Crispr Therapeutics (NASDAQ:CRSP) is down on Monday after an article in today’s issue of Nature (one of the most-trusted, well-known scientific journals) raised concerns about Crispr’s gene-editing technology. As of this writing, Crispr stock is down 7.9%.
And investors need to take a second to understand the news.
Crispr is a revolutionary gene-editing technology that has been widely embraced by the scientific community. It uses the cell’s own Crispr/Cas9 mechanism to delete small snippets of the cell’s own DNA (such as a mutation) and insert different DNA sequences in its place. Crispr has huge potential in the treatment of thousands of different diseases, genetic research and even food science.
Today, however, an article published by Nature brought to light a possible problem for Crispr, and investors are selling on the headline. And the headline does sound scary. Especially when the boring “Repair of double-strand breaks induced by CRISPR–Cas9 leads to large deletions and complex rearrangements” becomes, “BREAKING: CRISPR Could Be Causing Extensive Mutations And Genetic Damage After All.”
But the truth is far more mundane, and while it may have implications for researchers working with Crispr’s technology, the effect on the company’s earning potential is likely non-existent.
A New Study on Crispr
So what does it mean?
Researchers at the Wellcome Sanger Institute have observed that when Crispr is used, it can cause deletions and mutations in DNA near, but not including, the DNA being studied. (DNA exists in strands, and specific sequences along these strands are targeted by Crispr.) This has the potential to skew experimental results and make creating therapies based on Crispr more difficult.
That sounds bad, but it’s far from the end of Crispr.
James Haber, a molecular biologist at Brandeis University who was not involved in the study, says that these findings deserve attention but they should not stop anyone from using Crispr. Instead, researchers should perform a thorough analysis to make sure that these mutations are not appearing in cells they’re working with.
This is important for researchers, but not for investors in CRSP stock. Crispr Therapeutics still has all of the potential that it did before this news came out. Other gene-editing techniques have displayed similar problems, so it’s not as if the scientific community is going to drop Crispr en masse.
It is important to note that these mutations were only found in Crispr techniques that rely on DNA cutting. There are a number of ways that researchers use Crispr, such as switching DNA around without cutting, turning genes on or off and anything that targets RNA instead of DNA.
When It Comes to Biotech, Beware the Headlines
Furthermore, when it comes to biotech stocks, investors should not only look at what the science is saying, but how science itself works. The scientific method is predicated on the replication of experiments. One experiment showing something does not make it a proven fact, and many researchers are often studying the same or similar issues simultaneous. That’s why you can read headlines about a new study that says coffee causes cancer the same week you can read a headline about how it prevents cancer.
This article is reporting on primary data. That means that it’s based on just the experiments of those writing the paper. A review article is an article that looks at the findings of many different experiments, from many different researchers and research institutions, often over a longer period of time. Review articles can show a scientific trend or consensus. Primary data articles cannot.
Case in point, Nature’s own news piece on the findings not only talked to James Haber, it contacted a number of other researchers in the field to get reactions to the study. And in doing so they reported on two different labs, which are continuously testing for the types of mutations observed in today’s reported study and who have not noticed any of the same mutations.
Does this mean the study is bad or Nature is bad or science can’t be trusted? No. Not even close. All of this just means that a single headline is just that. A single headline.
The Bottom Line for Crispr Stock
To sum up, here’s why you shouldn’t be selling Crispr stock on this news: This study is one paper that says one group of people observed an issue in their specific research. This issue can be controlled for if researchers are aware of it and conduct additional tests. And, this specific Crispr method is not the only Crispr method.
Additionally, right now, Crispr is a research tool. It is currently used on the cellular level in laboratory settings. Any therapy developed using Crispr still has to undergo the same rigorous safety testing as any other drug before it can gain FDA or EMA approval.
If you believed Crispr Therapeutics was worth owning before, it is still worth owning. Scientifically, Crispr is still a revolutionary technology that will benefit people for years to come.
Broadly, this can be seen as a reason why reacting to a single headline can be dangerous, especially when it comes to biotech stocks. Investors should always dig deeper than the scary headline before making any rash decisions.
As of this writing, Regina Borsellino owned no positions in the aforementioned securities.
Legendary Investor Louis Navellier’s #1 Stock to Buy NOW
Louis Navellier — the investor the New York Times called an “icon” — just helped investors make 487% in the booming Chinese stock market … 408% in the medical device sector … 150% in Netflix … all in less than 2 years! Now, Louis is urging investors to get in on what may be the opportunity of a lifetime. By using a unique investment strategy called “The Master Key,” you could make hundreds of percent returns over the next few years. Click here to learn about the #1 stock recommendation from one of America’s top investors.