CRISPR’s Potential as the 21st-Century Cure-All Hits a Major SnagJan16

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Daily Intelligence Briefing – January 16, 2018

FEATURED TOPIC: BIOTECH – CRISPR’s Potential as the 21st-Century Cure-All Hits a Major Snag

CRISPR, the revolutionary gene-editing technology that allows scientists and doctors to modify a living organism’s genome to fix genetic diseases, has hit several trial milestones over the past year. This form of genetic engineering entails inserting, deleting or replacing DNA in the genome using “molecular scissors.” Using CRISPR, researchers have been able to cure mice of deadly genetic conditions like hemophilia B, Lou Gehrig’s disease, and Huntington’s disease. It is with great anticipation, therefore, that the first U.S. trials of CRISPR on humans were slated to begin this year. But, new complications have the biotech community suddenly questioning CRISPR’s potential as the 21st-century cure-all.

Precision, for one, is a challenge. DNA and RNA are molecules essential to the development and functioning of all forms of life. Whereas DNA contains the genetic information of the living organism, RNA acts as a messenger transmitting instructions from DNA for controlling the synthesis of proteins. During the gene-editing process, CRISPR relies on a guide RNA to direct it to the part of the genome you want to cut. But the guide RNA is about 20 letters long and multiple sites in a genome can have the same series of letters, so there is a risk that CRISPR could snip the wrong section with disastrous effect. Making incorrect cuts in a genome, for example, could switch on a cancer-causing gene or some other problem. The solution to this dilemma may lie in the predictive abilities of AI. Microsoft is developing an AI tool that will, in theory, flag genes that are difficult to safely edit so doctors can avoid them when using CRISPR.

Also of great important to the genome-editing procedure is a protein called Cas9 which is used to target and cut out specific sections of DNA. Without Cas9, CRISPR wouldn’t work. However, stem cell researchers at Stanford have stumbled upon another possible obstacle to using CRISPR on humans: The fact that human bodies may have already built up immunity to the Cas9 protein which means the technique might not work for most humans.

Yet, all is not lost. Three of the leading companies in CRISPR human therapy — Editas Medicine (EDIT), CRISPR Therapeutics (CRSP), and Intellia Therapeutics (NTLA) — are exploring various strategies to get their therapies past the immune system. One solution being considered is to edit the cell outside of the body, as is common for diseases that affect the blood, which would mean only using CRISPR outside of the body. Others advocate using CRISPR only in places the immune system cannot reach or finding an entirely different CRISPR protein instead of Cas-9. An alternate idea involves developing new delivery mechanisms that protect the CRISPR-Cas9 system from immune response and detection.

It is too early to determine if any of these proposed strategies will lead to a solution that works. While some insiders believe the industry faces headwinds, executives at EDIT, CRSP, and NTLA argue this is just a temporary bump on the road. Despite significant volatility, their share prices these past six months have outperformed the biotech index (XBI) by a huge margin. If their predictions are correct, there are certainly more gains ahead for this young industry. 

HERE in the meantime are some related articles on Genomics (the stories are summarized in the BIOTECH & HEALTHCARE Section):

• Genomics – Most People May Already Be Immune to CRISPR 
• Genomics – Microsoft Wants to Use Artificial Intelligence to Make CRISPR More Accurate 
• Genomics – New tools for turning genes into drug factories
• Genomics – As Consumer Genomics Databases Swell with New Users, Observers Ponder the Industry’s Future

CHART: GENOME ENGINEERING COMPANIES (CRSP, NTLA, EDIT) vs BIOTECH ETF (XBI) (vs S&P500 (SPY)

OTHER STORIES HIGHLIGHTED IN TODAY’S DIBS:

• Markets: 
  • Bonds – U.S. 2-Year Yield Tops 2% for First Time Since Financial Crisis  
  • Cryptocurrencies – No Cryptocurrency Trading Ban in South Korea, Government Says 
  • Cryptocurrencies – Mnuchin Warns Against Bitcoin Becoming the Next ‘Swiss Bank Account’  
• Economics and Trade: 
  • Inflation – Rents boost U.S. core CPI; retail sales rise solidly
  • Trade – China Reports Biggest-Ever Annual Trade Surplus With U.S.  
  • US Tax Bill – Corporations may dodge billions in U.S. taxes through new loophole: experts   
• Services: 
  • F&B – E-commerce poised to disrupt grocery, food distribution businesses 
  • Gaming – China game sales up 23% in 2017 
  • Marijuana – Portable Brain Imaging May Provide a Roadside Pot Test
• Manufacturing and Logistics: 
  • Plastics – European Union considers tax on plastic bags and packaging  
  • Plastics – The UK Prime Minister Is Working to End Plastic Litter by 2042  
• Commodities:
  • Commodities – China Sets New Records for Gobbling Up the World’s Commodities
  • Steel – US Commerce Department wraps up steel probe  
• Energy & Environment: 
  • Solar – Industry Leaders Make Last-Ditch Effort to Steer Trump White House Away From Solar Tariffs 
  • Renewables – China Sitting Pretty To Dominate New Clean Energy Future, Claims IEEFA 
• Biotech: 
  • CRISPR – Most People May Already Be Immune to CRISPR  
  • CRISPR – Microsoft Wants to Use Artificial Intelligence to Make CRISPR More Accurate  
• Endnote: 
  • Inflation – Here’s where inflation hit your wallet hardest in

JOE MAC’S MARKET VIEWPOINT

• Joe Mac’s Market Viewpoint: The Coming Value Rotation
• Joe Mac’s Market Viewpoint: Beyond the BOND BUBBLE
• Joe Mac’s Market Viewpoint: A Review of MRP’s Latest Change-Driven Investment Themes
• Joe Mac’s Market Viewpoint: The Gathering Storm
• Joe Mac’s Market Viewpoint: Contrarian Crude Call

CURRENT MRP THEMES

About the DIBs: MRP focuses on identifying transformational change in the global economy and offering an investment thesis whenever an opportunity arises that has not yet been recognized by the market. The DIBs are MRP’s compilation of articles and data from multiple sources on subjects reflecting disruptive change that have potential investment implications for an industry or group of securities. We share these with our clients who may already have or may be considering exposure in the industries affected. The subjects change daily and constitute an excellent update on featured topics. 

• United States, Consumer Price Index, MoM, DEC: 0.1% from prior 0.4%
• United States, Retail Sales, MoM, DEC: 0.4% from prior 0.8%
• United States, Baker-Hughes Rig Count, WoW, wk1/12: 939 from prior 934
• Romania, Inflation Rate, YoY, DEC: 3.3% from prior 3.2%
• Hungary, Core Inflation Rate, YoY, DEC: 2.6% from prior 2.7%
• Moldova, Industrial Production, YoY, NOV: 9.5% from prior 10.0%
• Greece, Inflation Rate, YoY, DEC: 0.7% from prior 1.1%

Bonds – U.S. 2-Year Yield Tops 2% for First Time Since Financial Crisis  

The two-year Treasury yield jumped above 2 percent, marking a rebound to a key psychological level last seen just as the U.S. sank into the depths of the financial crisis in September 2008. The past 14 months have witnessed a remarkable reversal for the coupon maturity that’s most sensitive to Federal Reserve expectations. After failing to eclipse 1 percent through much of 2016, the yield surged following President Donald Trump’s election victory, and kept climbing throughout 2017 as policy makers delivered on their promised three rate increases.

Data Friday showing that the underlying pace of U.S. inflation accelerated last month finally drove it above 2 percent, as traders priced in a growing likelihood that the Fed would follow through on its projection of three rate increases this year. Treasuries fell broadly, led by shorter maturities, with the difference between yields on five- and 30-year maturities approaching the smallest since 2007. B  

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Cryptocurrencies – No Cryptocurrency Trading Ban in South Korea, Government Says 

The Blue House, the executive office and official residence of the South Korean President, has announced that there will be no cryptocurrency trading ban in the short-term. The South Korean government’s official announcement came after a massive backlash and criticism against the Ministry of Justice, which independently announced its plans of banning cryptocurrency trading. The Ministry did this without the consent of the Ministry of Strategy and Justice and other government agencies involved in the South Korean cryptocurrency regulation task force.

According to the Blue House, more than 60,000 citizens voted in a petition to fire the head of the Ministry of Justice Park Sang-ki, who released a premature statement earlier today, on January 11, that the government will implement a policy to shut down cryptocurrency trading. CoinTele

Cryptocurrencies – Mnuchin Warns Against Bitcoin Becoming the Next ‘Swiss Bank Account’  

U.S. Treasury Secretary Steven Mnuchin said he will work with the Group of 20 nations to prevent cryptocurrencies such as bitcoin from becoming the digital equivalent of an anonymous Swiss bank account. Speaking to the Economic Club of Washington on Friday, he said wants to ensure “bad people cannot use these currencies to do bad things.” Mnuchin said U.S. authorities, including the Federal Reserve, were studying the pros and cons of issuing digital dollars instead of hard cash, but “the Fed and we don’t think there’s any need for that at this point.” Y

Inflation – Rents boost U.S. core CPI; retail sales rise solidly 

Underlying U.S. consumer prices recorded their largest increase in 11 months in December on strong gains in the cost of rental accommodation and healthcare, bolstering expectations that inflation will accelerate this year. The strengthening domestic demand was also underscored by other data on Friday showing retail sales rising at a solid clip in December.

The reports probably will keep the Federal Reserve on course to increase interest rates in March. They raised the prospects of a more aggressive monetary policy tightening this year, especially against the backdrop of a $1.5 trillion package of tax cuts passed by the Republican-controlled U.S. Congress and signed into law by President Donald Trump last month.

The Labor Department said its Consumer Price Index, excluding the volatile food and energy components, rose 0.3 percent last month as prices for new and used cars and trucks and motor vehicle insurance increased. Economists are hoping that a tightening labor market, rising commodity prices, a weak dollar and fiscal stimulus will lift inflation toward the Fed’s 2 percent target this year. R

Trade – China Reports Biggest-Ever Annual Trade Surplus With U.S. 

China reported its largest-ever annual trade surplus with the U.S. last year while its overall imbalance with the world shrank, potentially strengthening the Trump administration’s case for tougher penalties and other trade actions against Beijing. A global recovery led by the U.S. provided a shot in the arm for Chinese exporters last year, boosting China’s economy. Rising American demand, in particular, pushed up Chinese shipments, expanding China’s trade surplus in goods with the U.S. by 10% to $275.8 billion in 2017, according to Chinese customs data released Friday.

That figure, a record for the nearly five decades for which such data exist, marks the U.S.’s largest trade deficit with any trading partner. By comparison, China’s overall foreign trade surplus contracted 17% as higher prices of oil, iron ore and other commodities raised the value of inbound shipments from countries like Russia, Australia and Saudi Arabia. The widening of the China-U.S. trade imbalance comes as U.S. and Chinese officials and business groups warn of sharper clashes over trade between the world’s largest economies. WSJ  *

US Tax Bill – Corporations may dodge billions in U.S. taxes through new loophole: experts  

A loophole in the new U.S. tax law could allow multinational corporations like Apple Inc to avoid paying billions of dollars in taxes on profits stashed overseas, according to experts. Stemming from a Republican overhaul of international business taxes, the loophole involves the tax rates – 15.5 percent or 8 percent – that companies must pay on $2.6 trillion in profits they are holding abroad. 

By manipulating their foreign cash positions, a determining factor under the new law, a U.S. multinational could potentially save money by shifting profits to the lower rate from the higher one, according to Stephen Shay, a senior lecturer at Harvard Law School. The savings could amount to more than $4 billion in Apple’s case alone, he said. R

F&B – E-commerce poised to disrupt grocery, food distribution businesses 

Shara Serrano pulled into the Kroger parking lot and waited a few minutes as a store clerk loaded her trunk with the groceries she ordered online earlier that day. Serrano is one of millions of consumers whose online shopping habits are transforming the grocery business, fueling demand for new food manufacturing plants and cold storage facilities. In the Houston area alone, customers like Serrano have spawned a frenzy of industrial development.

Experts predict foreign grocers including Germany-based Aldi and Lidl will have to build their own warehouses once they reach critical mass. To meet the growing demand for construction, Houston-based engineering firm Lockwood, Andrews and Newnam recently expanded its food distribution and manufacturing services in the southern U.S. Although groceries lag home goods and apparel in online sales, it’s one of the fastest-growing segments of e-commerce. Today, about 1 in 5 American households shop for food online. HC

Gaming – China game sales up 23% in 2017 

China’s games market reported strong growth last year as gaming is becoming an important form of entertainment, particularly among the young. Game sales in China rose 23 percent year on year to 203.6 billion yuan (31.3 billion U.S. dollars) in 2017, said Zhang Huaihai, an official with the State Administration of Press, Publication, Radio, Film and Television. Mobile games reported stronger annual growth of 41.7 percent, with revenues contributing 116.1 billion yuan, or 57 percent of the total revenues, Zhang told the China Digital Entertainment Industry Annual Summit, which closed Thursday in the southeastern coastal city of Xiamen. Xinhua

Marijuana – Portable Brain Imaging May Provide a Roadside Pot Test

Many states are legalizing marijuana, but the way our bodies process it makes it hard to create objective tests to determine if someone is too high to drive. Stat reports that a brain cap could reveal shifts in brain activity that may be linked to unsafe levels of cannabis use. The device uses a technique called functional near-infrared spectroscopy, which bounces light around the inside of the skull to measure changes in blood flow that may correspond to shifting communication between parts of the brain. Researchers are still trying to ensure that the signals they see are actually a result of drug impairment.  MIT

Plastics – European Union considers tax on plastic bags and packaging 

A plastic tax for residents of the EU would be the largest of its kind in the world, covering more than 500 million inhabitants, though China has also placed serious restrictions on thin plastic bags. If a tax is implemented, and effective at discouraging use, it could make a serious dent in the number of plastic bags used annually.

Trying to cut plastic use in light of China’s import restrictions has become a more popular idea in recent months. For years, China has been the world’s largest purchaser of scrap and recycled plastic, though that appears to be changing. Reducing the amount of plastic used in Europe or the UK could help the region combat the material stockpiling that has been reported in some parts of the U.S

The details of how to apply the tax are pending and it hasn’t been decided whether manufacturers or consumers would bear the brunt of the obligation. WDive

Plastics – The UK Prime Minister Is Working to End Plastic Litter by 2042 

Theresa May, the Prime Minister of the United Kingdom, has announced her intention to end all plastic waste deemed “avoidable” in the UK by 2042. The movement to end “throwaway culture” is part of the UK government’s 25-year plan to create a “Green Future,” and improve the environment.

Within this “plastic-free” plan, supermarkets will be pushed to adopt plastic-less aisles. Additionally, taxation on single-use items will be considered. The plan will also continue the five pence (about eight US cents) charge for plastic bags in shops, increase government funding for research in plastic innovation, and push efforts to support decreased pollution and plastic use in developing countries.

This government initiative is not the only effort aiming to clean up the UK. In 2017, a seabin was Installed in Portsmouth Harbor in the UK. This technology works to clean plastic, oil, and other debris out of bodies of water. Additionally, David Attenborough, famed UK naturalist, has drawn public attention to the rising and severe realities of plastic pollution. Futurism

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