What happened

Shares of CRISPR Therapeutics (NASDAQ:CRSP) fell nearly 19% last month, according to data provided by S&P Global Market Intelligence, after yet another study reminded Wall Street and investors that there's still much for scientists to understand about the use of CRISPR gene-editing tools in human cells. Previously, in June, two studies surfaced that suggested certain uses of CRISPR could trigger faulty DNA repair mechanisms to activate and turn a cell cancerous.

That was followed up last month by a new study suggesting that certain uses of CRISPR tools "seriously underestimated" the number of off-target changes made to a genome. CRISPR Therapeuticssaid to Reutersthat "[w]e do not use the methods described in this Nature Biotech paper ... nevertheless, in our work, we do not see similar findings." While that wasn't enough to appease Wall Street in July, shareholders have still enjoyed a year-to-date gain of 103%.

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The study published last month came from researchers at the prestigious Wellcome Sanger Institute, an affiliation that helped the results to be taken more seriously. But considering CRISPR Therapeutics says it doesn't use the specific techniques identified, investors may be wondering why the company's shares were impacted at all. Well, it has to do with increasing uncertainty over an important part of using certain gene-editing tools.

More specifically, the most recent study detailing off-target changes to DNA and those identifying the potential to activate cancerous mutations already present in cells all seem to imply the same thing: Scientists may have gotten a little ahead of themselves by assuming DNA repair mechanisms would work in a simple fashion. While CRISPR tools intend to fix genetic defects by cutting one or both strands of human DNA, all rely on DNA repair mechanisms already present in a cell to stitch the genome back together. If those fail, then CRISPR tools might be less effective or could even end up having significant unintended effects.

Right now, it appears that the most troubling side effects are observed when CRISPR tools cut both strands of DNA (a "double-strand break"). The lead drug candidates of all three major CRISPR companies deploying the technology for medical applications avoid that headache, although all companies are exploring preclinical therapeutics that will have to navigate that obstacle eventually.

Investors can likely expect gene-editing stocks such as CRISPR Therapeutics to experience a higher-than-normal amount of volatility. The technology has received an incredible amount of attention in the media and even popular culture, and the potential to cure diseases has Wall Street understandably excited. Those forces have combined to hand the pioneering companies premium market valuations, but it's important to remember that CRISPR is a relatively new technology. Investors in it for the long haul will simply need to buckle up and remain patient as results from the first clinical trials (yet to get started) begin to trickle in within the next few years.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool owns shares of CRISPR Therapeutics. The Motley Fool has a disclosure policy.

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Here's Why CRISPR Therapeutics Lost 18.8% in July -- The ...

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