CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

Hello, everyone. My name is Mitchell Kapoor. I'm a senior biotech analyst at H.C. Wainwright. Today, I have the pleasure of welcoming CRISPR Therapeutics. And from the company, Raj Prasad, CFO, is joining me today. Thank you so much, Raj.

Thanks for having us.

So maybe to set the stage, you can just give us an overview of where we're at with CRISPR today, CRISPR Therapeutics. A lot has transpired over the past -- since the year started. So could you just level set for investors and then we can jump into more specific questions across the pipeline?

Yes, absolutely. Yes, it's been an exciting time at CRISPR. We're going through the launch of CASGEVY with our partner, Vertex, where things are going well on both cell collections and revenue from infusions of patients. And we're hearing the feedback of the patient community as well, which is fantastic. It's great to have a transformative medicine out there and especially the first one using CRISPR/Cas9 technology. What we've done since then is we've been busy. We've been parlaying the technology into multiple therapeutic areas outside of our hemoglobinopathies franchise. So we have wholly owned internal programs in autoimmune and oncology. We have programs in cardiovascular medicine, rare diseases and type 1 diabetes. And if that wasn't enough, we expanded our technology basket with a deal with Sirius Therapeutics earlier this year to bring in some siRNA technologies with the thought that gene editing might not be the best approach for every indication. And we think that RNA has certain areas where it can build upon and be synergistic with our platform gene editing technology. So we did that with the lead asset where we're 50-50 on it for Factor XI, which is in the anticoagulation space. And we think it's an extremely valuable asset as well that will be one of the biggest targets going into next year with a competitor trial abelacimab that will read out sometime next year. So tons to talk about. I'm sure you do have some follow-up questions, but we could not be more excited about where CRISPR Therapeutics is sitting at this point in time.

Yes. And so with so much going on, so many different verticals in the pipeline, a key question that we spend time on is capital allocation trade-offs and how big is this business? Where do you spend time? So you have CASGEVY, you have in vivo cardiometabolic, allo-CAR-T, sRNA, diabetes. What, I guess, hurdle rates do you have to keep or partner assets?

Yes. I mean we think about this question like every day. The key point with our next suite of programs is we've invested a lot of time and effort over the last several years in creating next-generation medicines that are actually at a low cost of goods sold or will be at a low cost of goods sold. So with the allogeneic CAR-T program, we've made a significant effort with our manufacturing facility in Framingham, Massachusetts, to produce allogeneic CAR-Ts at a fraction of an autologous CAR-T therapy. Similarly, the in vivo program, it's a lipid nanoparticle plus mRNA, significantly low cost of goods so that we can be extremely competitive while also offering potentially onetime durable cure to patients. So when we think about the return on invested capital, the margin profile of these next-generation products are going to be extremely high at a reasonable cost at this point. When we think about our portfolio more broadly and where to add the incremental dollar, there's obviously the return on investment, there's the market opportunity. But then we also need -- we also have the experience of having an extremely successful partnership with Vertex and CASGEVY where we were able to bring this transformational medicine forward and continue to commercialize it successfully. So we are being very thoughtful of that. We do have a good cash balance. We have $1.7 billion on the balance sheet. So we don't want to do a hasty deal, and we don't want to do a deal where we haven't fully fleshed out the target product profile, the competitive landscape and what we can bring to the table versus maybe a strategic partner. But we are continuing to sort of analyze that as now we are reaching hPOC or human proof of concept across all these programs. I think that's going to be an important question that we hope to answer in the near term.

Okay. Great. Yes. And in the space after the Ver Lilly deal has kind of showed renewed interest in gene editing platforms and the ability to integrate those into like a broader play. How is CRISPR in vivo gene editing engine with ANGPTL3 Lp(a) [ AGT ] position as a platform partner. What's underappreciated about kind of the ability to scale this platform?

Yes. I mean I mentioned the COGS point earlier. I think it was good to see -- the Lilly see the landscape of genetic medicine similar to the way we do, I think, and that it's a continuum. I think that there is a subset of investors that I thought felt that it could be -- it was one or the other between RNA medicines and gene editing. And we don't see it that way. We do see it as a continuum. We obviously did an RNA deal ourselves. In cardiovascular medicine, in particular, it also -- I'm not surprised that this was the first large-scale investment from a pharma in gene editing or acquisition. We had always felt that cardiovascular medicine was going to be an area that would be transformed by genetic medicines because compliance is the biggest issue that we hear from cardiologists. Even PCSK9 therapies that are available that have once in 6-month profile, we're seeing 30% -- or we're seeing papers that let's say, 30% of patients aren't compliant with therapy. So if you're a cardiologist from that perspective, you're having issues with patients that are -- in the case of AGT, for example, or hypertension, patients with refractory hypertension are on 5 medications plus a diuretic. And the ability to take those every day or multiple times a day in some cases gets difficult for patients. And those are things where you want to be in a controlled range. You want to be in a normalized range. So if we have the ability with a one course therapy to get patients into that range potentially for lifetime, I think, that value creation and that transformation to the patient profile is extremely enticing to doctors and cardiovascular specialists.

Great. Okay. And so moving along into that segment of the pipeline with CTX310 showed some interesting data so far. The Phase I includes SHTG, HoFH, HeFH and mixed dyslipidemias. And so with olezarsen's win, we just had Ionis up here a couple of slides ago, with their win in SHTG, is this now a lead registrational path potential still? Or how do you think about this with olezarsen?

Yes. No, I mean, kudos to the CORE, CORE2 trial and Ionis for that result. I think that highlighted to us that significant reductions in triglycerides leads to a significant benefit in acute pancreatitis. And I think from the data we've put out, we're seeing reductions in triglycerides in patients up to 86%. And we think that, again, that SHTG could be a very enticing indication for that. We're also seeing reductions in LDL. So with one target, we're seeing both. And we're seeing reductions in the LDL patient that we called out, I mean, we're seeing a reduction of up to 82%. And so if we have this dual benefit, then patients that have severe hypertriglyceridemia and an increased LDL maybe not to that level might see a benefit we're getting -- to get within the normal range for both. We think that, that actually might be a differentiating factor. And obviously, the durability of effect and no need for multiple doses is obviously a huge benefit to our therapy. So yes, that trial was groundbreaking, and we look forward to sharing more data with our patients in SHTG in the second half of this year as well as later to come.

Okay. Great. Yes. And you mentioned a key facet there, durability. I'm wondering if that ends up being like the defining feature of what could be incremental versus what is in the space. So if you have something that's similar, but a more durable response, is that something that a patient would be more apt to go on? Is that how you're thinking?

Yes. I mean we think so in the high-risk populations, I think, again, doctors are going to be likely to put patients on it. I think you also think about patients that are in that maybe the younger age range where they're staring down 40 years of therapy does a one course therapy just transform themselves. I mean we have patients that we've treated with sickle cell that are [indiscernible] Mounjaro now, right? If you gave them the option of having a lifetime treatment regimen or CASGEVY, I think you have a strong percentage of that population is going to choose CASGEVY. So yes, we think the same thing for severe hypertriglyceridemias. Again, with those patients, when you pull the -- if you pull their blood, there's a thick, milky white layer on there. And so you're seeing that annually. And you know we all know now that increased triglycerides does -- is associated with acute pancreatitis. So there's going to be a meaningful patient population in our opinion that will opt for one course therapy.

Okay. And then as investors are thinking about modeling that type of a commercial adoption for a therapy like this, in SHTG or mixed dyslipidemia, how do you model uptake for like a onetime therapy versus like a chronic siRNA? And how do you think about like the payer economics, the adherence, pricing, things like that?

Well, there's -- adherence is easy. That's an easy question. The -- again, the COGS of this will give us a lot of latitude. So this isn't going to be something where we're going to price significantly higher. When we get later in development, we'll have more to comment on pricing specifically. But you can imagine that if we have COGS in a very low 5-figure range, to get to 90% margins doesn't need a super high price point. So we'll have to look at the pharmacoeconomic data that we have, obviously, the durability when we file a BLA or get approved at some point in the future. But we do think that in these larger indications, there's going to be a strong subset of severe patients that will choose this therapy. And I think over time, like any new technology, people will get more and more comfortable with it over time. But we do think that, again, in these high TAM indications where even the high-risk SHTG population is over 1 million patients, there's going to be room for multiple modalities and I think multiple blockbuster products.

Okay. Great. So moving from 310 to 320 [indiscernible]. The readout delay that you all have aligns well with the Novartis HORIZON trial with pelacarsen with Ionis as well. If results are modest at the first initial update, how does CRISPR differentiate? What is the way that this would be positioned versus pelacarsen or others in the Lp(a)?

Yes. Again, I think we attended a conference last year with like FDA and some industry folks where the question came up of you need HORIZON to sort of say, reduction in Lp(a) as a biomarker. And I think the FDA, I mean, they're going to look at both HORIZON and OCEAN. I think that there's not a significant delta between the readout of those two, and we'll have to look at both of those studies, I think, before truly understanding if there is a mixed result in that hypothesis. But for us, we continue to look at patients with a high baseline. So in the HORIZON study, I think at 80 milligrams per deciliter, there's a high cohort. So we'll be looking at that data in particular in addition to the primary endpoint to see whether patients with a high Lp(a) in that upper quartile do achieve an effect. because that would be the most relevant to us. But for us, we wanted to make sure that we fully understood the -- what happens when you therapeutically knock down Lp(a). And we also wanted to determine from the KOL community as well, is there going to be a threshold thesis? Is there a normal range you want to see in between? Do you not want to go down close to 0 like you do with LDL? I think these are questions that are still open that we'll get more answers from next year.

Okay. And Editas is now in this race with LDLR. How do you view LDLR as a gene editing target relative to ANGPTL3 or Lp(a)?

Yes. I mean I think we're very happy with the targets we selected. I think again, with ANGPTL3, there are -- it's a loss of function mutation that's out there. There's people that are genetically -- that have genetically knocked out ANGPTL3 that have a reduction in cardiovascular events. And so we felt very comfortable going after that thesis. And again, we've produced good clinical data. So to be determined, I wish Editas the best of luck. And again, cardiovascular medicine, I think, is going to be changed by genetic medicine. But we really like the target selection strategy that we have. And we'll be taking angiotensin into the clinic in the near term as well. So in the not-too-distant future, we're going to have 3 clinical programs in genetic medicine [indiscernible] cardiovascular medicine.

And so for siRNA briefly touched upon that branching out in terms of modality from gene editing, you also have now RNA. Can you help us understand, is the siRNA play a tactical bolt-on? Or is it the start of a multimodality type of a model for CRISPR?

Yes, it's a good question. I think for us, we wanted to supplement our current pipeline. And when we talk to these CV docs, we were hearing about anticoagulation and Factor XI from a lot of them as being an interesting target as well as being an extreme unmet need, especially in terms of bleeding that happens with the Factor Xs. So the Factor XI thesis was born out of not saying we need this technology, and we need to bring something on. It was more of this is a very interesting target. It's complementary to some of our efforts. We think that we're still talking about the durability thesis. So the small molecules and antibodies that are out there, we're still looking at potentially a 6-month -- once every 6-month option. So we're still focusing on this durability benefit over other players in the space. But the market opportunity for anticoagulants, especially patients that are ineligible for Xa because of bleeding risk is significant. And so we looked at this as a deal with a great counterparty partner in Sirius Therapeutics. We think this could be another multibillion-dollar asset for us in the future. And then also we got EMA approval. So Phase II trial will be initiated in the short term or it has been initiated. And these trials don't take very long to read out either for the Phase IIs. Historically, the abelacimab trial took about a year from start to finish. So we'll be moving forward potentially in the near term as well.

Okay. Great. And so you're starting in surgical VTE. How do you think about sequencing into broader chronic cardiovascular indications because that could certainly be interesting.

Yes. So we have -- I mean, the benefit here is that we will see the abelacimab trials readout and the milvexian trials read out prior to making that decision, but we'll have the Phase II TKR data in hand. So we'll sit at a good strategic point sometime in the back half of next year, where we'll see all these competitor trials develop and then we can sequence our Phase III development based on that. But again, we thought that this was a very interesting asset with clear differentiation in a multibillion-dollar market. It sort of hit all of our metrics. And then you don't want to knock out Factor XI for life. So we also thought that, that was a good target to go after with this technology synergism.

Great. Okay. And finally, in 3 years, which franchise, cardiovascular or autoimmune or diabetes would investors view as CRISPR anchor in your thoughts? And what milestones by the end of next year would make that vision credible?

Yes. I mean I think right now, it's too early to call what the lead candidate is going to be moving forward. I think we're seeing interesting data across all verticals at CRISPR right now, and that's a good problem to have. Again, we can -- in the next, say, 12 to 18 months, I think we can determine at our -- based on our balance sheet and our cash burn, we don't have any funding concerns in the near-term future. We can determine, based on our fundamentals, what do we need a strategic partner for, what would be a 1 plus 1 equals 3 type of equation where a partner would bring something that we don't have or we don't think we can develop to a certain of these verticals. And we can't do everything. I think that's sort of your resource allocation question. We know we can't do everything even with $1.7 billion. But I think the most important thing to do in biotech is you don't want to do a deal too early where you leave value on the table. And we have put ourselves in a position where we're one of the few that can actually do that. And so again, over the next, I would say, 12 to 18 months, we'll see more data. We'll see durability of data. And I think you'll see us make strategic decisions both on partnership as well as resource allocation in certain indications where we're maximizing ROIC. And we're really trying to aim to be that next $25 billion company in the space.

Makes a lot of sense. Raj, thank you so much. Really appreciate your time today. And thank you to all the investors in the room for joining.