Gene-editing startup strikes deal with Bayer to form Cambridge venture

The cluster of gene-editing startups in the Boston area just got a little bigger.

CRISPR Therapeutics said Monday it received a $335 million investment from German pharmaceutical giant Bayer AG — one of the last big European drug makers without a presence in Massachusetts — to form a joint venture in Cambridge that will hire 40 to 50 people over the next two years.

The venture, which has yet to be named, will operate as a separate company. It will use the promising gene-editing technology known by the scientific name of CRISPR-Cas9 to develop treatments for blood disorders, blindness, and congenital heart disease.

"This is game-changing," CRISPR Therapeutics chief executive Rodger Novak said in an interview. "We're putting $300 million to work in support of therapies using this technology."

Gene editing uses "molecular scissors" to cut and correct genetic mutations known to cause more than 5,000 diseases. It's too soon to say whether the approach will succeed or how long it will take to show results. But in addition to CRISPR, two other Cambridge companies, Intellia Therapeutics Inc. and Editas Medicine, are working with CRISPR-Cas9 technology.

It was the second alliance struck in the past two months by two-year-old CRISPR, which is based in Basel, Switzerland, but has its research operation and the bulk of its employees at 200 Sidney St. in Cambridge. CRISPR signed a $105 million cash and stock agreement with Boston's Vertex Pharmaceuticals Inc. in October to develop new therapies through gene editing to treat cystic fibrosis and other diseases.

Novak, however, said CRISPR will seek to commercialize gene-editing therapies to treat most disease areas itself rather than through partnerships. Its nearly 40 scientists and researchers in Cambridge, a drug discovery staff that is expected to grow to 75 by the end of next year, are researching treatments for everything from cancers and diseases of the central nervous system to metabolic, liver and kidney, and musculoskeletal disorders, he said.

"We've made it very clear to all parties that certain things will be done entirely by CRISPR," Novak said. "This is certainly a challenge from an operating perspective. We have to stay focused on our own activities while we're hiring an independent team into the joint venture."

Under the terms of the joint venture, which will be owned half by Bayer and half by CRISPR, the German company will invest at least $300 million into its research over the next five years. Bayer will also make its industry-leading protein engineering technology, based in its labs in Cologne, Germany, and San Francisco, available to the joint venture.

Axel Bouchon, a Berlin-based Bayer executive, will be the venture's interim chief executive, while Novak will serve as interim chairman. In addition, Bayer will pay $35 million in cash to take an equity position in CRISPR, which is owned by a consortium of venture capital firms. The parties didn't disclose the stake but said it would amount to less than 10 percent.

The intellectual property underpinning Cas9 is the subject of a global patent suit. It pits the University of California and the University of Vienna, which developed technology being used by CRISPR and Intellia, against the Broad Institute of Harvard and the Massachusetts Institute of Technology, which developed technology being used by Editas. The outcome, which may not be known for years, is likely to affect the direction of the research and the market.

Bayer's joint venture with CRISPR marks the first investment by the newly formed Bayer LifeScience Center, which is based in Berlin but will form partnerships with biopharma startups around the world in emerging drug discovery fields such as gene editing, gene silencing, cell therapy, and regenerative medicine. The center is being led by Bouchon.

"Boston, as the biotech hub of the world, is the first address that we'll look at," Bouchon said in an interview. "For Bayer, this [joint venture] is a big deal because it's a completely new way for how we do research. There will be active support from our internal operations."

If the joint venture with CRISPR proves successful, Bouchon said Bayer may eventually open a satellite office for its new life science center in the Boston area. "Boston is the core," Bouchon said. "Boston is the international hub for innovation in biotechnology."

Bayer until now has kept a low profile in the Boston area, home to the research and business offices of many global drug and medical technology companies.

In an October interview after his address to a CEO Colloquium luncheon in Boston, Bayer chief executive Marijn Dekkers, who formerly ran Thermo Fisher Scientific Inc. in Waltham, said Bayer was in "advanced stages of discussion" about opening a Massachusetts site that would focus on collaborations.