Biotech

Bhavneesh Sharma

Top 20 Ranking (28.2% Avg Return) --TipRanks

CRISPR Therapeutics (CRSP): Novel gene editing approach in CAR-T therapy

(Source of data: Bloomberg.com)

Key takeways:

- CAR-T approach to treat solid tumors is being attempted by more than 15 companies but is going to need a complex, multi-targeted approach, compared to the first generation CAR-T products directed against a single antigen.

- Solid tumor micro-environment is complex due to tumor immunosuppressive environment, barriers for T cells to reach inside the tumor like fibrous stroma, 'cold tumor' environment lacking T cells, and heterogeneous tumor tissue with multiple neoantigens, some of which are continuously mutating.

- CRISPR Therapeutics's approach to developing allogeneic CAR-T cells involves multiple steps to overcome these challenges presented by solid tumors. Using CRISPR/Cas9, the company is able to make multiple gene edits to engineer the CAR-T cells with the desired properties. While the company is also targeting hematological malignancies like CD-19 positive leukemias and lymphomas, I am impressed by their preclinical results in CD70 positive renal cell cancer models.

- CRISPR Therapeutics stock has pulled back due to the recent biotech sector pullback and is at an attractive Buy level ahead of several catalysts over the next 12 months which could help upward momentum. Rating Buy.

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Detail:

After the almost miraculous results shown by autologous CAR-T treatments in hematological cancers, and the expensive premiums paid by big Pharma for acquiring companies with these therapies, for example, $12 billion paid by Gilead (NASDAQ: GILD) for Kite Pharmaceuticals, there is no doubt that CAR-T therapy is one of the hottest therapeutic areas in immune-oncology. However, after commercialization, we have seen a slow uptake of the FDA approved autologous CAR-T therapies like Yescarta and Kymriah. One of the problems with the use of these therapies is the complex manufacturing, which involves taking T cells from the patient with cancer and modifying them outside the body to target certain tumor antigens and then infuse them back into the body. The process is complex and there are limitations, for example, some patients with very advanced disease may not live long enough for the therapy. Some patients with these hematological cancers may also be severely lympho-depleted due to prior therapies and may not have enough T cells to be isolated from their body.

In view of these limitations, the focus of CAR-T therapy has shifted to developing allogeneic methods, which means attempting to develop universal T cells which may be ready to use against a patient with cancer. The future of CAR-T therapy is certainly in the allogeneic space, as shown by the starting of Allogene (NASDAQ: ALLO), the new company started by Dr. Chang, Kite Pharmaceuticals former CEO, who sold it to Gilead for $12 billion and made $600 million for himself. I recently attended a one-day immune-oncology conference held by Jefferies in Boston, where at least 20 private and public companies pitched their allogeneic CAR-T programs to investors.

Among the 20 or so immuno-oncology companies in the allogeneic space, a couple of them have stood out to me. These are CRISPR Therapeutics (NASDAQ: CRSP), which is using CRSIPR/Cas9 gene editing technique to modify T cells in an attempt to boost their response to cancers and overcome the tumor inhibitory microenvironment. The second company on my list is Allogene, which I have described above. After some research, I currently like CRISPR Therapeutics’ approach towards developing allogeneic T cell immunotherapy better, though Allogene is leading in the pipeline development stage at present and may an allogeneic CAR-T product in hematological cancers in 2021. In this note I will provide a brief description of CRISPR therapeutics approach to developing allogeneic T cells in cancers. While the company has a diverse pipeline including CRISPR/Cas9 gene editing in diseases like sickle cell disease and beta-thalassemia, that will not be the focus of this article.

The advantage of CRISPR Therapeutics approach is that gene editing using| CAS9 can perform multiplexed editing, that is the modification and/or insertion of multiple genes within a single cell. Notably, CRISPR is also the easiest gene editing technique to manufacture compared to competing technologies like Sangamo's Zinc Finger (ZFN) and Cellectis/Allogene's TALEN. Compared to these competing technologies, CRISPR/Cas9 can make multiple gene edits using a single CAS9 protein and multiple small guide RNA molecules.

Advantages of the company’s CRISPR/Cas9 gene editing technology to create allogeneic CAR-T cells over competing technologies that use lentiviral transduction to insert CAR (example Allogene):

  1. More uniform CAR expression by TRAC locus CAR inertion.
  2. Enhanced T cell potency at the tumor site by TRAC locus CAR insertion.
  3. MHC-1 knockout (by eliminating beta-2 microglobulin gene) is believed to enhance the persistence of CAR-T cells.

CTX110

it is an allogeneic CAR-T cell therapy which is targeted against CD19 antigen which is commonly present in certain leukemias and lymphomas.

Steps in generating CTX110 (see the figure below):

  1. the T cell receptor or TCR is knocked off to reduce the risk of graft-versus-host disease.
  2. CD19 directed CAR is inserted site into the TRAC locus. Competing technologies like Allogene's CAR-T technology use a lentiviral vector for CAR transduction. Published medical research has shown that insertion of CAR in TRAC locus has advantages like better T cell expansion.

  1. The class I major histocompatibility complex-1 is removed from the cell surface. This helps to improve the persistence of CAR-T cells in an off-the-shelf setting.

(Three steps in generating CTX110)

The above steps in creating CTX110 have an advantage over competing allogeneic CAR-T therapies, for example, Allogene is using an integrating lentivirus to insert the CAR. Also, Allogene is also not using the MHC-1 knockout.

Preclinical proof of concept data:

in preclinical studies in mice, the company has shown the ability to perform the gene editing steps as outlined above. In addition, in a CD-19 positive tumor mouse model, the survival of the treated mice was also significantly pronounced compared with untreated controls and the efficacy was comparable to what is seen with the current currently approved CAR-T therapies.

CTX120:

it is an allogeneic CAR-T product candidate which is targeted against B cell maturation antigen or BCMA and is being developed against multiple myeloma. BCMA CAR-T therapies are a very competitive field and other companies, for example, BlueBird Bio (NASDAQ: BLUE) are already conducting advanced human trials of their autologous CAR-T therapy in this indication. The generation of CTX120 is similar to the three steps outlined for CTX 110 above.

The proof of concept efficacy was shown in a mouse model of multiple myeloma by complete elimination in the tumor volume compared to untreated mouse as shown in the figure below. The effect also persisted for 50 days.

CTX130:

it is an allogeneic CAR-T product candidate targeted against CD70. CD70 is expressed on several cancers, for example, non-Hodgkin’s lymphoma, renal cell cancer, glioblastoma, pancreatic cancer, lung cancer and ovarian cancers. The generation of this product candidate needs additional gene editing beyond the above three steps for the first two product candidates.

Additional gene editing steps apart from the 3 steps outlined above are:

  • Knockout of PD1 which removes the tumor immuno-suppression.
  • A fifth undisclosed gene edit

The additional two gene edits have shown increased cytokine production and higher cytotoxicity for T cells.

 Preclinical proof of concept data has been shown in a mouse model of renal cell cancer by complete elimination of the tumor volume which persisted in the day 50.

    At SITC conference in 2018, the company presented data showing 7 gene edits (6 knockouts and 1 knock in), which has not been seen with competing gene editing technologies like zinc finger or TALEN. Moreover, the gene editing was also safe and was not associated with any oncogenic or immortal properties.

    In addition to the above mentioned gene edits, the company can also use do gene editing to express T cell stimulatory molecules, or insert a safety switch.

    Milestones:

    - The first patient in the phase 1 trial for CTX110 is expected to be dosed in H1 2019.

    - IND for CTX120 will be submitted this year.

    - IND for CTX130 will be submitted this year.

    From a valuation perspective, I won't dig into details here since the purpose of this article is scientific but compared to the recent comparable acquisitions: KITE=$12B, JUNO=$9B, CRSP is trading at just above $2B. And apart from the CAR-T pipeline, investors also get several additional product candidates. The full pipeline is shown in the figure below.

    The company has already started a phase 1/2 trial of its CRISPS/Cas9 product candidate, CTX001 in beta-thalassemias.

    The balance sheet is healthy with $438M in cash reserves which is adequate for at least 12 months considering $96M in operating cash burn in 2018. There is no long term debt.

    Further reading: I suggest reading this poster presentation which CRISPR Therapeutics presented at the recently concluded annual conference of Gene and Cell Therapy which I attended. The poster presentation has interesting data on the effect of PD-1 knockout, ability of CAR-T cells for tumor lysis after multiple re-challenges etc.

    Risks in the investment:

    The efficacy data in cancers is from animal studies and may not be replicated in human studies. Some papers have raised questions like off-target effects though the company is using AI/data analytics for sequencing T cells to identify them. The company is well-funded for now but may need significant capital infusion in the future before any product reaches the market.

    Disclaimer:

    This article represents my own opinion and is not a substitute for professional investment advice. It does not represent a solicitation to buy or sell any security. Investors should do their own research and consult their financial adviser before making any investment. Investing in equities, especially biotech stocks has the risk of significant losses and may not be suitable for all investors. While the sources of information and data in this article have been checked, their accuracy cannot be completely guaranteed.

    I/we are long CRSP, ALLO, GILD.

    Bhavneesh Sharma covers biotech as one of the original contributing analysts at FATRADER. A market expert with a medical degree and MBA, he is ranked among the top 15 financial bloggers and top 100 overall financial experts (including Wall Street analysts) on TipRanks.
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