Here's Why Editas Medicine Fell as Much as 15.7% Today

By Maxx Chatsko Markets Fool.com

What happened

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Shares of gene editing pioneer Editas Medicine (NASDAQ: EDIT) dropped nearly 16% today after a new study published in Nature Methods drew attention to unintended effects of using the highly touted genetic engineering tool known as CRISPR. Shares of genome-editing peers CRISPR Therapeutics (NASDAQ: CRSP) and Intellia Therapeutics (NASDAQ: NTLA) were down as much as 6.9% and 14.9%, respectively, on the news.

The study, conducted by a team from Columbia University Medical Center, provided data showing that the technology can "introduce hundreds of unintended mutations into the genome," according to Genetic Engineering & Biotechnology News. That contradicts one of the better-known characteristics of CRISPR: precision.

Simply put, it's not sitting well with investors, who are (in knee-jerk fashion) adjusting the value placed on early-stage platforms, especially Editas Medicine, which will be the first of the group to enter clinical trials. As of 3:31 p.m. EDT, the stock had settled to a 11.3% loss.

Image source: Getty Images.

So what

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The study is among the first to quantify the specificity of CRISPR tools, which work by delivering gene editing enzymes to specific parts of the genome through the use of synthetic guide RNAs. Or that's how they're supposed to work. The authors of the study show that although intended edits can be made with respectable efficiency, such as correcting a mutation in a gene that causes blindness in mice, there are also unintended secondary edits made to the genome.

This may seem like a bombshell report, but it's a matter of optics. Researchers have never shied away from the reality that CRISPR gene editing tools can stray off target and make unintended edits to genomes in mammalian cells (i.e., humans). Many labs -- including Editas Medicine, CRISPR Therapeutics, and Intellia Therapeutics -- are working on increasing the efficiency and specificity of the technology. This is how science works. By quantifying these off-target mutations, which the paper attempted to do, researchers can begin to better understand how to improve the technology.

Investors and traders did not take the same cool-headed approach to the news, instead giving into a knee-jerk reaction to adjust the value of each pre-clinical technology platform. While off-target edits could prove troublesome for a CRISPR therapeutic used in humans, it's important to remember that there are currently no clinical trials underway in the United States. Editas Medicine will become the first to initiate a clinical trial later this year.

The sharp contrasts in reactions from researchers and investors is likely driven by how CRISPR is perceived by the media. Unfortunately, there is a generous amount of hyped-up science journalism that sticks to simple narratives -- "CRISPR has arrived and will cure all diseases!" -- instead of more nuanced takes that give equal weight to each current obstacles and future potential facing an emerging technology. Just remember: Biology is never quite so simple.

Now what

The results from the study don't really change anything, except for bringing more attention to the already existent clinical risk inherent to the development of early-stage CRISPR therapeutics. There is still plenty of work and new technology left to be developed before gene editing fulfills its promise in treating and curing human diseases. Hopefully, this can be a long-term positive for investors in CRISPR stocks by forcing them to listen to the fundamental hurdles for the technology. Hopefully.

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Maxx Chatsko has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.