We are VERY lucky to have a ‘resident doctor’ in the house who is generous enough to share his insights and analysis with members.

 

Alexander Kenton is a long-time EDGE member who actively trades and selectively holds biotech stocks – not exclusively but it is his ‘wheelhouse’ so tends to do most of his fishing there. As a result of his excellent shares in my trading room, and due diligence on many healthcare-related names, he has been early to notify us when a name looks excited and also to warn when extended. He sizes up the trifecta of science, management and business fundamentals in order to best assess risk/reward. We are grateful for these real-time calls in my trading room, and now we have the benefit of his big picture written analysis on a stock/sector that has a lot of attention and sponsorship: Crispr Therapeutics (CRSP).

Author’s Bio:

Dr. Alex Kenton, MD, MBA, a Fellow of the American Board of Pediatrics and Board-certified in Pediatrics and Perinatal/Neonatal Medicine, obtained a Bachelor of Science in Biology from MIT, an MD from the University of Texas Galveston, and an MBA from Yale. Dr. Kenton completed postgraduate residency training in both Internal Medicine (certified until 2011) and Pediatrics at Christiana Care Medical Center in Delaware. Subsequently, Dr. Kenton pursued a Neonatology fellowship at Baylor College of Medicine.

Formerly serving as the medical director of a system of NICUs, Dr. Kenton transitioned to a staff neonatologist role in 2023 to follow a passion for investing and business. Dr. Kenton is actively engaged in investing and trading, having started part-time in 2016 and transitioning to full-time in 2022, with a primary focus on biotech investments.

Additionally, Dr. Kenton provides business consulting services to individual medical practices, offering expertise in staffing, budgeting, and financing. Currently, Dr. Kenton consults for two medical practices. Dr. Kenton also brings experience in hospital and political finances and administration, having previously served as Chief of Staff and held leadership roles in organizations such as the Texas Medical Association Political Action Committee and the Bexar County Legislative Committee.

 

CRSP Review

Summary: This company has finally brought a gene editing process/product to market to address two serious diseases. Their process is likely to be applied to a host of additional diseases which has the potential to be profitable. Their R and D and SGA costs remain significant but their ability to translate their science to therapies enables them to remain viable for the future. They currently share revenue with VRTX and they rely on VRTX for some of their cell supplies, but I believe they could be a take-over candidate in the future.

 

The Science

CAS9- the enzyme that cuts DNA and a guide RNA sequence which combined and targets the DNA target in question. The complex targets a DNA sequence directly next to the DNA sequence we need to correct. This Cas-9 RNA complex unwinds the DNA sequence that is just before the target and then allows the RNA sequence to bind with the DNA target. The Cas 9 then cuts the target DNA sequence creating a double strand break. The cells natural repair mechanisms come in to repair the sequence, sometimes this results in deletion of additional base pairs and deletion of the entire target sequence in question and inactivating the gene. In other cases, if one inserts a new DNA template, one can replace the original inherited faulty sequence with a new sequence and thus change a nutated gene to a fully repaired gene.

So again, the strategies are to use the CaAS-9 RNA complex to inactivate a faulty gene (easier to do) or replace the mutated sequence with a repaired sequence.

 

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The approved therapy ( CASGEVY) for Sickle Cell Disease is to delete the sickle gene entirely ( this is an altered Beta chain in the Hemoglobin molecule that causes blood cells to get hard and stick together which causes thrombosis and pain and necrosis of limbs and organs in affected patients- this is called sickling) and allow production of the patients fetal hemoglobin and thus decrease sickling. This is a collaboration with VRTX.

Below is an illustration of how they do it. Notice they are targeting the same gene to delete it to target Beta Thalassemia and sickle cell. If you want more info on the molecular physiology behind that, hit me up. So same strategy and same gene targeted to address two diseases (Sickle Cell Disease and Beta Thalassemia)

 

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They are now expanding this process to target other diseases.

Example: High LDL cholesterol. The LDL cholesterol is the “bad cholesterol associated with heart disease. They are targeting the enzyme in the liver that produces LDL. If they knock out the gene that makes the enzyme that makes LDL cholesterol, then they theoretically decrease heart disease. The illustration is below. This trial is in phase 1