Investors enjoyed a record number of biotech IPOs in 2020 and 2021 as companies raced to grab bags of money from public markets flooded with liquidity. The pipeline has dried up considerably in 2022, primarily due to tightening financial conditions. It's not quite as fun, but it's a sign of healthy markets.
Despite the slowdown, the most promising companies can still drum up enough investor interest to make the numbers work. Prime Medicine (PRME) became one of the largest biotech IPOs of 2022 when it raised $175 million in October. The company is developing a third-generation gene editing technology platform that could potentially avoid the drawbacks of tools currently in clinical trials. Then again, the company will encounter new challenges for its tools.
The successful debut of Prime Medicine suggests other next-generation gene editing companies could be among the lucky few to go public during 2023 and 2024. There are advantages and disadvantages to being a publicly-traded company, and startups going public now won't be able to raise nearly as much money as was possible in recent years. Nonetheless, investors may want to keep an eye on this trio of gene editing up-and-comers.
Dozens of Crispr Tools in One Platform
Gene editing isn't new, but the invention and continuous improvement of Crispr tools has put it on the radars of global industry titans, Wall Street veterans, and individual investors alike. Gene editing is the ability to alter the genome of a cell to change its function. Scientists can theoretically turn on, turn off, insert, and delete genetic code to treat diseases at the DNA level. Early tools aren't perfect and leave plenty of room for improvement, but that's how scientific progress works.
First-generation Crispr tools from Intellia Therapeutics (NTLA), Editas Medicine (EDIT), and Crispr Therapeutics (CRSP) offer powerful capabilities, but come with notable drawbacks.
- First-generation Crispr tools cut both strands of DNA to edit a genome, then hope repair mechanisms already present within cells stitch the strands back together. That could increase the risk of triggering or causing cancerous mutations within edited cells, which may not be observed in patients until years after receiving treatment.
- First-generation Crispr tools are relatively large, which limits how they're packaged and delivered at the molecular level. Crispr Therapeutics has initially focused on editing cells outside of the body to navigate this limitation, whereas Intellia Therapeutics has designed lipid nanoparticles (LNPs) large enough to hold bulky gene editors. However, LNPs are currently limited to delivery to the liver, which means many diseases impacting heart, muscle, lungs, and other organs are out of reach without further improvements.
- First-generation Crispr tools utilize a relatively limited suite of editing enzymes. These enzymes are responsible for making the cuts or edits to a genome, but can be sloppy and error-prone.
Arbor Biotechnologies is building a technology platform that could address these limitations with a simple solution: shots on goal. The startup was spun out of the lab of Crispr pioneer Dr. Feng Zhang with unique computational tools that allow it to unravel some of the complexity of biology. In doing so, the gene editing company has discovered dozens of new cutting and editing enzymes that can be used for more accurate Crispr gene editors. It alone has discovered over six times and 30 times more enzymes than have been published in global scientific journals.
These new enzymes could be key for designing smaller Crispr payloads, enabling more accurate gene editors, engineering next-generation Crispr tools for base editing and prime editing, and more. The initial therapeutic pipeline is focused on genetic diseases of the liver, but Arbor Biotechnologies is exploring how to deliver gene editors to other organs.
Metagenomi is another high-profile startup utilizing machine learning to discover dozens of new gene editing systems, including those not based on Crispr. The company has focused primarily on smaller enzymes capable of powering base editing tools that don't require cutting both strands of DNA.
It's made swift progress. Scientists at the company have already tested hundreds of newly discovered gene editors for their potential in human therapeutics. The diversity of the platform and technical expertise has paid off. Metagenomi landed a gene editing collaboration with Moderna (MRNA) , although financial terms and disease targets weren't disclosed.
Gene Writing Instead of Gene Editing
Tessera Therapeutics is taking an entirely different approach to treating diseases. Instead of editing small sections of genes like Crispr tools, the company's novel technology platform could allow scientists to write and rewrite entire genes. It can change single base pairs, too.
The tools are based on something called mobile genetic element (MGE) genes. These aren't responsible for making the proteins that drive disease and health, but they play important roles how gene expression is regulated at the molecular level. In fact, MGE genes comprise roughly 50% of the human genome. Protein coding genes -- what gene editors need to target -- comprise just 2% to 3% of your genome.
MGEs can move genetic material around within a genome, making them the perfect foundation for a powerful gene editing toolkit. The drawback is they don't have a global flywheel of researchers making continuous improvements, which is likely to slowdown Tessera Therapeutics' march to the clinic.
Nonetheless, the startup has raised over $530 million in fundraising since the beginning of 2021. That's one of the largest hauls for any biotech company in that span and a sign that institutional investors are very interested in the technology platform.
