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Should You Buy the Dip in CRISPR Therapeutics?

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We recently documented the potential of Genome Editing technology to revolutionize the treatment of many serious diseases and three companies who are positioned to use a specific method of gene therapy called CIRSPR Cas9 to repair genetic diseases - CRISPR Therapeutics (CRSP - Free Report) , Intellia Therapeutics (NTLA - Free Report) and Editas Medicine (EDIT - Free Report) .

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After a spectacular runup in 2018, shares of CRISPR hit a snag recently.

Late Wednesday, CRSP announced that the U.S. FDA had placed a clinical hold on the company’s investigational new drug (IND) application to use the technology in a phase I/II study on sickle cell disease patients in the U.S. beginning later in 2018.

The markets pummeled CRSP’s shares which traded down almost 20% in after hours trading on Wednesday night and though they have recovered somewhat, remain 10% lower than Wednesday’s close in intraday trading.

To determine whether the recent selloff represents a buying opportunity for investors to get in on this recently red-hot stock at a more attractive price, let’s take a quick look at the FDA’s IND process and what a “Clinical Hold” actually means.

The FDA Process

Before researchers can conduct human clinical trials into an investigational drug, it must submit an application to the FDA addressing key safety and efficacy issues.  The application is required to contain information in three broad areas: Animal Pharmacology and Toxicology Studies, Manufacturing Information and Clinical Protocols and Investigator Information. The applicant can not initiate clinical trials for 30 days while the FDA reviews the IND for safety and to ensure that research subjects will not be subject to unreasonable risk.

It was during this review period that CRSP received notice from the FDA of the clinical hold, meaning they could not proceed with trials until the FDA had performed further review.

The grounds for a clinical hold at this stage encompass a wide range of possibilities.

The most serious include the possibilities that the application is intentionally erroneous or misleading, the investigators are not qualified to perform the trials, or that there is a significant risk of illness or injury to the participants.

The least serious is that the IND application simply does not contain sufficient information needed to assess the risks to subjects of the proposed study.

Any one or more of the listed grounds is sufficient for the imposition of a clinical hold. Within 30 days of imposing the clinical hold, the FDA must send the applicant a letter describing in detail the reasons for the hold. The applicant is expected to respond to any and all issues detailed in the hold letter (without a specific time limit, although presumably they have an impetus to respond as expediently as possible), then the FDA has 30 more days to address the response and choose to extend or lift the clinical hold.

The FDA does not make the details of these proceeding public during these periods.

CRISPR’s Application

In its statement Wednesday, CIRSPR therapeutics and its joint venture partner Vertex Pharmaceuticals (VRTX - Free Report) said only “CRISPR and Vertex expect to obtain additional information on the FDA’s questions in the near future and plan to work rapidly with the FDA toward a solution.”

So at this point, investors are somewhat in the dark about the reason(s) for the clinical hold and what they mean for the future of the trials and the company.

It’s possible that the application is simply not thorough enough and CRISPR can append the relevant information and continue as planned with little delay.

It’s possible that the FDA is simply proceeding with extreme caution (and subjecting this particular application to additional scrutiny) because gene therapy is so new that they want to be aware of all potential risks before they let the proverbial genie out of the bottle.  

Or it’s possible that the FDA sees serious risks in the trials or factual inconsistencies in the application that threaten to doom the project altogether.

Based on the language of CRISPR’s press release, the odds are that it’s one of the first two reasons, but without more information, it’s impossible to know. At this point, investors should probably avoid adding to a position until the reasons for the hold are clearer.

We will continue to monitor the situation.


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