This piece originally appeared as part of the Friday File for the Irregulars on July 28, but has now been unlocked for everyone. The company reported quarterly results about two weeks ago that were generally well received, and has otherwise gotten more positive press and analyst upgrades over the past month, and the shares are up about 15% since this teaser campaign ran in late July (both the broader market and the healthcare sector are roughly flat during those past four weeks).
The article below has not been updated or revised since it was first published on July 28, 2017. The original comments added in the discussion segment following initial publication are still appended for your information and edification.
Today your Friday File is a two-parter — I’ve got some updates on several companies I follow (and own), and I’ve shared that in a separate piece, but I’ve also been bombarded over the past 24 hours with requests to solve a new teaser pitch from the Money Map folks, so I thought I should whip out at least a brief solution to that one for you. After all, you’re an Irregular — what would I do without you?
The pitch I’m being asked about is an ad for Radical Technology Profits, the higher-end newsletter ($1,950/year) from Michael Robinson over at Money Map Press, and he’s talking up a huge sales surge for a tiny company that he thinks will make you rich… this is the promise on the order form:
“Ride This Tiny Company’s 28,700% Sales Surge All the Way to the Bank
“Secure an early stake now and you could be $2.8 million richer within 18 months.”
The promise is that this “device” will be powerful enough to destroy pretty much any disease — so that hits lots of investors right where they want it, massive wealth and a promise you won’t get sick. Who doesn’t get all tingly about both turning your $10,000 into $2.8 million and making sure Uncle Bob doesn’t die of lung cancer?
More from the ad:
“This tiny device is the brainchild of a Harvard molecular engineer who is now being hailed as the most transformative scientist of his generation.
“He has already been honored with a long list of prestigious awards.
“Experts believe a Nobel Prize is a foregone conclusion.
“And his financial reward could put him in the same league with Microsoft founder Bill Gates and Facebook founder Mark Zuckerberg.
“In fact, this scientific genius has launched a new company to bring his invention to market, just like Gates and Zuckerberg did before him.
“Right now, the company is tiny, with a mere $6 million in revenues.”
Ah, $6 million in revenues. That’s a lot different from the popular assessment of the size of a company by the value of its outstanding shares (that would be market capitalization, or market cap). But yes, you can imply, if you wish, that a company is tiny because it has “only” $6 million in revenues… just keep in mind that lots and lots of biotech and R&D companies have essentially no revenue, companies in this space are typically valued on the future prospects for their technology or their product, not on the actual revenue they’re currently bringing in.
More from the ad:
“But mark my words: They won’t stay small for long.
“You see, on February 15, 2017, a federal court handed down a stunning decision that forever alters the healthcare hierarchy…
“This was one of the fiercest patent cases in history, with the winner seizing patent rights likely to be worth billions and billions of dollars.
“One of the nation’s foremost patent experts called the case a…
“Monumental event for the world.”
So what was this actual patent decision? More clues:
“And now the ground-shaking verdict is in…
“The inventor and his research organization triumphed and have assigned the primary patent license to the inventor’s company.
“Please understand: This tiny $6 million company controls over 40 registered patents – and has another 500 patents pending.”
Right, so what we’ve obviously dealing with here is CRISPR technology — the gene editing breakthrough of a few years ago that has been fought over in the courts, as several different leading research scientists have claimed ownership of the first wave of critical patents for CRISRP-Cas9.
There is a very good chronological description of the patent disputes from The Broad Institute here, though keep in mind that The Broad Institute is a party to many of the lawsuits and partnered with Dr. Feng Zhang and his lab — Dr. Zhang was the one to file the first patent for the use of CRISPR-Cas9 to edit cells of complex organisms, and it was his patents that were upheld in that February hearing (it was an interference case, so essentially the patent examiners ruled that Zhang’s patent did not interfere with the work or patent applications of other researchers, including Dr. Emmanuelle Charpentier, Jennifer Doudna and their teams at UC Berkeley and the University of Vienna).
So yes, this is Editas Medicine (EDIT), a $700 million R&D company that is advancing the patented CRISPR technologies of Feng Zhang and the Broad Institute at Harvard & MIT (though Jennifer Doudna was also a cofounder of Editas, which she left last year). The Broad Institute, and therefore Editas, which is their primary licensee (with exclusive rights to use the technology for genomic medicines, and right of first refusal for any gene targets it is not pursuing), did win an important patent fight in February.
And yes, they do have revenue of about $6 million for the past year… a largely meaningless number, mostly from R&D milestone payments, for a firm that has operating expenses of $115 million over the past year (including $67 million and climbing for R&D spending). They do also have some meaningful alliances, with Allergan in opthalmology, including $90 million in R&D support, and with Juno in cancer (which is where most of that milestone payment income came from).
It’s worth noting that the share prices of the three widely-followed CRISPR-related stocks did not react to that February decision as if it were a “winner takes all” announcement — EDIT did pop up on the news, and Intellia (NTLA — founded by and licensing the patents of Jennifer Doudna) and CRISPR Therapeutics (CRSP — founded by and with patents from Dr. Emmanuelle Charpentier) did drop in price, but none of the three has been particularly impressive since and all are of roughly comparable size (the other key company often mentioned, Caribou Biosciences, also founded by Doudna, is not public) . Which seems to me like shorthand for “the market isn’t sure which of these three, if any, will win in the end.”
The article that the ad cites when using this “Winner takes all” language is here, from the MIT Technology Review, and it’s an article from 2015 about the beginning of the dispute over “who was first to invent” CRISP-Cas9 that was decided back in February. Indeed, the headline of that article is “CRISPR Patent Fight Now a Winner-Take-All