Precigen, Inc. (PGEN) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining us for another session at the 44 JPMorgan Healthcare Conference. I'm Brian Cheng. I'm one of the senior biotech analyst at the firm. On stage, we have Precigen Therapeutics, I'll now pass the mic to them for a short presentation followed by a live audience Q&A. Helen, the stage is yours.

Thank you very much, Brian, and thank you for the invitation to the JPMorgan meetings. And I would say good morning or afternoon to some of the audience that are on the webcast. Today, what I would like to do is take you through the advancements of our portfolio at Precigen. Obviously, I would be making some forward-looking statements. Please read that. And first of all, I just want to introduce really for those of you who might not be familiar with Precigen and Precigen story who we are. We are a biotech company that has focused on a cell and gene therapy for various indications, including rare diseases and in oncology. We are located in Maryland. And our approach has been from the very beginning and start of a company is to really have a differentiated technology and platforms that can be applied to a specific indication with a very specific regulatory strategy. And as I take you through the basically presentation, you will see how we have done that with our first drug that has been approved last year, PAPZIMEOS in a very, very rapid manner to go from really discovery development to approval in 4 years. So with that in mind, today, I'm going to have the focus on our main platform, which is an AdenoVerse platform. This is a viral vector platform, but it's unlike any other adenoviruses. These are actually gorilla adenoviral vectors that are nonreplicating, but the major difference, as you see on the right side of this slide is, first of all, their large payload capacity so for instance, if a regular adenovirus or other viruses, they have somewhere between 3 to 4 or 5 kb, you're looking at somewhere between 12 to 15 kb of capacity, which means you can put more epitopes, much more jeans. And this is really unique and differentiated from that perspective. Also, what is very different in our platform for AdenoVerse platform is the ability to repeat dose. And in a regular adenoviral vectors as you all have seen is you can give 1 dose and perhaps by the second time that you go in, you have seropositivity because all of the people healthy or some of the patients they already are seropositive. They have neutralizing antibodies to these viruses because they have seen it before. The immune system has seen it, has generated neutralizing antibody and by second third time that you start injecting these viral vectors, basically, you are getting very high titers of neutralizing antibody, which inhibits their capability of activating the immune system. And as a result, it's like really shooting basically empty bullets. That's what it happens. Not in the case of AdenoVerse platform here because and we have done extensive studies both in healthy volunteers in U.S. and also in Africa. There is -- majority of the people are either completely seronegative and the few percentage that they have is seropositivity is very, very low. And the way we have designed these vectors, which is very interesting, it pushes towards a T cell immunity and not humoral B-cell. So even upon injections of these multiple times and by that, I don't mean 2 or 3 or 4 times, we have had clinical studies in our cervical cancer and head and neck studies that we have -- patients have received over 16 injection over a period of 2 years. And you do not see those high titers, and you keep seeing the expansion of a specific and high affinity T cells. So this is very, very important for this, and we have the full IP around this platform, and we are the only company that has established this and have the IP. And obviously, as I spoke, it pushes more toward T cell immunity than the B cell immunity, at least the designs of the vectors that are currently I'm speaking about. And a very high productive manufacturing basically process, which has been really one of the bases for us having our own manufacturing in-house and has allowed us to move very rapidly. On the left-hand side, you see the portfolio that is associated with our AdenoVerse platform. Of course, at the top is our PAPZIMEOS is a drug for a rare disease, as I will take you through the journey of it today and which we received the approval -- full approval from FDA last year and followed by exactly the same platform and the same vectors, but now addressing HPV 16 and 18, which is the cause of head and neck in the indications for cervical cancers, head and neck, anal cancers. It's the reason that these tumors are developed, and we are in 2 phase II at this point and actually quite interesting data, some of it we have reported and some we will be reporting in the upcoming quarters and year. And it's very, very interesting. Obviously, I will talk about the platform further. So as has been our tradition, we always go to what did we -- was our goals and what did we accomplish in a prior year coming to JPMorgan and as you see on the top of the list is the full approval for PAPZIMEOS for the treatment of all adults with recurrent respiratory papillomatosis, and I will again take you through what this disease is for those of you who might not be familiar with it. We also have commenced our commercial U.S. launch of PAPZIMEOS and we have launched the manufacturing. And currently, we are -- patients across United States are being dosed with PAPZIMEOS and this is quite exciting. And finally, we have secured up to $125 million in non-dilutive findings to fortify our balance sheet. So quite an exciting year for us, definitely a paradigm shifting for a company as we have moved now from an R&D company to a commercial company with a first FDA-approved drug in the history of this drug, which is over 100 years for RRP. So what is RRP? And very shortly explain recurrent respiratory papillomatosis, is caused by the infection of HPV 6 and 11. And this can happen in children or adults and that's the root cause of formation of these benign tumors, which takes place on either the vocal cords or in trachea. It's quite a devastating disease because the patients, they can't speak or the picture that you see in the center, this is through the trachea that you're looking at or they can breathe the only treatment that was available. And this is not because other treatments have not been tried in this indication, but the only thing that works is continuous strategy until before the approval of PAPZIMEOS. So you can imagine that how devastating this is for if you have it from childhood or in the cases of adult. So just to give you a little bit of perspective because at the beginning, I said what is the vision of our Precigen and how we are advancing ourselves. This is really a snapshot of what we did, Precigen was basically initiated in 2020 so 5 years. And what we did in 2021, we cleared the basically IND Phase I and we finished the Phase I in the middle of pandemic and started our single-arm Phase II and of course, the discussions with the FDA at that time. And by 2023, you see that we basically FDA granted accelerated path 2024, we at ASCO, we presented the data, a pivotal data from our Phase I and Phase II and by actually in August of 2025 despite of the fact that we were on an accelerated path for a conditional approval based on the safety, efficacy and durability of the response, which I will take you through in a very short slide. FDA decided that there is no need for further trials, and we were granted actually a full approval in advance of our PDUFA day, which we were very pleasantly happy with this news. And as you can imagine, our commercial team start hitting the ground running in September of 2025. So first and only FDA-approved therapy, this is what PAPZIMEOS is. And that means a lot for the patients and also for the physicians that, by the way, they do not like using surgery because they know that surgery is not a treatment for these patients. This has been the only way that they could have kept the patients from actually tremendous difficulties and even death because if they can't breathe, obviously, we know what the outcome is. So first and only FDA-approved for a disease that I mentioned is chronically challenging and debilitating rare disease. And we have shown a really transformative clinical data, which I will take you through. And this has been the basis for the FDA decision. And finally, we have been able to use this platform. This is really the, I think it showcased the ability of AdenoVerse platform. And for those of you who have heard Commissioner yesterday, Dr. McCurry. Actually, 1 of the strategic ways of FDA moving forward is really the platform approvals now when a platform works across a certain indication and how it can be rapidly moving for other indications. So we are very excited about this for our portfolio. So let's look at a little bit about the pivotal data, again, for those of you who might have not seen it and the mechanism of action. PAPZIMEOS is really a drug that is given just subcutaneously, very simple injection, and it doesn't require any device. It doesn't require any kind of special challenges simply like the way you receive flu vaccine, you get it in the either arm or in the leg, very easy administration. However, quite a sophisticated mechanism of action, what it basically does, it contains a number of epitopes and it will basically sort of educate your immune system to find the infected cells or the cells that is the cause of these benign tumors and destroy them simply. That's the mechanism through the high affinity T cells. So with that, this is the pivotal data from our clinical trials. On the left-hand side, you see the response of our patients. We went to the most severe patient population actually, and this was designed by purpose because if you can make the drug work in that setting, obviously coming to the less severe patient population. It's well accepted. And that's what you see. We have patients in here that they had 10, for instance, surgeries in a prior year. And then by receiving 4 injection of PAPZIMEOS in a span of 3 months subcutaneously, they went to 0. They are looking at the complete responders. And first, when we started was the minimum of 12 months. But what you see on the right-hand side, these patients now have been followed for years. And in the last actually news that we had out was we have followed these patients. Now they have passed median of 3 years, and they have not required any surgery or any other treatment for that matter. So this is quite exciting. And by the way, they are continuing to be in the response. And another group of the, what we refer to as partial responders, they also responded by reducing their number of surgeries, but they clearly didn't go to 0, which gives the ability for us to redose these patients, especially in view of the safety of this drug that basically, when you receive it, it's a grade 1 or maybe a grade 2, which is equivalent to when you get a flu shot, a little bit of fever, a little bit of rash on the arm and then it goes away in a few days. So this is quite exciting, and this is the data that FDA has seen and the safety data and has allowed to move from a single arm pivotal to full approval. So PAPZIMEOS, the commercial opportunity, and we will take questions afterwards. The 27,000 patients in U.S. excess of 150, and we have done these studies now also in Europe. There are 4 countries in Europe plus the U.K. and Japan, we will be in excess of 35,000 patients, 50,000 patients in other territories. And clearly, in China, a very high population excess of 85,000. So quite a large patient populations that -- and this is adult in these cases. One of the things that there is a lot of discussion about the biotechs and how ready they are to commercialize. And the indication for the commercialization to support a successful launch is, first of all, you have to know your market size before you obviously launch your commercial teams out. And we had done that prior to approval, 27,000 patients in the U.S. You have to optimize your footprint knowing where these patients are located. So you don't have to deploy 300, 400 salesperson all across in the territories that they might not be that many patients. We had done those studies prior to the approval and had a very, very good understanding of the territories and also discussions with the payers to be able to establish a price that is going to be accepted by payers. Obviously, build awareness both patient education as well as physician education besides just KOLs that they are out there, and we did that prior to our launch and approval and finally set up a distribution important. You can do all of that, but if you don't have your commercial material and you don't have your supply chain and distribution, obviously, that is a recipe for failure, and we were not going to do that. So with that in mind, after we receive our approval in August of 2025, we exactly executed against all of that. And we went to a full mode of commercialization, full promotional campaign, and Phil will talk about this with me. We have now more than 96% of our target centers has been covered in the past 3 months. This is incredible speed by anybody's count. As far as formulary and IDN and community support, we have more than 50 accounts here and that they have been prepared and ready, and they have been also prescribing PAPZIMEOS. The payer pull through, this is very important because this is a rare drug disease with, obviously, a different pricing. And we have already got coverage through Medicare, Medicaid. We have covered more than 170 million lives through big and small, basically private health insurances. And we will discuss this. This is almost close to 80% of the coverage for these patients. And finally, the patient support hub. And I just want to stress this is the hub just for our company that we have set up. In November, they were already more than 100 patients there and we just reported in a matter of 1.5 months it's more than 200 patients in this hub. This hub does not represent all the patients because the centers of excellence they have their own hubs that they enter the patient. So as you can see, this is just a fraction of the patients that are coming in, and this is directly to the Precigen hub. And just to give you a view that a significant increase in PAPZIMEOS brand awareness since approval, we went from 7% to 66% in a matter of 3 months and in the community centers, again, from 6% to 58%. This is a huge increase, and it shows the interest of the patients and the physicians in this drug because this is the one and only FDA-approved drug for this rare disease. And looking ahead, what is in front for us is, obviously, we are laser focused on the commercialization of PAPZIMEOS in the U.S. This is what our commercial team is out and continuously, we are focusing to expand that. And we are very, very excited with the reception that this drug has had among the patients and physicians. And by the way, this drug, the FDA has given a very broad label for PAPZIMEOS that all RRP patients regardless of severity can receive this. So if an RRP patient is just recently diagnosed, they can receive this drug. And if the RRP patient has been dealing with this disease for 10, 20, 30 years and we had patients that they had this disease from age of 1, if you can imagine, excess of 300 surgeries, they will receive it as well. And this is extremely important because this drug is not just for severe patient population. It's for any adult RRP patient with diagnosis. And I would like to add 1 other point. Why is this important? The studies that has come out have very clearly shown these patients, by the time they are into their fifth surgery, they have irreversible damage to their vocal cords and to their trachea. And actually, over the years, a good 1/3 of these patients actually might have to go through tracheotomy. So that's why the patients want to receive this, the physicians want to prescribe it because they know what the end result is. One more surgery is 1 more damage to these patients an irreversible damage. The regulatory expansion of PAPZIMEOS is very important for us. And as we have communicated already last year, we submitted our application to EMA. We received actually acceptance validation of that and it currently is under review for EU and in EMA. We are planning to submit to Japan very rapidly, and we have had very, very constructive discussions with Japan FDA and very exciting ones. And we are initiating our PAPZIMEOS pediatric because this is a drug that based on the safety, efficacy and durability of response, it fits perfectly for children, and we do not want to be leaving children behind. Again, we heard from the FDA Commissioner how important it is to make sure that there are more drugs for pediatric population. And finally, as I mentioned at the beginning, this is the proof of the platform for AdenoVerse. And we are very excited about what we are seeing in our 2 Phase II data that will be reported in the future, both in cervical cancer and in head and neck because we are applying the exact same actually vector with the same safety with the same profile and in HPV-related cancers. So we are very excited with that and also from a perspective of regulatory strategy that we are moving with that. And finally, I'm going to finish by simply addressing we have a very -- Precigen has a very strong foundation for long-term value creation. PAPZIMEOS for us is our first, and we are very excited about a commercial drug but it will not be the only one. And on our AdenoVerse platform, as I mentioned, we have 2 others that are in Phase II and rapidly moving with this. So clearly, we have a technology that is differentiated. We have a commercial asset that is quite exciting and it's out there. We are also expanding our territory to ex U.S., and we have derisked the technology platform and clearly, a very, very solid leadership team that, as I showed you, from our start or initiation of Precigen in 2020 despite of all the challenges in -- with pandemic we have gone from a discovery drug development in 4 years to approval. So this speaks to the expertise on every level of the company, research, development, manufacturing, and we have it inside manufacturing as well as commercial. So we are very excited about that. So on that, obviously, we also have established a very strong balance sheet that clearly, it allows us a runway that with the revenues of PAPZIMEOS to get us through the cash flow positiveness. So with that, I would like to thank all the audience and Brian and we'll be happy to take questions. And I invite our Chief Commercial Officer, to come with me also so we can answer any questions that audience might have and Brian. Thank you.

Well, thank you so much for joining us. Let's start the Q&A. [Operator Instructions] How has the PAPZIMEOS launch been going so far? And are there any surprises from your vantage point today?

Okay. So I think I will let Phil answer that.

I will answer that. I mean we're very pleased with the launches. You saw some of the leading indicators in terms of patient identification, site activation, I think the surprises that we've had have been positive ones been nice surprises. A couple I would call out is, one is the speed of payer uptake. That number of 170 million -- approximately 170 million covered lives, plus Medicare plus Medicaid, and that's a significant portion of the target market already covered within 1.5 quarters of the full launch. So we're thrilled with that. The second pleasant surprise has been community interest. A lot of those patients that Helen talked about in the hub are actually from the community. So not only the academic institutions, the large hospital systems or IDNs, but the community and that has been very pleasing from a market perspective in terms of embracing this as the new standard of care.

On 1 of your slides, you said that more than 50 accounts have prescribed PAPZIMEOS. Can you tell us if these 50 accounts are -- are these numbers reflective of the commercial products, meaning that this is revenue generating and they should reflect in your fourth quarter number?

So the prescription means that those patients have been selected by the institution to go into the process by which they have benefit verification and ultimate payer adjudication so there's a transmission mechanism from prescription to revenue realization. We'll talk more about some of that at the next earnings call, we won't be talking about specific numbers of patients or revenue projections. But that is the first step in getting these patients on to treatment.

Yes. And maybe I can add. What is very important and I think should be recognized that if you can imagine that our commercial teams basically will receive this approval in August of 2025. And then there is a process, especially for bringing in the centers of excellence because all of them, they have their committees, approvals that especially for a drug that has -- and there is no precedence for it. And then formulary, committees that has to go. So obviously, the team has done an outstanding job in the Q3, Q4, covering all of that and very rapidly bringing this, which will be leading to -- sorry, Q1, Q2 and really the increase in the prescription and as well as the -- we already have seen enrollment of the patients and the patients have been dosed across the nation from East Coast to West Coast, and we are very happy that also that speaks to our supply chain and manufacturing capabilities.

Brian, the thing I would add is just to remind everyone that we have fundamentally transitioning, transforming this therapy this condition from what was a surgically managed condition to a medically managed condition. I mean that's a deep systemic change that has to impact all facets of the health care system. So we don't take that lightly. But as you can see, the early signs and the momentum that we've created is very pleasing, and I think consistent with the establishment of a new standard of care in the therapy area.

With the unrestricted label, how should we think about just the receptivity of usage among the milder versus the more severe subset of the population?

Yes. I mean, I'll say a couple of things, and then maybe, Helen, we've got clear signals. Helen showed the increase in awareness, which comes from our quarterly ATU research. We do that every quarter to understand how sentiment trial utilization is happening in our target audits. There's a clear indication from those doctors in the community and in the academic institutions to use the drug across all severities. I don't think we should be surprised at some of the earlier patients of maybe more severe. That's where the highest unmet need is. And we see that in many drug launches across many therapy areas, but we fully expect as we go forward that we will see utilization across all severity.

And maybe I can add, this is what we are hearing from our patients. As I mentioned, the study that came out, I believe it was either a 1.5 years ago maybe from John Hopkins. It pointed out to the patients that by their fifth surgery, as I mentioned, they have irreversible damages. And therefore, patients are very educated about their disease. And what we are hearing is really the need to receive these as early as possible. So they do not even need to have 1 extra surgery at this point. And I think this is very, very important. And the physicians and the surgeons, we have to say. They agree with that because the surgeons in general, this is not the type of the surgery that they like to do because they know the outcome what it is, which means another surgery and further damage to these patients.

Any questions from the audience? So just going back to your comment earlier, related to committee approval and formulary. Can you talk about just the process, the steps involved in terms of getting patients on drug. So if a patient gets a prescription for PAPZIMEOS, what happens after? And I guess, what are the steps involved? And also how long does it take for patients to get the first dose of PAPZIMEOS.

Yes, there's no single answer in terms of how long it takes. It's very specific to each patient actually in each institution. But certain things have to come together. Obviously, the patient has to be identified, and we've seen that already from the numbers that Helen mentioned. That then starts the process of benefit verification to make sure that the patient is supported from a benefits perspective. They have -- you have to interact with their health plan. The payer has to then sign off on the coverage. And of course, the institution has to be ready from a formulary perspective to be able to administer the drug, although actually, in advance of some of these formularies being set, and we are seeing a lot of formularies already come on from these big institutions. But even in those that haven't had their formularies approved yet, we are seeing use through a medical exception process. So there's a number of steps that have to come together. I wouldn't put a time line on that. In some cases, it's relatively quick and others, it can take a bit longer. But the most important thing from our perspective is that signal of intent, which is represented by the patients in our hub, but also the patients that we know are going through the IDNs are not necessarily in our hub. And some of the early patients that have been treated have actually not come from our hub. So there's sort of 2 parallel paths of patient demand that we're working through at the moment.

And maybe if I can just add this. The most important thing was getting the coverage by the payers, imagining that in 3, 4 months to cover almost 80% and 170 million lives and even Medicare and Medicaid through the government shutdown. This speaks again to payers having been educated about what is the need and the power of this drug and then also having these approvals from the all large and small payers and insurance companies it really has helped the patient uptake.

And in fact, in a few cases, we've had a payer that hasn't issued its formal policy yet approve the drug through a medical exception process when they've had peer-to-peer discussions with the treating physician, which again, I think speaks to the high unmet need and the value that we are delivering to the treatment of the condition.

Great. Can you talk about just your current financial outlook towards cash flow breakeven. What are the assumptions that go into the projection that you will get there? How do you think about the projection of also revenue accumulation over time from PAPZIMEOS?

Okay. So as we have mentioned, the guidance that we have given with the cash that we have at hand, and we raised actually last summer, which -- without dilution to our shareholders. This will put us in place with the revenues that will be coming. Currently, we are not giving any guidance on -- from a perspective. But we have said and continue saying that this will bring us to the cash flow positive in by the end of this year. And we will be obviously communicating further as we go along.

But Brian, to your point about '26, '27 outlook, I mean, -- we've obviously looked at analogs. We looked at rare disease uptake. We've looked at the situation that we are the first and only treatment for this condition. So we expect our trajectory to be consistent with that -- the philosophy of establishing a new standard of care in this therapy area.

Okay. What will be a fair comp, just kind of latching on your last comment, what will be a fair comp just to understand how the trajectory will look like?

So I think from a trajectory, we -- obviously, we are expecting a Q1, Q2 and we are increasing in our patients uptake, and we will be -- that is what we have accounted for. And I think with -- we are very pleased with what we are seeing, again, through the patient coming in not only to our hubs, but to the others and also from our physicians that across the United States have been reaching out and going back to this concept of community, which was a very pleasant surprise because we originally thought all our majority will be through the actually centers of excellence, and we are finding that, that is not the case. Actually, this is a huge boost, and we are very excited about that, that the community basically physicians are very, very advanced in knowing what this drug is all about and wanting to prescribe it to their local patients.

Great. And maybe just in a minute we have left, how do you think about just the ex U.S. opportunities, how do we think about partnership potential as well?

Absolutely. As we mentioned, we have already submitted our application and is validated for EU and we are planning for Japan submission as well soon. This is obviously very important ex U.S. But definitely, we are also very much interested in looking at partnership for ex U.S. as our focus is currently and laser focus is on U.S., and we are evaluating various options from that perspective as hopefully, we receive the approvals around the world.

And in the meantime, we do a lot of the work, the groundwork, obviously, on pricing market research, understanding sequence of countries and all the work you need to do. We're part of the new JCA process in Europe at the moment. So we're doing all the groundwork. But as Helen said, partnership is one of the key options.

Great. Well, thank you so much for your time. Thanks for joining us.

Thank you for having us.