On Monday, Intellia Therapeutics was unveiling positive study results for a pioneering gene editing medicine when it received some bad news: legal rights to the basic technology behind its treatment belonged to the Broad Institute of MIT and Harvard, not the University of California, from which Intellia has a license.
The ruling, issued by an arm of the U.S. Patent Office, appears to end a yearslong dispute over which scientists were the first to invent a way to precisely edit DNA inside eukaryotic cells, such as those of animals and humans. The judgment is likely to have ripple effects far beyond the walls of university laboratories, forcing biotech companies like Intellia to draft new legal documents as they seek to secure rights to develop and market new drugs made possible by that discovery.
While the decision doesn't bar Intellia from continuing clinical testing, it may push the company to begin talks with the winners of the case — the Broad and its licensee, Editas Medicine — to ensure that ownership of the intellectual property is clear well before experimental medicines advance to Food and Drug Administration review.
"You want to avoid getting across the FDA finish line and essentially having that tainted by the Broad Institute suing you," said Jacob Sherkow, a University of Illinois law professor who specializes in bioscience law. "I think that behooves the parties to figure this out sooner than later."
The decision is likely to affect companies that licensed rights to CRISPR-cas9 gene editing from the University of California as well as its partners the University of Vienna and Nobel laureate Emmanuelle Charpentier. Among them are Intellia, CRISPR Therapeutics and Caribou Therapeutics.
Shares in Intellia fell 19% on Tuesday following Monday's post-market close announcement of the decision, which was issued by the Patent Trial and Appeal Board. CRISPR Therapeutics shares declined by 7%, while Caribou stock dropped 6% Tuesday.
Editas shares, meanwhile, rose by about 5%. While its patent position is now strengthened, Editas has been comparatively slow to make progress developing its CRISPR-based medicines, falling behind Intellia and CRISPR Therapeutics. All are still some ways from winning U.S. approval for a CRISPR-based medicine, although CRISPR Therapeutics could submit an application for its first later this year.
In a statement, Intellia said it would evaluate the ruling and that it is "confident" the University of California and its partners can "find a path forward to affirm their IP rights," including a possible appeal of the decision. CRISPR Therapeutics, meanwhile, pointed to its "robust" intellectual property estate, which includes 45 U.S. patents covering the composition of gene editing treatments as well as methods of use, including in eukaryotic cells.
Charpentier, founder of CRISPR Therapeutics along with Jennifer Doudna, a University of California scientist, have been credited with being the first to discover how to manipulate CRISPR sequences — used by bacteria to defend against viruses — to create a kind of molecular "scissors" to edit genes. In 2020, Charpentier and Doudna won a Nobel Prize in Chemistry for their work.
But in the case decided Monday, the Broad Institute successfully showed that its scientist, Feng Zhang, first demonstrated CRISPR could be used to edit genes inside eukaryotic cells, pointing to its potential use in humans, before the Doudna-Charpentier team did.
According to the ruling, ownership of the discovery under U.S. law goes to the party that is first able to successfully "practice" it. In doing so, PTAB rejected the Doudna-Charpentier team's claims that Zhang's discovery was derived from information his collaborator, Luciano Marraffini, got from a scientist on their team.
In response, the University of California said it is "considering options to challenge this decision." The next step would typically be an appeal to the U.S. Court of Appeals for the Federal Circuit.
While an appeal may extend the legal battle, the Broad's case was strong and supported by the evaluations of data and witness credibility, according to David Silverstein, a patent attorney with Axinn, Veltrop & Harkrider. "Those are the types of things that get deference on appeal," he said.
Silverstein added that the dispute is likely to end with a legal settlement, cross-licensing agreements or even a patent pool, particularly because CRISPR gene editing is a platform technology with a wide range of uses as medical treatment. However, with the number of claims and counterclaims still pending between the two teams, it may be years before the issue is fully settled.
There's precedent in biotech for such a settlement, such as with older biotechnology that underpinned drugs like Avastin and Humira, Silvan Turkcan, an analyst at JMP Securities, wrote in a March 1 note to clients.
"We point to monoclonal antibodies as a comparable technology where several patent holders cross-licensed technologies."
The Broad has indicated it would like to reach such a settlement. "[The] Broad believes that all institutions should work together to ensure wide, open access to this transformative technology and will continue to explore how best to make this happen," it said in a statement.