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CRISPR spoils go to Broad and partners – for now, at least – in USPTO ruling

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By Marie Powers
News Editor

In a single sentence, the U.S. Patent and Trademark Office (PTO) rendered a judgment of "no interference-in-fact" in CRISPR/Cas9 interference motion phase, neither canceling nor finally refusing the claims of either party.

On face value, the ruling favored the Broad Institute at the Massachusetts Institute of Technology (MIT), which is aligned with Editas Medicine Inc., of Cambridge, Mass. The company swiftly issued a statement commending the decision.

"We are pleased with the USPTO's decision of 'no interference in fact' for the patents that have been granted to the Broad Institute for their innovative and fundamental work on CRISPR-Cas9 genome editing," said Katrine Bosley, Editas Medicine's president and CEO. "This important decision affirms the inventiveness of the Broad's work in translating the biology of the natural world into fundamental building blocks to create unprecedented medicines."

Editas has continued to invest in the genome-editing technology, easily raising $120 million in 2015 in an oversubscribed series B and grossing $108.56 million last year in its IPO. (See BioWorld Today, Aug. 11, 2015, and Feb. 4, 2016.)

Following the PTO's decision, shares of Editas (NASDAQ:EDIT) spiked to $25 before closing at $24.30 for a gain of $5.44, or 28.8 percent.

The closely watched PTO case involving two patents for CRISPR, or clustered, regularly interspaced short palindromic repeats, has been regarded as a pivotal moment for the intellectual properties (IP) associated with the technology, pitting MIT's Broad against the University of California at Berkeley (UC). The UC patent, which was filed first, deals with the use of CRISPR to conduct gene editing of bacteria. The Broad patents, in a fast-tracked application, deal with editing of eukaryote genes. (See BioWorld Today, Dec. 9, 2016.)

In the meantime, UC amassed an intricate CRISPR/Cas9 tie-up. In December, two CRISPR/Cas9 co-inventors, Emmanuelle Charpentier and Jennifer Doudna, entered a global agreement to recognize the other's IP rights and IP licensing deals. The agreement encompassed Basel, Switzerland-based Crispr Therapeutics AG and Cambridge, Mass.-based Intellia Therapeutics Inc., co-founded, respectively, by Charpentier and Doudna, as well ERS Genomics, founded to manage Charpentier's personal IP rights, and Berkeley, Calif.-based Caribou Biosciences Inc., which has licenses from the University of California and the University of Vienna to develop technologies for cellular engineering and analysis based on CRISPR/Cas9. (See BioWorld Today, Dec. 19, 2016.)

The companies also agreed to cooperate on maintaining the patent estate and on coordinating efforts to prosecute, defend and enforce their shared IP rights.

Shares of Crispr (NASDAQ:CRSP) and Intellia (NASDAQ:NTLA) both sank about 11 percent following the PTO's ruling, though Crispr regained some ground to close at $15.90 for a loss of $1.36, or about 7.9 percent, while Intellia settled at $12.51 for a loss of $1.27, or 9.2 percent.

Intellia scheduled a call to early Thursday in which Nessan Bermingham, its CEO and founder, Jose E. Rivera, executive vice president and general counsel, and Graeme Bell, chief financial officer, were expected to address the ruling.

Ironically, the decision came a day after the Committee on Human Gene Editing issued a report that concluded clinical trials involving genome editing in gametes or early embryos could be permitted in the future for serious conditions and under stringent oversight. Experts who weighed in on the paper had conducted a year-long review of the scientific and ethical issues thrown up by CRISPR/Cas9. (See BioWorld Today, Feb. 15, 2017.)

Although the judgment was "a best case scenario" for Editas, the ruling doesn't necessarily spell the death knell for the UC-related parties, suggested Jefferies analyst Gena Wang. UC et al could still move forward with another set of claims and seek a second interference, appeal directly to the Federal Circuit – a process that would take approximately 18 months, Wang said – or settle with Broad to invent around any potential restrictions on Broad's patent and, potentially, include some cross-licensing opportunities.

In a statement, the UC parties noted that, as a result of the PTO decision, "UC's broader case, which was previously considered allowable but for the interference, is now released from the interference and may be prosecuted to potential issuance by UC, while a new interference can be sought with respect to eukaryote claims, currently pending in a separate UC patent application once they are deemed allowable."

That public declaration notwithstanding, Wang put her money on the last of the three options open to the UC parties as the most likely outcome.

"Given that the use of single guide and tracrRNA (claims in UC patent application backed by clear evidence) are fundamental to the CRISPR technology, we believe cross-licensing could eventually likely be the path taken by both parties where NTLA/CRSP could license from EDIT the use of CRISPR in eukaryotic cells, while EDIT could license from NTLA/CRSP the use of single guide and tracrRNA," Wang wrote, suggesting royalties might be set in the mid-single-digit range.

Wang had posted a flash note on Tuesday following a meeting with Editas officials, who had observed that it was "rare" for an interference motion to result in a no-interference in fact outcome. Presciently, they also said the decision for motion phase "could be anytime from now."

Overall, the company appeared "to be confident that EDIT's IP portfolio (30+ issued patents) allows them to be prepared for any outcome," Wang wrote, adding that an investigational new drug application for the company's lead candidate, LCA10, was on track for a filing before year-end.

The technology is designed to address a form of Leber congenital amaurosis (LCA), a rare retinal disease that causes severe vision loss.

If the Court of Appeals for the Federal Circuit does becomes the next stop for UC, it will also likely be the last stop, due to the absence of any question of the fundamentals of patent law.

The final outcome could be worth untold billions to the victors. When Crispr Therapeutics priced its $56 million IPO last October, total funding for CRISPR contenders passed the $1 billion mark. (See BioWorld Today, Oct. 20, 2016.)