the three frameworks for evaluating gene editing stocks. Before I met Maxx, not the Maxx, I didn’t kind of know each other. But before I started working with Maxx, I’m not even sure if I would have known what a gene editing stock was. And I might have spelled it like blue jeans. So I have learned a lot in this area. And that is all because of Maxx and the other people who’ve covered these areas here on 7investing. But Maxx, why don’t you give a little bit of an intro as to why we’re talking about this today?

Maxx Chatsko  0:43

Yeah, thanks, Dan. So you know, obviously, you know, gene editing with CRISPR. Right, really popped onto the radar, a lot of investors are very excited about it. And pretty much anything and everything CRISPR related now, it’s done very well in the markets. And maybe you could argue they’re a little ahead of themselves. Maybe you could argue that the automatic sentence is warranted, right? Yeah, I can see it both ways. I think we need more clinical data to support all of that, but definitely make that case.

Dan Kline  1:07

Now, you know, investors don’t need to be experts. But I think there is still a minimum level of information that’s required in order to really understand even at a basic level, the investment opportunities in front of you. Even when there’s, you know, six or so CRISPR stocks right now that are publicly traded, they all have a little bit of differences. They all have some nuances. So they’re not equal opportunities, and some have more challenges than others. When it comes to the competitive landscape, I mean, there’s a lot of details and nuances that you want to consider when you’re weighing these technology platforms. So Dan, and I here thought it would be great to provide some simple frameworks for thinking about this space. So I’m also publishing a publicly available article, so not behind a paywall or anything, it’s going to accompany this podcast. So you’ll be able to see that and that can explain some things a little bit better, in written word, but this is a high level discussion of some of these frameworks, how to think about these things the way that you’re interested, and go read the article and tables and graphics as well,

Not behind a paywall. But you do have to solve a riddle. Oh, did we drop that I think we dropped the whole riddle requirements. So let me give a little bit of context here. Because I think this is true in every space. So let me make a statement that I hear all the time. Sports betting is going to be huge as legalization, or you could say marijuana is gonna be huge because of legalization. Thereby, these companies in sports betting and marijuana are good investments. That is not true. That when you say you need to have some information. You need to be able to evaluate and what will become a crowded space, because if there is money to be made, the space will get crowded. You need to be able to look at something and say, okay, that cannabis, that sports betting that gene editing company, here is what differentiates them. And you do that by creating a framework. Frameworks are very big amongst our friends, I don’t think I’ve heard that word as much as I’ve heard it in the past two years, a little bit of a shout out to our buddy, Brian Feroldi who probably has said it more times than any person I know. But you have a three framework system. Why don’t we start with framework number one and that’s the three emerging approaches. Feel free to provide any context that I didn’t deliver there.

Maxx Chatsko  3:17

Yeah, that’s perfect. So yeah, the first framework is just think about the whole space in terms of the approaches that are emerging for gene editing. Now, very important to point out a lot of investors and even in scientific literature, scientists will see gene editing very broadly, that’s kind of the big umbrella. And then all of these approaches fall underneath of that. I actually would prod investors to draw some clear distinctions between gene editing, which is the first generation approach, base editing, which is the second generation approach, and then prime editing, which is the third generation approach.

Dan Kline 3:52

So it’s also important point out, you know, these are the approaches, there’s different systems for each of them. So there is CRISPR, gene editing, there’s CRISPR based editing, there’s CRISPR priming. CRISPR is not the only way to do all of those things. But also TALEN based editing, ARCUS based editing. So these are the approaches broadly kind of agnostic in terms of the actual technology used to supporting get there. So we look at the first generation approach to energy that it has, but I would call it so the advantages are that it’s pretty simple to use. It has a simple therapeutic payload in terms of the components. Some of the disadvantages is really the big one here. And this is one of the bigger questions on standing for these companies is that gene editing requires making a double stranded break in the genome. So we’ve seen it in biology class, or in school if you weren’t sleeping through that. Or maybe in science fiction,

Any movie starring the x men, you also get this graphic.

Maxx Chatsko  4:47

Yeah, maybe you’re a big fan of Gatica. I don’t know. Is that Did you ever see Gatica, Dan?

Dan Kline

I did.

Maxx Chatsko  4:52

Great movie. Alright, so we’re all familiar with the double helix. So a double stranded break means you’re, you’re cutting the genome in half, you’re breaking both of the parts of the double helix. And the problem with that is, when they get stitched back together, there can be a lot of errors, there can be random mutations, there can be chromosomes, so bigger parts of the genome can rearrange randomly in unpredictable ways. So all of those things that are random insertions of genetic material, random deletions of genetic material, rearranging chromosomes – those are all some of the most dramatic events in biology. All three of those are actually hallmarks of cancer cells. So we’re triggering this with a therapeutic to attempt to cure treat some of these diseases, well, as would be a pretty nasty unintended side effects and consequences. Right. So some of the examples of the first generation gene editing companies, I think investors know these pretty well, but this is like CRISPR, therapeutics, Editas Medicine, Intellia therapeutics, a company that just recently went public Caribou Biosciences, a little more creative on the names as we get along here, Dan.

Dan Kline

Not not to be confused with Caribou Coffee, totally different company.

Maxx Chatsko  6:00

So those are CRISPR companies that are working on the first generation gene editing approach.

Dan Kline  6:06

Maxx, let me ask a very layman question here. So in a lot of areas, when you have a first generation of second generation or third generation, that means the third generation has supplanted the previous two generations that not, it doesn’t sound like that’s what happened here. These are different approaches but first generation might still have benefits or be useful. Am I getting that in any way correct?

Maxx Chatsko  6:27

Yeah, so there could be, each of these could have value different applications. And we might just see them sort themselves out over time, or first generation, even though it’s called first generation. Maybe it’s still very useful in a very specific application, or a very specific type of cell for making edits and certain organ, for instance, maybe second generation of different applications, third generation, and they’ll do quite different capabilities. So you can’t necessarily swap each one for another. So just round out the other companies, in the first gen, Selecta which uses TALEN, and your Precision Biosciences, which is using ARCUS. So CRISPR, TALEN, ARCUS is kind of the three enzymatic systems.

Dan Kline  7:06

If we move on to the second generation, he said, and this one’s been very exciting for a lot of investors. So the advantages here is that it doesn’t make double stranded break in the genome. So it’s considered to be much safer. Base editing can also precisely correct genetic defects and it can also target DNA or RNA. So it’s not limited to one information molecule over the other. Some of the disadvantages of base editing is that it can only edit in certain parts of gene. So gene sequence has different parts to it, some to get the gene read by the machinery in the cell, some of the sequence which really includes the the protein that we’re trying to create in the end. And then, at the end, we have like a sequence that tells the genetic machinery to stop reading as we start making the protein. So base editing can only actually edit in certain parts of the genome. So it does limit some of the diseases that we can target. We can also only correct certain parts, I’m sorry, to certain types of mutations, so relatively simple mutations that does limit the types of diseases as well.

Another disadvantage compared to the first generation approach is that base editing has a larger therapeutic payload. So just think of this as being like a bulk of your payload, right? If gene editing is a tennis ball, maybe gene editing, I’m sorry, if gene editing is a tennis ball, and maybe base editing, I mean, it’s more like, you know, soccer ball, so it’s a little bit bigger. And it does complicate things in terms of how do we get that into cells, what types of cells can we get it into, I think will be easy to get into like the liver, for example, but maybe getting into the muscle parts of the brain might be much more challenging.

So some of the examples here obviously have Beam Therapeutics, that’s one of the the hottest companies here in this space, overall. Verve Therapeutics, one of the newer CRISPR companies also using base editing, it’s actually licensed a lot of this technology from Beam Therapeutics and Beam Therapeutics has the right of first refusal can opt in to co develop a lot of the programs being developed at Verve. Intellia Therapeutics actually is also working on base editing tools. It only has demonstrated data for ex vivo settings. We’ll actually talk about that a little bit later. But it is working. And I actually think just due to the double stranded breaks and the risks there, I think a lot of the first generation companies will eventually have to develop their own base editing technologies. Selectus with TALEN, also as TALEN based editing. And Precision Biosciences is working on ARCUS based editors as well. So again, not only CRISPR extends to a lot of different technologies. There’s actually other companies some I can’t talk about for various reasons, but other ways to do base editing. If we look at the third –

Dan Kline

I think it’s worth noting that these companies aren’t all pursuing one approach. That Selectus you mentioned, in both the first generation and the second generation. So it’s, these companies can adapt and say, Okay, this approach might work for this thing and then this approach might work for something else, that is probably better for investors, it also can be a little bit confusing. So I just wanted to do a tiny reset for the people who are coming to this with perhaps less of a background, that if you buy some companies, you might be getting exposure to different angles, which gives you more chances for failure and more chances for success. But let’s talk about the third generation, which is prime editing, which I was so hoping was the ability to turn into a truck, but it is not sadly.

Maxx Chatsko  10:26

Unfortunately not. So prime editing, it’s the newer, it’s the third generation approach. You’re right now this can actually only be done with a CRISPR system. There’s only one company working on it’s called Prime Medicine. This was actually spun out of the Liu Lab. So the Liu Lab also made Beam Therapeutics and base editing, because it said, Hey, you know what, there’s some limitations to gene editing, making double stranded breaks, I bet we could avoid that, and maybe make a more precise way to edit genes. So they came up with base editing. The Liu Lab then said, ou know what, maybe we can do even better the base that maybe we can even more versatility, so they come up with prime editing. So they’re getting the advantages are this also does not make double stranded breaks. That’s great. You could do everything base editing can do and a little bit more, including knocking in large pieces of DNA to the genome.

So if Remember, the catering commercials were back in the day, anything you can do, I can do better. I think that’s prime editing. tagline, Dan. Some of the disadvantages, though, for prime editing, one is unproven, still being optimized. You could say that about all of these systems and technologies, they’re all still pretty much for the most part being optimized. Prime editing has the least amount of data supporting it. They do have a ton of money, though, at Prime Medicine, a lot of excitement there from venture capitalists. The other disadvantage, and this is very important is definitely the largest therapeutic pivot out of all three of these. So base editing is larger than gene editing, prime editing is even larger than base editing and by a pretty wide margin. And the reason for that is it actually contains two different enzymes. So we look at it all the details, but an enzyme is a pretty big, bulky molecule in and of itself. So we’re adding two enzymes instead of one. So this might have even more problems trying to encapsulate into a lipid nanoparticle or viral vector, it probably wouldn’t fit in a lot of viral vectors. But it’s just thinking about like, how do you get this into a cell? That’s going to be a big challenge as they try to target You know, liver versus muscle versus maybe things in the central nervous system like the brain.

Dan Kline

Maxx, I think it’s fair to say that each of these three are going to be useful in different disease cases, some more specific, some broader, well, why don’t you give a little analysis there.

Maxx Chatsko 12:34

Yeah, that’s true. So you know, a good example to I mean, even when we get really good results, sometimes that’s not necessarily like the ideal approach. One of the best examples. The only in vivo data we have for CRISPR gene editing in any gene editing approach. We just had it in the late June from Intellia Therapeutics. So in an in vivo CRISPR, gene editing knockout, we’ll talk about knockouts in the next framework. And this was targeted to the liver. So they’re trying to stop the expression of the TTR gene, in patients that have a disease called hATTR. So this is caused by mutations in the TTR gene, which causes that TTR protein to misfold. And then it kind of gets clumped together and aggregates, it can form these sticky deposits in the liver, also in the heart. So it can be fatal, it’s actually thought to be one of the leading causes of heart disease, maybe just a little under diagnosed in the general population. Well, there’s different flavors of the disease, I guess you would say. But so they’re trying to knock out the TTR. And if you don’t have the TTR, then can’t make that mutated TTR protein. Problem solved. And they got some really good results.

One of the biggest issues with this, this is gonna be true as we start to think about, you know, curing your treating genetic diseases is all genes actually play multiple roles in the body. This is actually a beautiful example of that, because the TTR gene, yes, when it miss folds, it causes some of these diseases and scarring to build up in certain organs. However, humans also need the TTR gene to transport vitamin A throughout their body. It’s only produced in the liver, the TTR gene that is. So if we’re knocking it out in the liver, there’s no other organ that’s going to start expressing the TTR gene to rescue the expression. So vitamin A is needed for vision, Dan, you know all about that you’ve had a fun experience with vision in the last year or so. But if you knock out or silence the TTR gene, those patients might not have symptoms of the disease, and it can be fatal. So this could be a good trade off. But they do require daily supplementation of vitamin A.

They can also suffer from it’s called night blindness. So in low levels of light, they’re basically blind so that maybe can affect their quality of life. Maybe they can’t drive a car, do certain things like that. So there are other you know, side effects and consequences. Even though we say the Oh gene editing and we cured it. This is fixed. There’s still room for improvement. So, point being, you know, maybe the ideal treatment for diseases like this, you know, hATTR would be to silence that achieve and maybe to correct the mutation and preserve the levels of TTR in patients so that we wouldn’t have to give them, you know, vitamin A, or tell them not to drive cars at night, and so forth.

Dan Kline

So I want to move on to framework two. But before we do that, where are we in this game? So we’re in the very early stages, you talk a lot about de risking events, but we know the potential here, how close are we to, you know, significant amounts of meaningful treatments that we expect to work on on lots of people? Are we talking years? Are we talking decades? Are we talking like, you know, your kids might be dealing with it? You know, and in mine, who’s 17 might not be there? Like, what, what’s the timetable here?

Maxx Chatsko  15:51

Definitely this decade. I mean, there’s some other approaches like from CRISPR, Therapeutics for beta thalassemia, and sickle cell disease, so two rare blood disorders, a little more complicated process and what we’re talking about that in the next two frameworks as well. But that should be I mean, I would think it could be approved in the next few years. Intellia Therapeutics with that knockout of the hATTR gene that could be approved, there are actually other very effective and convenient treatments for that, gene. So that could complicate the commercial picture.

That’s important to actually this is a great question, because we talked about these things being rare diseases, but there’s actually other genetic medicine tools out there. So sometimes, the diseases being targeted by these gene editing companies, or any of these approaches, actually have, you know, safe, effective and convenient treatments available on the market. I mean, there’s Alnylam Therapeutics has an RNAi is called RNA interference drug, it’s probably going to be approved sometime in early 2022. To treat hATTR. And it only needs a dose, if it’s a simple shot once every three months. They might be able to dose it once every six months. And they’re actually working on a next generation tool and maybe they can only do it once every 12 months, give, you know very high levels of knockdown of that gene. And it would be reversible. So unlike, you know, gene editing was permanent. So if anything goes wrong, there’s no Undo button, there is that for RNAi.

So there’s different things to evaluate in the competitive landscape as well. It’s not as simple as one of these gets approved from a gene editing pipeline. And it’s just gonna have, you know, billions and billions of dollars in revenue. Some of these could end up being done, because maybe there’s safety concerns, or doctors are hesitant to prescribe these. Maybe other tools are just effective enough. And that’s all we need. So, but yes, we should have, some of these tools should be approved, certainly this decade, we should end up with man, I don’t know, maybe half a dozen or more. I think gene editing approaches approved.

Dan Kline

I only brought that up. Because I think it’s important to remember as investors, and I own a lot of these companies, Maxx owns a lot of these companies. I don’t own it because of my own volition, I own it because of Maxx and other members of the 7Investing team who have the knowledge to to understand this and where we should go. But recognize that there is some risk here. Some of these things may not work, some of these things may work. And they may end up being way more expensive than solutions that maybe don’t work as well. But but work enough? I think we’ve seen that in the medical space where it’s like, yeah, this $30,000 treatment will cure everything. Even with vision, I had laser surgery, laser surgery cost about $4,000. If I had the lenses put in that can be adjusted and forever correct by vision, that would have been about $12,000. So did I get the inferior one? Absolutely, Maxx, feel free to jump in before we get to framework two, but framework two is the major applications. So if you if you have a past comment, go ahead, or if you want to just keep plowing ahead, go forward here.

Maxx Chatsko  18:53

Yes, you brought up that point of you know, just the risk and understanding that and I think that’s good, too. And you made a comment previously about you know, different companies are working on multiple approaches, just in case, right, it’s always good to kind of have different tools in the toolbox and spread risk around. So I do think, you know, some of those first generation companies are going to have to pivot or transition to base editing down the line. Some have already made investments and are developing those tools today.

And that’s okay but you know, so this is kind of similar again, Alnylam Pharmaceuticals (NASDAQ: ALNY) RNAi. So it launched with a ton of hype, RNAi won the Nobel Prize,a lots of parallels to how CRISPR kind of started. And then it’s an initial approach just didn’t work and couldn’t actually deliver the payloads delivered safely and effectively. Actually had some patient deaths in some of his early work. So it had to go back to the drawing board and eventually built a new tool to really safely deliver its payloads to the liver. And now those drugs are just taking off and has four approvals as should enter here with five. Next year. It should be six or seven, I mean, is firing on all cylinders. I think it’s the largest genetic medicine company in the world right now.

But it wasn’t always easy. If you were investor early on. There were some times there were maybe you were down 60 or 70%. But the company did eventually figured out and pivot. So I think that’s a might be a good analogy for some of these first generation CRISPR companies. A we’re in a crazy bull market, in my opinion. B, there’s some of these valuations, historically speaking, are definitely very frothy for drug developers. Usually, they’ll wait for more data. So there’s a lot of success already priced in, if any worries and safety signal comes in, like, some of these are going to have really sharp decreases in your valuation, because there’s more to give up. But also know that there are ways for them to correct it just might not be fun in the interim, right, as they’re pivoting to base anything. You know, it’s all new clinical trials, all new tools. So that could take a little bit longer, in order to realize your full potential. But it doesn’t necessarily mean any of these are dead in the water, just because they’re using the first 10 rules.

These are not stocks to buy, and then worry about what they’re doing every day. These are stocks to take the long view on. And there’s even the companies that ultimately win may have setbacks, may have drugs that come to market that don’t catch on, may have things that work but have terrible side effects. We’ve discussed all of it. So let’s move on here to framework two, the major applications. That’s it sounds like we’re doing a movie sequel here. But why don’t you jump in there, Maxx?

Dan Kline  21:26

We gotta get one of those. What do you What’s the thing where they snap it, and that’s the new, the new scene starts. I don’t know anything movies. But anyway, alright. So the major applications, a lot of ways to edit the genes, edit genes, and they beat they vary based on the approach. So this section in this framework in particular, works a lot better out in writing this is. I have a great table, showing the advantages of each the disadvantages of each and the companies that are using each of these applications. But we’ll start real quick with knockout.

Maxx Chatsko  21:56

So we talked about Intellia therapeutics (NASDAQ: NTLA) as a knockout pipeline for its first generation gene editing approach. This is just disabling gene function. So the advantages, it’s permanent gene silencing. So some might argue that’s an advantage over temporary tools, such as RNAi, or antisense oligonucleotides. But the disadvantage is also that it’s a permanent gene silencing. You could argue that that’s not the way to go. Because if something goes wrong, these patients have no undo button, you can’t undo gene editing necessarily. So some of these examples, all of the generation approaches can actually use knockouts.

The first generation approach is relatively sloppy. So you know, not that I’m not picking on anyone, somebody, but Intellia’s the only one that has dabbled. So, you know, with the first generation approach, the way that it knocks out a gene is it actually inserts mutations into that gene. So it’s kind of interesting, because we usually talk about CRISPR being precise, right? Yeah. And we’ve heard this in headlines and articles. And you and I both know how the media works. But the reality is, it’s weird to be careful, right? It’s precise, because we can precisely target a specific gene. But then what happens after that how we actually induce the knockout is not so precise, necessarily. So these first gen approaches actually insert random genetic material and delete random material, they disable a very important part of the sequence, meaning that gene can no longer be read. Now, the problem is you can have on target and off target effects. And we have, you know, each patient might have a slightly different insertion or deletion mutation. So there are some risks for that.

The second generation approach of base editing you can also do knockouts, much more precise, because they can just snip one little base pair, so one little letter in the gene and actually disable genes permanently. Now, that seems like the preferred approach, I guess, if you’re going to do knockouts at all. The next application will be insertions. So we’re just what it says inserting more genetic material into a cell that manages precise integration is possible. So this is actually better than gene therapy. Today, we have gene therapy, we encapsulate the gene in a viral vector, we deliver it to patients, and actually doesn’t insert the gene into the patient’s genome, it creates this other little like bubble, it’s called an endo zone, outside of the nucleus, but it provides enough gene expression over time, so that’s good. But if we use CRISPR, to create a very precise, you know, integration site in a patient’s you know, then we could actually insert the gene exactly where it needs to be on the genome.

So the genome is kind of like real estate Dan where, you know, location matters. And that was one of the things in the early days of gene editing 20 years ago, that really held the field back. They actually used to try to insert genes into the human genome, but they would do it randomly, they had no control over where it went. And that could be bad, because if you integrate it next to the wrong genes, you could actually cause cancer in patients. So having that random, this was just too much of a risk. So now we’ll use those viral vectors and different kinds. We found a kind of a workaround, but we can’t really get into the You know where it’s supposed to be, is ideal for inserting genetic material. And some of these approaches can actually do that. The disadvantage is that insertion actually still requires a viral vector to deliver the genetic material, we’re still making double stranded breaks, we talked about that, I think it’s gonna be one of the bigger risks for the field. And also, when we’re making a double stranded break, and we’re working with viral vectors, the viral vectors, that’s the thing that we use to encapsulate the genetic material, that in itself, the delivery vehicle can actually integrate into your genome. And there’s been some issues with that as well in the past. So you might be part virus, Dan, if, if you had some of these tools worked on you.

So like, in a cool way, like Venom or in like a not cool way, like I’m sneezing all the time?

Dan Kline  25:46

Probably not like Venom. That’d be cool, though, right? So actually, like, and this is to double stranded breaks happen all the time, right? Whether we’re using CRISPR tools or any therapeutic, that’s gene editing, or, you know, you just sitting in the sun too long, we’re going through double stranded breaks all the time. So it doesn’t necessarily mean it’s a deal breaker, but I think it’s going to be an important safety field. And same thing, we actually do have a virus integrated into our genome now. So, you know, again, this is a deal breaker, we actually don’t know the answers to a lot of these questions.

Maxx Chatsko  26:20

Another applications activations, we’ve actually activated this, I mean, we’re just kind of up regulating their expression. So it’s gonna be good for treating diseases where, for whatever reason, the gene says not being produced in the right amounts may be a disease from inadequate protein expression. For example, we have low insufficiency, they’re common, classic diseases, where when this is a problem. Now it might be kind of difficult to control how much of the gene we activate. So we don’t just want to turn it on at full blast necessarily. We might want to only have a little bit or a moderate amount, and then maybe a little bit more difficult to control. So that’s kind of one of the disadvantages. Again, all the advantages is, is permanent. So that’s good. And it’s potentially better than mRNA tools, that’s another genetic management tool. Again, that would be temporary. So maybe that has an advantage, but we’d have to keep giving doses of mRNA. Maybe in some instances, or diseases, we could argue it is just better to have activation.

The next application here would be precise correction. And this is exactly what it sounds like. So this is kind of where bass editing and prime editing come into play. The advantage is it preserves protein levels. So this is different from gene silencing where we’re just saying, We don’t need that gene anymore, get rid of it. Because you do need all genes – well, I should say, all genes have multiple roles in the body. So it’s not always so simple as saying we’re just going to get rid of that gene or that protein, because that can cause other side effects in patients. The disadvantage, though, as I kind of mentioned earlier with the second gen approach is there are a limited number of genetic mutations, you can actually precisely correct. So there’s like really large mutations, spanning larger sequences might be a little bit out of reach of base editing right now or for the foreseeable future.

The final application, at least the last one I wrote down is knock in. So this is kind of like insertion, and we talked about, but it’s a little bit more precise. And so that’s an advantage, the disadvantage would be it’s a little more complicated mechanism, and it can be difficult to precisely control. So similar to activation. So I think the only thing that can really do knock ins are, I think the best bet we’re gonna have is gonna be actually prime editing. So I think priming is the only approach that can actually use knock. And so if you’re missing like a big chunk of your some gene Dan, we can actually maybe knock it in instead of knocking it out.

That works for me, we’re gonna move into framework three. So Maxx, let me ask one quick question here and don’t take a lot of time answering this, but what are the risks here? Are is the testing procedure, robust enough to make sure that you don’t, you know, cure my arthritis, but stopped my body’s ability to process oxygen? You know, or like, like, I’m being a little bit ridiculous here. But playing with genes, obviously has some risk here. So are we sort of insulated from this and how the levels of testing works to get these to market?

Dan Kline  29:16

This is a great question, Dan. I’m proud of you. So this isn’t even on the sheet. This is a great question.

Maxx Chatsko  29:23

Years of watching the Incredible Hulk has has taught me some things in this area.

Dan Kline  29:27

So this is a great question. Right now, drug developers are self regulated. So it’s up to them to kind of sequence patients. Even if those patients are maybe mice or non human primates to get an idea of what other effects their tools might be having. There is some debate on whether or not they’re doing the proper amount of developing the right diagnostics, to survey enough of the genome in order to tell if their tools are having effects they shouldn’t be. So for example, in order to see all the possible on target and non target effects, you probably need to do some really robust whole genome sequencing. Not every company is doing that sometimes they’re only looking at sequences that might be very similar to what they’re editing, just so they can say, well look at the seven most common things, and we didn’t see any effects. So we must not be having any off target effects. And maybe it sounds too simple, because your genome is really large, really complicated. And when you’re making double stranded breaks, you can have large deleterious effects or really bad consequences, even when you’re making your edit exactly where you intend to.

Maxx Chatsko  30:34

So I think the FDA, this is one of the risks, I guess, of safety and regulatory, and, you know, all it takes is one company to really screw up a trial, and the whole field could be put on a clinical hold. So that is a huge risk for the field. And the FDA might come in and say, Alright, we need to develop better diagnostics to understand this in clinical development, and also monitoring patients who’ve been treated with these. Because you know, years from now, if problems arise, we’ve already treated hundreds of people, well, might not might be too late or the wrong time to really figure out that you screwed up. So this is a bigger risk, because it’s a permanent tool. Unlike other drugs that have been developed to date.

As we move on to framework three, I’ll make a little bit of an aside joke here. We always sort of see the Spider Man example where like, you get bitten by a radioactive spider, and you get all the advantageous traits of being a spider, you don’t see the opposite, where you get bitten by a radioactive spider, and you get all the non, you don’t get the brain of a spider, like you get the strength like, and that is in a very ridiculous way the risk here. That sometimes in curing something, the unintended consequence, what you mentioned with vision before, well, that might be worth it. In the case of certain things. Where Okay, I can’t drive at night, but like my liver keeps working like that, that’s good. On the other hand, perhaps you are curing something that’s, you know, more an annoyance than something that’s life threatening, where the side effect could be worse. So again, the only reason we bring all this up is this is a long road. But let’s get to framework number three, the major administration routes, administration doesn’t mean what I would normally think administration means here.

Yeah, no red tape here for administration. So this is how do we actually get the drug into the patient. So we have in the body is in vivo. So the way we’re editing genes, that tool is actually the drug itself. Then there’s outside the body. So that’s ex vivo. So we’re taking cells from a patient, we’re extracting them, we’re editing them in the lab, and then we are rejecting them back into the patient. And then we have Ricky Martin, who is Living La Vida Loca Dan, the other type of no I’m just kidding.

 So the advantages for in vivo are, of course, it’s simpler for patients, right, you show up to your maybe it’s an infusion center, your doctor’s office, right now, there’s nothing of subcutaneous delivery for for any of these approaches, but much simpler for patients. Can show up maybe you you know, maybe you have a slight immune suppression drug that you’re giving ahead of time or something, maybe not. And maybe just we designed the drugs so well, and so precisely, they get exactly where they need to in the body. The disadvantages, it’s more difficult to control. Once we administer this, we give you an IV infusion, well, it’s up to that engineering in order to get it to the liver or to the muscle tissue or to the brain. And actually, we can’t deliver to the brain, these cannot cross the blood brain barrier. And again, it has to do with their size, their encapsulated with the nanoparticles, or viral vectors. So we can’t actually give you an IV infusion to get to the brain, we have to do what they call, quote, minimal invasive brain surgery. Dan, I don’t know if that sounds like an oxymoron to me. I don’t know there’s minimally invasive brain surgery.

Like brain surgery, then you’re back to work in an hour like this doesn’t. It doesn’t seem like those two things would go together.

Dan Kline  33:50

Yeah. Well, they’re looking at like, you know how we’re going to treat neurodegenerative diseases with some of these tools, right? So we can’t do an IV infusion. But you know, there’s different routes, there’s intrathecal. So we can inject it into your spinal cord. And then there’s directly in your brain. What does that call? Time for? Yeah, there’s too many words, there’s all these. There’s so many different administration routes. But anyway, it’s still an in vivo approach is my point. So, but the disadvantage is more difficult to control. Once it’s in the body, you know, it’s going to do what it’s going to do. And if you didn’t design it properly, that could be a risk event.

Maxx Chatsko  34:25

Oh, no, nevermind, I was gonna get to the questions here. But you have a little bit more to do. So sorry for stepping out.

Dan Kline  34:30

That’s all right. So for ex vivo, The advantages are you have way more control over the process, right? We’re taking cells from a patient, and then we’re editing them in a laboratory setting. So there’s a lot of advantages we can see. Did we actually do this correctly. So we have multiple shots in order to make sure it’s 100% correct or closer as high accuracy as you can get. You can also screen some of the cells before you put them back into patients. So maybe you can weed out the things that are weren’t edited correctly, or maybe don’t look, you know, look a little funny. However, you’re determining that. So that is an advantage, with more control over the process.

Maxx Chatsko  35:02

The disadvantages are that ex vivo is actually more complex. There’s more process steps involved, maybe the harvest cells from a patient. And oftentimes that requires, you know, immune suppression somewhere in here, it’s more expensive because there’s more steps. And the more steps you have, the more chances there are for errors to come up and arise, right. So we’ve seen this, for example, with some of the first generation car T cell therapies and cancers, we need to harvest those from patients. It’s you know, it takes many weeks to do the whole thing from it’s called vein to vein time, through the time we harvest it from the time you put it back into the patient, you know, three, four weeks or longer, long time to wait if you’re trying to get treated for something like cancer and aggressive form of cancer. So that is one of the downsides.

So Maxx, let me jump in. First of all, Matt Cochrane wants me to ask you to stop signing him up for off label human trials for these he is not going to go for it. No, I’m kidding a little bit. Second, is one of these better than the other? The other like, you know, you have in the sheet here is in vivo always better. But it seems to me like there’s gonna be uses for both of them, right?

Dan Kline  36:09

Yeah, so some companies are only working on in vivo. I’m sorry. Some companies rightfully worried about ex vivo. So Caribou Biociences (NASDAQ: CRBU), one of the newer companies that went public, they have a proprietary CRISPR system. And they’re only working on making cell therapies. So that’s only an ex vivo approach. There’s other companies that kind of dual pipelines, right. So we look at CRISPR Therapeutics (NASAQ: CRSP) , and Editas Medicine (NASDAQ: EDIT) and Intellia Therapeutics, those all have both in vivo and ex vivo approach. So ex vivo does make sense for if you’re engineering cell therapies, so there are all these companies actually engineering car T cells to make cell therapies that we for cancer, so that makes a lot of stance, she’s actually been there.

Maxx Chatsko  36:49

But then there’s a gray area when it comes to, you know, rare diseases. Currently, I mean, you know, there’s, there’s CRISPR therapeutics is working on an ex vivo first generation gene editor for beta thalassemia, and sickle cell disease. So again, that requires harvesting cells from patients editing them in the lab, putting them back in and patient. It has impressive results. But again, it leaves a little bit to be desired, maybe it’s not the ideal approach, could we design an in vivo gene editing to do the same thing? So maybe instead of being four weeks, it takes you know, a single office visit or infusion. Obviously, that would be more ideal for patients. So it’s kind of the promise of in vivo, but it kind of depends on the cell types, the types of edits and applications you’re trying to go for, and also what diseases you’re trying to treat, I think, ideally, like the holy grail would be, we could edit any cell in the body, wherever it is. So as a company actually working on that called Sana Biotechnology (NASDAQ: SANA), not necessarily gene editing company, but that’s their crazy aspiration. And basically, they’re going to be a very large company, but lots of challenges there. And, you know, they have to develop a lot of technology. But so sometimes ex vivo is perfect. And that’s all we need. Sometimes in vivo, though, really is better.

Dan Kline  38:03

Maxx, before we recap, you know, I’m a sci fi fan. And in some of the Robert Heinlein books, they’ve sort of engineered humanity to not live forever, but live on a very extended basis. How long is it before I go to the mall, and there’s a segment we have places at the mall now that are doing various like, you know, improve your skin improve, you know, lose weight, whatever it is. How long if I go to the mall, take some tests are like, Hey, you have these six things wrong with you? And here are these treatments we could give you. And you know, you’re now going to live 15 more years. Is this actually going to like sort of unlock some of the secrets of, you know, of living forever for humanity. And I’m teasing a little bit, but I’m also being really serious. Because if you could eliminate, say, you know, the types of heart disease that kill the most people? Well, obviously, that’s gonna have a meaningful impact, especially if that becomes something you could do, you know, on your lunch break, as opposed to having a big major doctor’s appointment to do it.

Yeah, that’s a good question. There are. So in terms of like anti aging, there’s a lot of science, we need to figure out for that. But you’re right in terms of improving, not just your life span, your health span, imagine you were very healthy into your 70s. Well, that could change a lot of thing that reduces healthcare costs for you, your family, the entire healthcare system, that would be a very good goal to strive for. And we do kind of start to see some of these tools maybe have a potential.

Maxx Chatsko  39:26

Right now, in the early goings, the early days in the field, most of these platforms are targeting rare diseases, diseases that have no other treatments. So very small, relatively small patient population, maybe 1000s of patients worldwide that are affected maybe 10s of 1000s, and really at the higher end, maybe at 100,000, or something around there. So still relatively small patient populations. Of course, if you’re selling your drug for, you know, $2 million a year that kind of adds up. Now, there is the possibility we could start to use these two You know, rather than like correct mutations, we can actually give humans beneficial mutations that would protect them from disease. So there’s, there’s a lot of examples, there’s examples of like for, we can give you a variant of a gene. And these are actually found throughout the world and normal, like people walking around. People just have genetic variance. Very rare sometimes, but, you know, they give them maybe much higher, like eight times higher bone density, so they won’t break bones as easily and they also won’t have osteoporosis, we have a much lower risk of that. They are also worse swimmers when you have denser bones.

Dan Kline  40:38

But better UFC fighters, so it could really go either direction.

Watch for your shin splints. So yeah, there’s shin guards, you would get shin splints. So yeah, there’s that. And then there’s also so we’ve talked about this one company a little bit. Verve Therapeutics (NASDAQ: VERV) is the newer CRISPR based editing company. And they’re working on providing protective variants for protecting against cardiometabolic diseases. So right now they’re targeting people who have like, you know, very rare types of high cholesterol, meaning like you’ve inherited, just, you know, you got a bad roll the dice. And for whatever reason, your body doesn’t process cholesterol, and it builds up in your blood. So that’s their initial target. But they’ve stated like, well, we can give this there’s no reason we can’t give this to Dan and Maxx and, and Matt Cochrane, as well. So they could eventually have this instead of taking a pill every day like a Lipitor to lower your blood cholesterol, maybe one day, we just go and get edited with this protective variant, and none of us really develops, we all have like a very easy time, keeping our levels of blood cholesterol low. So that’s a pretty interesting goal and target. And it’s something that is absolutely on the table with some of these technologies.

Maxx Chatsko  41:51

I am making every effort to do all the right things now so I can live to the point, where these things are at the mall are easy to come by from your doctor, I feel like I’m a little bit on the old age side of you know, you better stay healthy for like another decade or so. So all of this stuff is there.

Dan Kline  42:08

Well, so that company Verve. Yeah, they have, they’re the only company that has based anything that non human primates that’s kind of like the last animal model we use before we try and human testing. And in those non human primates, it worked very well in terms of keeping their cholesterol levels in check. And there’s different types of cholesterol. I’m kind of being vague here intentionally. But I think that’s going to translate very well into human studies. So I think that is really great. For that approach.

Maxx Chatsko  42:37

I’ve seen a lot of Planet of the Apes movies in my lifetime. So we should be absolutely careful about creating super apes. That being said, we’ve gone longer than we want it to go. So I want to just give you like 45 seconds here, Maxx to do a bit of an investing takeaway. If you want to recap, there is an article that’s going to be published on this, that’s going to be free and public facing There will also be a transcript of this. And Maxx will do a bit of an introduction, I’ll do a timestamp. So you can go back and find any of the things you want. But Maxx, as an investor, let’s just talk a little bit about patients about sort of how your approach has to be, it’s a lot like me waiting for the cholesterol fighting super mutation, that it’s not going to happen tomorrow. And if someone tries to sell it to me, I should be very skeptical.

Dan Kline  43:21

Yeah, it’s very important to be realistic with your timeframes and your expectations for you know how large your company might be at a sustainable level. My recommendation this month in August, I said was maybe my the best opportunity for a ten x that I’ve ever seen. And I got questions like, when do you think it’s going to ten x? I think that’s not what I said. So I shouldn’t have said that. Yeah, you know, look, I mean, think about for gene editing, and these types of approaches these pipelines, think about like a five to 10 year timeline in terms of your investment. So I know it’s very hard to do that, you know, and stop sports. So, so crazily high in like a six month period, and they seem to go up every month, that’s probably not going to be the norm. But you know, five to 10 years, I think some of these are going to be much larger than the the main has some significant downturns in between there, but fuel on for five years, I think we’re gonna be in a pretty good spot,

Maxx Chatsko  44:14

And be a little wary of what I’ll call the light news upturn. Where a stock is up 300%, because it had some very encouraging de risking event that is not a come to market events. Like it is, you know, an encouraging piece of data can cause crazy stock movement. These are things you’re going to be in for the long term, we’ve taken more of your time than we intended to. We’ve taken more of our time that we’ve attended to. So as I said, there’s going to be all sorts of supporting material on this.

Dan Kline  44:40

Thank you to Maxx for doing all this research. Because once again, we talked about this a lot. Any area you’re investing in, it’s really important to understand the fundamentals of that business. And so let’s say I’m talking about investing in the movie business. Well, that used to be somewhat simple, have a breakdown of how a movie is profitable. I wrote a piece this this morning and that’s going to be live on the site probably by the time this goes up, that basically says, oh, all those economics are totally different. That is kind of the table Maxx’s setting here that you have to understand what you’re buying what the industry looks like. And in this case, it’s a lot more complicated than going, Oh wait. Black Widow might not do as well at the box office, but it’s going to drive Disney plus loyalty. That is way more simple than what we have here. So we appreciate having Maxx being able to do this being able to lay this out because this is an area I will say I’ve invested relatively heavily, maybe 7, 8% of my portfolio is in stocks in this space and I will not pretend I’m an expert. I am farming my research out to Maxx. So with that, I will thank Maxx Chatsko, I will thank Sam Bailey who’s going to do a lot of work to get this up. I will thank all of you for listening. We are 7investing, empowering you to invest in your future.

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