Let’s go to the NASDAQ for some insight on a couple of recent biopharma stories. First off is Axovant, a company that’s interesting in a number of distressing ways. I last wrote about them here, after their Alzheimer’s candidate came up short in the clinic, which was a development that surprised no one who had been paying attention. The same compound has now failed in a trial for Lewy body dementia, surprising no one who has been paying attention. I have been unhappy about Axovant since their IPO; the entire operation seems to someone from the outside (like me) as engineered to sell unwonted hope to both investors and patients. The particular financial conditions of the company (extraordinarily rapid IPO, generous provisions to insiders, strong happy feel-good coverage from the investment firms that got commissions from the IPO itself and from nobody else, etc.) should have been enough to give anyone pause. Knowing that both the compound itself and its mechanism of action had failed multiple times in the clinic was just more reason to wonder what was going on, and now here we are.
I only wish I’d been short the stock this time as well, and Axovant’s remaining investors no doubt wish that they weren’t still long. When the Alzheimer’s news hit back last fall, the stock price went from about 24 to about 6, but even when a stock is down in the single digits you can still lose a lot. Premarket, AXON has dropped from Friday’s 5.4 to about 2.7, and half your money is half your money no matter where you started. As far as I can tell, Axovant’s main hope is another castoff compound, nelotanserin (ex-Arena), but that one’s not too encouraging, either. And what does this mean for CEO Vivek Ramaswamy’s stable of other companies with similar strategies? One of these could still work out, of course, but this doesn’t make the whole idea look any more appealing.
Now to another story. I mentioned last May that a paper had come out with doubts about the utility of CRISPR gene editing. That caused the stocks of the companies in this field to drop, but the work had enough questions around it that I took that as a buying opportunity, and bought Editas (EDIT) at 13.46 and Crispr Therapeutics (CRSP) at 14.08. That has been a profitable investment, since they closed Friday at 33.59 and 26.81 respectively, but now another paper has come out that’s going to affect the whole field.
This one shows that many people may already have an immune response to Cas9 proteins, because we’ve been exposed to the relevant bacterial sources (Staphylococcus and Streptococcus) so much. That could well complicate many of the more ambitious ideas about using CRISPR techniques on human patients, although you have to figure that ex vivo modifications (via bone marrow transplants, etc.) would be in much better shape. Introducing the whole Cas9 machinery into humans in some form, though, could run into trouble. I’m not sure – no one’s sure – about how this will affect newer CRISPR-based ideas, many of which involve modifications of the system and proteins from different sources. But it’s “classic CRISPR” that’s closest to the clinic.
News of the paper circulated around on Friday, but it appears that many investors needed the weekend to read the paper – or to read stories about the paper, more likely. The stocks involved (chiefly EDIT, CRSP, and NTLA) didn’t move much, but premarket today they’re all down about 10%. I’m considering whether to sell myself (taking my profits and running) or waiting this out a bit, and I haven’t decided yet. But it’s for sure that the development of CRISPR-based therapies has not thrown out its last surprise, and anyone investing in this area had better be prepared for turbulence.