Guide to the First Ever FDA CRISPR Approval Expected this Year by CRISPR & Vertex (XDNA ETF Companies)

Introduction

While being a newer technology, there are several publicly tradeable companies utilizing the power of CRISPR gene editing, base editing, and prime editing in the Kelly CRISPR & Gene Editing Technology ETF (Nasdaq: XDNA). Two of the XDNA companies are about to make history with potentially the first ever commercially available CRISPR technology.

First FDA Approved Treatment - Major Milestone for the CRISPR Revolution: XDNA companies, CRISPR Therapeutics, 12.18%, and Vertex Pharmaceuticals, 1.56%, are anticipated to get the first ever U.S.-marketed treatment based on CRISPR this year for their Exa-cel therapeutic (data as of April 18, 2023).

What is Exa-cel: Exa-cel is a CRISPR/Cas9 gene-edited therapy for sickle cell disease and transfusion-dependent beta-thalassemia (“TBT”). In an investor call February 7, 2023, Reshma Kewalramani, M.D., CEO and president, Vertex, said the company expects Exa-cel to be its next commercial launch. The one-time fix from Crispr and Vertex has gotten a raft of regulatory preferences that will fast-track its review and give it some marketing exclusivity if approved.

When: The approval could come as soon as late this summer, but most likely around November, and would make it the first therapy created through this sort of gene editing to become widely available in the United States.

Why it Matters: The first FDA approval would mark a major milestone event in the Life Sciences Industrial Revolution (page 11), setting other XDNA constituents expectations for things to come as it may inform the path with forward regulatory bodies and the payer landscape for future gene-editing programs.

CRISPR / Gene Editing Technology: CRISPR is a Nobel-winning technology that rewrites faulty genes as it is a pair of biological scissors that cuts and replaces genes in living organisms’ cells.

Creating the Cure: CRISPR Therapeutics and Vertex Pharmaceuticals Exa-cel treatment is a CRISPR/Cas9 gene-edited therapy for sickle cell disease and beta thalassemia. Sickle cell afflicts 100,000 Americans and has treatments but no cure. Patients who received the one-time Exa-cel treatment in clinical trials have remained free of the red blood cell disorder‘s agonizing symptoms. Sickle Cell Disease ("SCD") is an inherited red blood cell condition that causes severe chest pain, known as a vaso-occlusive crisis ("VOC"), and can lead to serious health conditions such as stroke. Severe forms of SCD are normally treated with regular blood transfusions, which are time consuming, inconvenient, expensive, and do not cure the disease. Exa-cel has proven to cure the disease in all 31 treated patients, according to results from the Phase II/III CLIMB SCD-121 trial in Sickle Cell Disease shared in the investor company presentation (see below).

The Power of CRISPR: One & Done Treatment

Kelly Intelligence believes gene editing is the next evolution of healthcare. The whole premise of CRISPR is to cure disease, not to just treat the disease.

Therapeutic strategies to treat life threatening diseases have evolved over time

Source: Intellia Therapeutics

The goal of gene editing is to:

• Treat patients at the root cause of their disease
• Single dose treatment with potential lifelong benefit
• Reduce burden to the healthcare system over a patient’s lifetime

Exa-cel Data

Exa-cel is emblematic of outcomes desired by not only patients, but also the medical community, for all the three points above as the data supporting Crispr's marketing applications for Exa-cel are persuasive.

According to results from the Phase II/III CLIMB SCD-121 trial in Sickle Cell Disease shared in the investor company presentation, all 31 treated patients remained free of vaso-occlusive crises as seen in the below data provided by the company.Vertex and CRISPR Therapeutics started submissions of Exa-cel in sickle cell disease and beta thalassemia in November 2022. The regulatory progress has moved a bit faster outside the U.S., as the European Medicines Agency and U.K. authorities have already validated the filings. In the U.S., Vertex completed their rolling submission at the end of March.

Source: CRISPR Therapeutics

Competition: Gene Therapy

Exe-cel is a gene-editing cure which would need to compete against current therapies in the market which require multiple and repetitive life-long treatments. Exa-cel will likely have to compete with bluebird bio’s rival gene therapy, Lovo-cel, in sickle cell disease, and Zynteglo in beta thalassemia.

Recent market research suggests that physicians “have a strong preference and interest in gene editing over other potentially curative approaches,” Chief Operating Officer Stuart Arbuckle of Vertex told investors during a conference call Tuesday, February 7^th, 2023, suggesting potentially better reception of Exa-cel versus Lovo-cel. Exa-cel is different from the bluebird medicines. Rather than using viral vectors to deliver a functional HBB gene, the Vertex-CRISPR therapy uses CRISPR to turn off the suppression of fetal hemoglobin and thus increase the amount of healthy hemoglobin in red blood cells.

For Exa-cel’s initial launch, the company plans to focus on the approximately 32,000 patients with severe SCD and TDT, both in the U.S. and in Europe. These patients suffer from multiple hospitalizations yearly due to vaso-occlusive crises in SCD or require near-monthly transfusions for TDT. Vertex is busy talking to commercial and government payers and policymakers in the U.S. and Europe. The company aims to ensure that broad patient access and reimbursement deals are in place when Exa-cel is approved, Arbuckle said.

According to Arbuckle, Vertex has talked with all U.S. state Medicaid agencies, plus about 150 U.S. commercial payers and several health economic assessment bodies in Europe, including Britain’s National Institute for Health and Care Excellence. So far, payers see Exa-cel’s clinical data as “highly impactful,” especially in its ability to reduce vaso-occlusive events and hospitalizations, Arbuckle said during the February 7^th, 2023 conference call.

Economics: Pricing

In 2021, Vertex increased their interest in Exa-cel by being responsible for 60% of the costs of developing, manufacturing and commercializing of the therapeutic with support from CRISPR Therapeutics and will receive 60% of profits from global sales. CRISPR will handle the remaining 40% and receive 40% of profits. Vertex paid CRISPR $900 million up front with another $200 million possible after the first regulatory approval for the therapy.

In the U.S., SCD patients who endure recurrent vaso-occlusive crises will spend an estimated $4.2 to $6.2 million throughout their lives, according to Vertex's presentation. TDT, meanwhile, has a $4.2 to $5.7 million projected lifetime cost. 

In the U.S., treatment costs for severe sickle cell disease patients range between $4 million and $6 million over a lifetime, Arbuckle said. Bluebird is pricing Zynteglo at $2.8 million and has said it will file Lovo-cel for an FDA approval by March. Even if the companies were to price Exa-cel at the lower end of that estimate, the one-time drug would break the $3.5 million drug-price record recently set by CSL’s hemophilia B gene therapy Hemgenix.

Vertex believes a network of about 50 authorized treatments centers in the U.S., and 25 in Europe, should suffice for its sickle cell disease and beta thalassemia gene therapy candidate exagamglogene autotemcel, or Exa-cel, Chief Operating Officer Stuart Arbuckle told investors during a conference call Tuesday, Feb. 7^th.

Vertex is not giving any sales projections for Exa-cel in 2023, citing uncertain approval dates.

Patient Case Study

In 2019, Victoria Gray became the first patient to be treated for sickle cell disease using CRISPR. Today, all of Gray's symptoms are gone. Throughout Gray's life before she got the treatment, the deformed, sickle-shaped red blood cells caused by the genetic disorder would regularly incapacitate her with intense, unpredictable attacks of pain. Those crises would send Gray rushing to the hospital for pain medication and blood transfusions. She could barely get out of bed many days; when she became a mom, she struggled to care for her four children and couldn't finish school or keep a job.

"I'm doing great," Gray, now 36, said during a recent interview from her home in Forest, Miss. with NPR, which has had exclusive access to chronicle her experience for more than two years. "This is major for me and my family," she says. "Two years without me being in the hospital? Wow. We just can't believe it. But we're so grateful,” she told NPR they reported on December 31, 2021.

Doctors will still follow her for 15 years to make sure the treatment keeps working and continues to be safe.

Conclusion

CRISPR and gene editing technology is still in its infancy but it is expected to have commercialized uses within the next year, if not sooner.

Companies in the Kelly CRISPR & Gene Editing Technology ETF (Nasdaq: XDNA) provide access to:

• Exposure to Innovation: Aims for thematic multi-cap exposure to innovative companies focusing on CRISPR and gene editing technology.
• High Growth Potential: Aims to capture long-term growth with low correlation to traditional growth and healthcare strategies. Enables investors to access growth potential through companies that we believe are positioned to benefit from disrupting the genomic and life science industries.
• Tool for Diversification: Offers a tool for diversification due to little overlap with traditional indices. XDNA can be a complement to traditional healthcare and growth strategies.
• Targeted Exposure: XDNA is a concentrated portfolio that provides access to emerging areas within the health care sector at the intersection of science and technology.
• Cost Effective: In a single trade, XDNA delivers access to dozens of companies with exposure to the emerging CRISPR and gene editing theme, seeking to provide a lower cost alternative to mutual funds, private equity funds, and venture capital management in an Exchange Traded Fund (ETF).

Disclaimers

Limited Operating History Risk. The Fund is a recently organized investment company with a limited operating history. As a result, prospective investors have a limited track record or history on which to base their investment decision.

DNA Modification Technology Company Risk. DNA modification technology companies face intense competition and offer products and services with a potentially short product life. These companies will generally require large amounts of capital expenditures on research and development, with no guarantee that the product or service would be successful. They may be heavily dependent on intellectual property rights. The laws related to these rights can vary and there is no guarantee that a company will be able to successfully protect their intellectual property rights. These companies, like other health care companies, are subject to various government and regulator oversight that could hamper or impede their operations.

Foreign Securities Risk. Investments in non-U.S. securities involve certain risks that may not be present with investments in U.S. securities. For example, investments in non-U.S. securities may be subject to risk of loss due to foreign currency fluctuations or to political or economic instability.

Investing involves risk including possible loss of principal.

Before investing, carefully consider a fund’s investment objectives, risks, charges, and expenses contained in the prospectus available at KELLY ETFs.

Distributor: Foreside Fund Services, LLC.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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