There is more than one way to edit a genome.
Investors have been clamoring for emerging instruments based on the Crisp System, and a handful of words now encompasses the competitive landscape. Besides Crisp there is Talen, ZFN, Arcus and more.
Arcus is in the news this week.
Novartis (NVS) – Novartis AG Get Report signs collaboration with Precision Biosciences worth up to $1.4 billion (DTIL) – Precision Biosciences Inc. for the development of the gene editing tool Arcus. get report. The deal provides the small-cap biotech with a financial lifeline and further validates the novel technology platform.
And it follows Precision’s research collaboration with Eli Lilly (LLY) – Get the report from Eli Lilly & Company announced in late 2020 that could be worth as much as $2.5 billion.
In the midst of a biotech winter, is the latest development enough to prop investors up?
What is Arcus Gene Editing?
Gene editing is the process of altering a person’s genome to treat or cure a disease. Many gene editing tools rely on enzymes called nucleases. These enzymes cut DNA to facilitate gene editing. For example, first-generation crisp tools often use the Cas9 nuclease.
Precision Biosciences is developing an Arcus Tools based technology platform powered by i-creel Nuclease. The tool has several potential advantages over its more famous sharp counterparts.
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Arcus gene editing tools are relatively smaller and have fewer components. Simplification could result in more convenient treatment for patients and the ability to reach different parts of the body. Crisp tools still target genes expressed in the liver or “capture” editing cells taken from the patient. Arcus tools could be designed to more easily target genes in the liver, muscle, brain, and bone marrow.
For example, Eli Lilly has used the technology platform to develop gene editing tools that target the liver, muscles and brain. Novartis is interested in exploring the potential of Arcus Tools to treat or treat blood disorders such as sickle cell anemia.
Is Novartis Precision Biosciences Exposing a D-Risk?
Working with two of the world’s largest drug developers is rewarding, but it’s too early for investors to celebrate.
Precision Biosciences earned $75 million in upfront cash from Novartis and could generate tens of millions in milestone payments over the next 24 months. With a $50 million share offering, the company’s liquidity now extends through the end of 2024.
In addition, Arcus Tools can be used to perform gene editing directly in the body. This could offer a notable advantage over Crisp tools under development, which are required to take cells from patients, make them in the lab, and then administer them to patients.
That’s where the good news ends. Precision Biosciences’ cache runway could stretch to the end of 2024, but that may not be enough to collect meaningful clinical trial data. The Eli Lilly collaboration was launched 18 months ago but recently enrolled its first Arcus drug candidate. This means that the clinical trial will take at least 12 months. It will be even longer before Novartis begins clinical trials on blood disorders.
Worse, the company issued a public stock offering shortly after announcing its collaboration with Novartis. The offering will raise up to $50 million in cash and increase the number of shares outstanding by 57%. It will be far more debilitating – and it was badly timed and probably entirely unnecessary.
To be honest, Precision Biosciences did a great job finding partners to develop Arcus gene editing, but it’s still a risky investment. Investors need to recognize that Eli Lilly or Novartis could leave at any time. In fact, it often happens in drug development! Gilead Science (gilded) — Gate Gilead Sciences Inc. The report returned rights to a hepatitis B program to Precision Biosciences two years ago after the program was given priority.
In other words, validation by a pharma titan or two can go a long way, but validation by positive clinical data is more important. Unfortunately, that’s still years away.