Gene editing & entrepreneurship

Gene Editing (GE) is a catch-all term for a new suite of breeding techniques to change the genome of an organism using precision methods.  It promises faster and cheaper introduction of of desirable traits into agricultural plants and animals, or removal of undesirable traits, which might include:

• Resisting abiotic challenges eg drought, heat, frost, salinity 
• Enhancing consumer traits eg colour, flavour, texture, allergen & nutrient content
• Facilitating automation eg machine harvesting, robotic surveillance
• Eliminating painful animal processes eg de-horning or castration
• Resisting disease & decay before and after harvest

Not only does GE allow traits to be changed quickly and accurately, it also – in some parts of the world – avoids many of the regulatory challenges that dramatically increase the cost of using older Genetic Modification (GM) techniques.

Although the major breakthroughs leading to the famous CRISPR-Cas9 patent disputes only emerged 6 years ago, the potential of these new approaches is manifest (“the biggest biotech discovery of the century” according to MIT Techology Review) and a cluster of new companies have emerged to capitalise on this new technology, presenting exciting opportunities for the AgTech community.  Many of these are originating in the USA, and the US will continue to pull ahead after last year’s European Court of Justice pronouncement had a chilling effect on European startups.  It may be only a matter of time until similar explosion in innovation is seen in Asia, South America and elsewhere.  

What is Gene Editing?

Gene editing involves new methods – most famously, but not exclusively CRISPR – to add, remove, silence or change genes in a very targeted way. This stands in contrast to the inexactness associated with more traditional breeding techniques, which rely on novelty arising from random assortment of genes during sexual reproduction plus a level of mutation (low in natural breeding, higher if chemical or radiation induced mutagenesis is deployed).  For more specifics on gene editing and other breeding techniques see the Genetic Literacy Project.

Gene editing does not necessitate the use of genes from other species.

Unlike GM techniques, the gene editing does not necessitate the use of genes from other species, and this underpins the differences in regulatory perspective.  The United States defines a GMO as involving the introduction of interspecific DNA and requires regulation, whereas if gene editing involves intraspecific manipulation it does not.  The European Union, in contrast, has suggested that gene editing should be subject to the same regulatory regime as GMOs regardless of the source of the genetic material used.  

What Business Models are Emerging?

So Gene Editing allows animal and plant genomes to be precisely edited in a way which accelerates the breeding cycle, at lower cost than ever before, which in turn allows more novel combinations of traits to be created. Such scope for creativity has unleashed a parallel boom in businesses capitalising on gene editing technology in agriculture. Broadly, I’ve noticed three business models are emerging in the Gene Editing space:

• Creating novel crops and varieties
• Producing tools and technologies that help in GE
• Providing GE services

Novel crops & varieties: 

Many companies are applying Gene Editing to specific crops and animal types.  This ranges from creating entirely new crops for specific market types, to supplementing broader breeding programme goals with these tools.   In most cases the revenue model revolves around licencing agreements and royalties from the novel varieties emerging, although reach through to closer relationships with the rest of the value chain is sometimes seen.

A good example of new crop comes from the US company CoverCress.  They have developed a gene edited version of the native weed species Pennycress.  Building on its natural growth cycle but modified to grow a high yielding protein / oil crop, the plant promises an extra cash crop alongside winter and spring cover for fields otherwise dedicated to soy and maize and left bare over winter.

One step along are companies introducing novel properties into existing cash crops.  A good example here is the UK’s Tropic Biosciences who have, among their goals, to produce coffee beans that grow without producing caffeine.  

creating entirely new crops … to supplementing broader breeding programme goals with these tools

At the integrated-into-business-as-usual end of the spectrum are companies dedicated to further improving existing mainstream crops which already benefit from major breeding investment.  Examples here include Calyxt, which IPO-ed in 2017, whose pipeline includes high fibre wheat, and high oleic soy.  Recombinetics’ agricultural division, Acceligen, would also fall into this category, being a rather rarer example of a GE company dedicated to improving livestock sustainability & welfare.

Tools of the Trade

A second set of businesses have cropped up providing tools to facilitate the Gene Editing process.  One of the biggest drivers in the growth of these businesses is the desire to get around intellectual property controls set up by the inventors of the most famous technique, CRISPR-Cas9.  For other commercial companies, accessing CRISPR-CAS9 technology involves so many restrictions and reach through clauses that many judge it commercially prohibitive or impossible.  

Stepping into this space is Inscripta, a US based company which gives away its CRISPR-MAD enzymes for free generating business for its other products such as software, reagent and instruments.  This business last year (2018) raised a further $55m in Series C funding.

Similarly UK based DeskGen, backed by one of the genomics industry giants, Illumina, focuses on providing software tools: a database of genome editing data & machine learning algorithms to drive genomic and gene editing research.  In contrast the agriculture-oriented Benson Hill Biosystems has developed a CRISPR 3.0 technology suite alongside proprietary machine learning & computational breeding capability which they have branded as the “CropOS” system.   Promoted as being more efficient, precise and affordable than other tools on the market, their mission is to design, predict and create novel traits.  

Outsourced service provider

Even with a proliferation of tools and techniques, gene editing remains a knowledge-intensive process.  While the costs have come down enormously, building up expertise from scratch is still expensive.  So a different angle has been taken by Phytoform Labs.  They provide a service to existing breeding and seed production companies, using their unique “lab on a chip” technology to accelerate the pace of their development process.  Rather than focusing on major crop types, this team believe that the opportunities exist in often overlooked niches – think peppermint or kale instead of wheat and rice.  

Even with a proliferation of tools and techniques, gene editing remains a knowledge-intensive process.  While the costs have come down enormously, building up expertise from scratch is still expensive.  So a different angle has been taken by Phytoform Labs.  They provide a service to existing breeding and seed production companies, using their unique “lab on a chip” technology to accelerate the pace of their development process.  Rather than focusing on major crop types, this team believe that the opportunities exist in often overlooked niches – think peppermint or kale instead of wheat and rice.  

Challenges and Opportunities

Companies based around GE form a very young sector, and the route to providing products, services and new varieties will not be a direct one.  As companies form, pivot, merge and restructure their business models will morph too.  The relative strengths and weaknesses of the competing platforms and technologies will become clear, winners and losers will emerge.  But in addition to these inevitable twists and turns, the sector faces specific challenges beyond the control of event the most capable entrepreneurs: regulation , consumer acceptance and trait malleability. 

The sector faces specific challenges beyond the control of event the most capable entrepreneurs: regulation , consumer acceptance and trait malleability. 

Regulation is a major concern. The business model for all of these companies depends on the use of GE techniques growing. When in 2018 the European Court of Justice ruled to treat this technology within the same regulatory framework as transgenic GMOs, it had a chilling effect not just on innovation on Europe, but the size of the market as a whole, not just by eliminating the EU from the potential market but because other jurisdictions may also follow suit.

Nonetheless, there is reason to think that attitudes to GE might change over time. Even some prominent environmentalists are now recognising that biotechnology has a place to play in the toolkit available to feed our population sustainably. Public opinion might be changed by the endangerment of, for example, the Cavendish banana, a major consumer genetically homogenous crop which stands to be wiped out by the TR4 fungus.  But on the other hand, perhaps scandals such as He Jiankui’s production of gene edited human babies will raise fears to a level which makes the entire concept of gene editing unacceptable to the public.  

Lastly, not all traits are amenable to genetic editing or modification.  For a trait to be modifiable it needs to be subject to fairly simple genetic control, and the “road map” to achieve this within the genome needs to be understood. Many commercial plants and animals still have not had their genomes comprehensively mapped and we’re still learning about the immense complexity of how genes are expressed as our understanding of epigenetic and the microbiome unfolds.

There is no doubt that as a technology, gene editing will have a huge impact.  The shape of the industry in 5 or 10 year’s time, however, is still emerging.