Who Owns the Biggest Biotech Discovery of the Century?

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Who Owns the Biggest Biotech Discovery of the Century?

Jennifer Doudna, Emmanuelle Charpentier, and Feng Zhang are three of the most consequential scientists of the 21st century, pioneers in a revolutionary gene-editing technique with far-reaching possibilities. But first we gotta sort the intellectual property. To the patent trial and appeal board of the U.S. Patent and Trademark Office we go!

There is no dead body, no famous defendant, and no “Dream Team.” There are no television cameras in the court room, no Jeffrey Toobin, and no National Enquirer.

This “Trial of the Century” is all about eggheads and nerds, scientists and patent attorneys.

Yet there is some serious drama here, including a junior scientist defector and potential interference from Europe.

The consequences are extraordinary. There are literally billions of dollars at stake for the litigants. And there’s a lot more than that on the line for the rest of us.

It’s the patent dispute over CRISPR (clustered regularly interspaced short palindromic repeats), the revolutionary gene-editing technique that promises not only to change the way we fight disease but also to deliver us “superbabies,” designer puppies, and glow-in-the dark beer.

On one side stand Jennifer Doudna, Emmanuelle Charpentier, and the University of California, Berkeley.

Doudna, in an August 2012 research paper, detailed the use of CRISPR to cut targeted DNA segments using RNA in prokaryotes, or single-celled organisms, in a test-tube environment.

Opposing are Feng Zhang, George Church, and the Broad Institute of the Massachusetts Institute of Technology and Harvard University.

Zhang, in research published in February 2013, detailed the use of CRISPR to edit DNA in eukaryotes, single- or multicelled organisms with genetic material in the form of chromosomes contained within a distinct nucleus.

Zhang and his team demonstrated the viability of CRISPR in living cells of mice and humans. Backed by the Broad Institute, Zhang filed an application with the U.S. Patent and Trademark Office (USPTO), paying an additional fee for “fast track” status, and was granted a patent in April 2014.

The consequences are extraordinary. There are literally billions of dollars at stake for the litigants. And there’s a lot more than that on the line for the rest of us.

Doudna and her group had filed with the USPTO six months before the Zhang/Broad group filed for its patent. Zhang and Broad have subsequently received 13 more patents.

Doudna and UC Berkeley have argued that the Zhang/Broad patents “interfere” with their application. Their position, in short, is that Zhang, employing “conventional methods,” was working with “a reasonable expectation of success” in his mice and human tests.

The hard, innovative, inventive work was already done . . .  by Doudna.

Alas, argue opposing counsel, Zhang made it work in complex organisms where others, including Doudna, had failed.

CRISPR isn’t the first gene-editing tool. But it has changed the way it’s done. It’s a cut-and-paste method that’s made a time-consuming, extraordinarily hard process “cheap and reliable.”

This technology will facilitate understanding of fundamental issues of biology, including the function of each gene, the discovery of genetic mutations that cause illness and disease, and the ways we can fix such mutations.

CRISPR will someday help us fight disorders caused by defects in a single gene, such as Huntington’s disease and sickle cell anemia.

It will help us understand how to better treat diabetes, autism, Alzheimer’s, and cancer, illnesses that result from complex processes that implicate hundreds of genes.

It’s already been used to fix a genetic defect in laboratory mice that causes hemophilia B.

And in November, a Chinese team led by Sichuan University oncologist Lu You executed the first injection into a human of genes edited using the CRISPR technique. The patient, who suffers from aggressive lung cancer, is participating in a clinical trial at West China Hospital.

Doudna and Zhang have pledged to let scientific researchers use the CRISPR intellectual property for free. But they and the companies they’ve founded will certainly seek licensing fees from private companies hoping to exploit the technology for commercial gain.

By that count, the Broad won the day, as the three-judge patent court panel expressed some skepticism over the Doudna/Berkeley argument that extending CRISPR from prokaryotic to eukaryotic cells was an obvious step.

Handicappers often point to the number of questions asked from the bench of attorneys arguing respective sides of a courtroom dispute.

By that count, the Broad won the day, as the three-judge patent court panel expressed some skepticism over the Doudna/Berkeley argument that extending CRISPR from prokaryotic to eukaryotic cells was an obvious step.

Another way to get a grip on who “won” is to check stock prices.

Editas Medicine Inc. (EDIT), Feng Zhang’s vehicle backed by Alphabet Inc.’s (GOOG) GV venture fund and Bill Gates, was up 1.4% on Tuesday, the day of oral arguments, but gave back 2.2% on Wednesday, the day after cases were made.

Editas priced 5.9 million shares at $16 per to raise $94.4 million and debuted on the Nasdaq on February 3, 2016. It’s currently trading at $15.65.

Jennifer Doudna is now part of Intellia Therapeutics Inc. (NTLA). The stock was down 1.9% in early trade Wednesday, extending a 0.2% loss on Tuesday.

Intellia priced 6 million shares at $18 per to raise $108 million in its May 6, 2016, IPO. Intellia’s big-money backers include Atlas Venture, Novartis AG (NVS), and Regeneron Pharmaceuticals Inc. (REGN).

Crispr Therapeutics AG was founded by Emmanuelle Charpentier, who worked with Doudna on the research that led to the August 2012 CRISPR paper. The company sold 4 million shares at $14 each to raise $56 million from its October 2016 IPO.

Crispr was up 6.2% on Tuesday but gave back 1.8% on Wednesday and is now trading at $21.84

Crispr’s investors and partners include Bayer AG, Celgene Corp., and GlaxoSmithKline Plc.

We’ll hear from the three-judge U.S. patent court panel by late January or early February.

Whatever the result there, the dispute will almost certainly head to the U.S. Court of Appeals for the Federal Circuit. So a final determination of who owns what MIT Technology Review dubbed “the biggest biotech discovery of the century” is many months — if not years — in the future.

Money Quote

“If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”

— Thomas Jefferson

Smart Investing,

David Dittman
Editorial Director, Wall Street Daily

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By David Dittman