Often, promising emerging technologies such as CRISPR are conceived in universities. Early-stage companies are then formed to bring these ideas to fruition, with the support of private investors. There are now a multitude of small companies each working on bringing to market different CRISPR applications.
We are also on the cusp of the next step, which is for these small companies to grow into established biotech firms or be acquired by bigger name pharmaceutical groups. When a disruptive technology such as CRISPR is clinically validated, this often leads to a flurry of business development activity in the industry. Typically, larger cash generating companies swoop in, either to purchase the licensing rights to a drug or to acquire the companies responsible for the innovations.
Other companies working in a similar area might also benefit from such a development, as the technology is recognised as having real potential. For instance, Intellia’s recent success might also impact companies including Crispr Therapeutics, Beam, Bluebird and Edita, which are also addressing an astonishingly wide range of other conditions.
Balancing act
As CRISPR technology takes hold and becomes a mainstream method of treatment, the companies harnessing its potential could reap a proportion of the global pharmaceutical market.
Investors can capitalise on this growth by investing at different stages of the drug development cycle. For example, we have exposure to CRISPR through our investment in Regeneron, the established US mid-cap company that collaborated with Intellia to fund the development of the amyloidosis treatment.
We also hold a position in Swiss-American start-up CRISPR Therapeutics, a smaller technology focused company.
By holding a variety of companies using CRISPR to tackle genetically driven diseases at different stages in the innovation cycle, we are able to balance our risk exposure – mitigating the risks related to drug approval, while capturing the immense growth potential on offer.
Development stage companies such as CRISPR Therapeutics are considered high risk, while dependable profitable companies like Regeneron offer a less volatile option. We also look for revenue growth opportunities – companies with an approved and launched product but not yet turning a profit – as we believe these are poised to become the next generation of successful, profitable companies.
