Precision BioSciences, Inc. (NASDAQ:DTIL) is an advanced gene editing company dedicated to improving life by developing in vivo therapies for genetic and infectious diseases with the application of its wholly-owned proprietary ARCUS genome editing platform. The company's focus on leveraging ARCUS to enable sophisticated gene edits, including gene insertion, excision, and elimination, sets it apart from traditional gene knockout approaches.

Business Overview

Precision BioSciences was incorporated in 2006 and is headquartered in Durham, North Carolina. The company has devoted substantial efforts to research and development activities, recruiting skilled personnel, establishing its intellectual property portfolio, and providing general and administrative support. Precision's ARCUS platform is a novel genome editing technology using sequence-specific DNA-cutting enzymes, or nucleases, designed to perform precise modifications in the DNA of living cells and organisms.

The company's current pipeline is focused on advancing in vivo gene editing programs that go beyond gene knockouts in the liver, with a particular emphasis on programs involving complex edits and gene insertion. Precision's lead in vivo gene editing programs target chronic hepatitis B virus (HBV), Duchenne muscular dystrophy (DMD), and certain hemoglobinopathies, such as sickle cell disease and beta thalassemia.

In January 2024, Precision entered into a license agreement with TG Cell Therapy, Inc. and its parent company TG Therapeutics, Inc. (the "TG License Agreement") for the non-oncological applications of its allogeneic CAR T therapy, azercabtagene zapreleucel ("azer-cel"). Under the terms of the agreement, Precision received an upfront payment of $10.0 million, with the potential to receive an additional $7.5 million milestone payment and up to $288.6 million in additional milestone payments, as well as tiered royalties on net sales.

In February 2024, Precision announced that it had granted Caribou Biosciences, Inc., a leading CRISPR genome-editing cell therapy company, a non-exclusive, worldwide license to one of Precision's foundational cell therapy patent families for use with CRISPR-based therapies in the field of human therapeutics. Precision received an upfront payment and will be eligible for royalties on net sales of licensed products, as well as specific tiered milestone payments upon the occurrence of certain strategic transactions involving Caribou.

Precision's partnership with Novartis Pharma AG, announced in June 2022, continues to progress. Under this collaboration, Precision is developing a custom ARCUS nuclease designed to insert a therapeutic transgene at a "safe harbor" location in the genome as a potential one-time transformative treatment option for diseases including certain hemoglobinopathies. Novartis is responsible for all subsequent research, development, manufacturing, and commercialization activities.

In April 2024, Precision exercised its rights to the return of three programs from its amended and restated development and license agreement with Prevail Therapeutics, Inc., a wholly-owned subsidiary of Eli Lilly and Company. The company previously highlighted promising preclinical data demonstrating the potential of ARCUS in vivo gene editing for large gene excisions and high-efficiency gene insertion in adult non-human primates.

Financial Performance

For the three months ended March 31, 2024, Precision reported revenue of $17.6 million, compared to $8.8 million in the same period of the prior year. The increase in revenue was primarily driven by the TG License Agreement and the Caribou license agreement, as well as an increase in revenue recognized under the Prevail Agreement, partially offset by a decrease in revenue recognized under the Novartis Agreement.

Research and development expenses for the three months ended March 31, 2024 were $13.3 million, compared to $11.0 million in the same period of the prior year. The increase was primarily due to higher external development costs for Precision's PBGENE-HBV and PBGENE-PMM programs, as the company continues to advance these programs towards the clinic.

General and administrative expenses decreased to $8.4 million for the three months ended March 31, 2024, compared to $11.1 million in the same period of the prior year. The decrease was primarily due to lower employee-related costs and share-based compensation expense, as well as decreases in consulting fees, insurance expenses, and legal fees.

For the full year 2023, Precision reported annual revenue of $48.7 million, annual net loss of $69.8 million, annual operating cash outflow of $84.1 million, and annual free cash outflow of $86.4 million.

Liquidity and Capital Resources

As of March 31, 2024, Precision had cash and cash equivalents of $137.8 million and available borrowings of $7.5 million under its Revolving Line with Banc of California. The company believes that its existing cash and cash equivalents, expected operational receipts, including upfront and potential near-term consideration from TG Therapeutics and other licensees, operational efficiencies gained from the divestment of its historical CAR T operations, and availability of its ATM facility will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of 2026.

Precision expects its cash runway to be sufficient to achieve first-in-human Phase 1 clinical data for its lead in vivo gene editing programs, PBGENE-HBV and PBGENE-PMM.

Regulatory and Clinical Updates

Precision's gene editing program PBGENE-HBV, for the potential treatment of chronic hepatitis B virus (HBV), remains a top priority, and the company expects to submit an investigational new drug (IND) application or clinical trial application (CTA) in 2024. Preclinical data has demonstrated that ARCUS nucleases can effectively inactivate covalently closed circular DNA (cccDNA) and integrated HBV DNA, with substantial reductions in hepatitis B surface antigen (HBsAg) and no detectable translocations in primary human hepatocytes.

In September 2023, Precision announced that it intends to pursue development of PBGENE-PMM as a potential first-in-class opportunity for the treatment of m.3243 associated primary mitochondrial myopathy (PMM). Preclinical data has shown that Precision's mitoARCUS nucleases can efficiently eliminate mutant mitochondrial DNA without off-target editing in the nuclear genome. The company expects to submit an IND or CTA application for PBGENE-PMM in 2025.

Precision's partnership with iECURE, Inc. continues to advance an ARCUS-mediated gene insertion approach as a potential treatment option for neonatal onset ornithine transcarbamylase (OTC) deficiency. Non-human primate data has demonstrated sustained gene insertion of a therapeutic OTC transgene one year post-dosing in newborn and infant animals with high efficiency. iECURE has received regulatory approvals to initiate a first-in-human Phase 1/2 trial evaluating this investigational therapy.

Risks and Challenges

Precision faces several risks and challenges common to the biotechnology industry, including the inherent uncertainty in developing novel genome editing technologies, the ability to advance product candidates through clinical trials and obtain regulatory approvals, competition from other genome editing platforms and therapies, and the need for substantial additional funding to support its research and development activities.

The company's reliance on collaborations and licensing agreements with third parties, such as Novartis, TG Therapeutics, and iECURE, also exposes it to risks related to the success and priorities of its partners, as well as potential disputes or termination of these agreements.

Additionally, Precision faces risks related to intellectual property protection, including the potential for patent challenges and the evolving regulatory landscape surrounding genome editing technologies.

Outlook and Conclusion

Precision BioSciences is well-positioned to leverage its proprietary ARCUS platform to advance a new class of gene editing programs that go beyond simple gene knockouts. The company's focus on sophisticated edits, such as gene insertion, excision, and elimination, holds promise for addressing a wide range of genetic and infectious diseases.

With a strengthened balance sheet, a diversified pipeline of in vivo gene editing programs, and strategic partnerships with industry leaders, Precision is poised to make significant strides in the development of transformative therapies. As the company continues to execute on its clinical and regulatory milestones, investors will closely monitor its ability to translate the potential of ARCUS into tangible clinical and commercial success.