Precision BioSciences, Inc. (DTIL) Earnings Call Transcript & Summary

Thanks for joining us. I'm Salveen Richter, biotechnology analyst at Goldman Sachs, and we're pleased to be joined by Precision BioSciences. And with us this morning, we have Matt Kane, Founder and CEO.

So Matt, maybe starting with the overview here on CAR Ts. There were a number of companies, well, actually 3 in the lead here, on developing allogeneic CAR Ts. How do you view your pipeline and technology as differentiated from competitors, particularly as you look at kind of the first data sets, including yours, that have started emerging here?

Yes. Well, look, first of all, Salveen, thanks for hosting us today. I really appreciate it. And I hope this finds you and your team and all those listening safe and healthy during this unprecedented time. Again, my name is Matt Kane, and I am part of just an absolutely incredible team at Precision BioSciences. And to the core of your question, you're right, this is an incredibly exciting period in the field of allogeneic CAR T. It's moving quite fast. Data sets are emerging now both from Precision and other groups that are, I think, really quickly answering some of the critical questions that we had to answer to enable us to move forward. And we've got -- we're expecting at least to see so much more coming this year, including some additional data from Precision BioSciences. So we've just been thrilled to see the progress in -- both at Precision and within the field generally. And a key differentiator that we've incorporated has been the way we've approached cell engineering itself and our core focus on safety. Our unique and quite differentiated editing platform that we call ARCUS is really what makes all of this possible. Without ARCUS, we would not have the product that we've been able to generate today. And we have been able to generate highly consistent allogeneic CAR T cell products, and we've been able to do so at very high yields using a very unique single engineering process that enables us to produce a very high percentage of expansive cells, again, at high yield. We've also incorporated a novel co-stimulatory domain that we call N6 that also helps to provide us with a gentle expansion profile, again, with a core focus on safety with this cell product. So it's that -- a combination of safety and accessibility were 2 of the key boxes that we wanted to be able to check right out of the box, and I'm happy that we've been able to do so.

Great. And then your -- I guess maybe your preconditioning regimen here stands out as one of the differences. Can you remind us on the rationale behind your approach here? And then what is the protocol, whether it's higher concentration of flu/cy or stealth cell vectors or use of biologics that will be followed if a more rigorous preconditioning treatment is required?

Yes. I'm glad you brought up the preconditioning lymph regimen or the lymphodepletion approach that we take. Again, these are allogeneic CAR T cells. So unlike with autologous CAR T where we lymphodeplete to create space for the CAR Ts, we need to do that with allo CAR Ts, but we also need to create a time period where the patient's immune system is pushed back long enough so that our CAR Ts can traffic to tumor cells, expand and kill the tumors before, again, the patient's immune system comes back and eliminates the CAR Ts, which is what we want. These are foreign cells. And so we want to take an appropriate approach towards lymphodepleting in these patients that would push the immune system back but not to a point in which it would put these patients at risk for severe infections and other safety-related problems. And so we've started our study using doses of fludarabine and cyclophosphamide and no additional biologic and at dose levels that were comparable to what we've seen with autologous CAR Ts. Again, we've been able to start on this path by making these very high-quality, highly consistent and expansive cells that, again, do not require us to severely deplete patient T cells for extended periods of time and yet still be able to see responses from the CAR Ts. So in terms of the paths that we're following today, again, the field has emerged in a rapid pace, and I think we're all learning a tremendous amount and unlike anything I've seen in recent history. But now that we've established such a clean safety profile, I think, across the field, and this is really important for allo CAR T to truly transform the treatment paradigm, we now have the ability to rapidly optimize the product on a number of different fronts and one of those is through the modification of the amount of these lymphodepletion agents that we provide patient. And we think about doing this to better understand whether or not increasing, or decreasing even, the amount of these agents could have an effect on the cell persistence, and then ultimately, the response rates and the durability of these responses. There are a lot of key questions that are still out there in the field that, I think, we need to start answering so that we can get to the next frontier in allo CAR T, which is to establish a good understanding of the durability of responses that we can establish using these products.

Yes. And when we think about that, so it does seem like 2 of the biggest hurdles heading into this field was whether GvHD would be managed and then how to think about T cell persistence and durability, and the latter is still an outstanding question. But how long do you think we need to see treatment or durability -- or how long do you think we need to see durability, post which maybe this question gets answered?

Yes. I think you're spot on. Again, I think this -- now that we've been able to, I think, as a field, overcome some of the initial key questions -- and just to kind of revisit those briefly, I think you've touched on one, and that was because these cells are foreign, would we see severe signs of GvHD or graft-versus-host disease? This is where -- the concern here is that the donor cells would actually attack healthy tissue. And as a field, we've been able to show that by knocking out the TCR gene, we've been able to avoid any severe signs of GvHD. And in Precision's case, we reported on data last year that showed absolutely no signs of GvHD, which was really encouraging. And then the second thing that we sought to establish in the field is whether or not we would see response rates that would tell us that we were also on the right path towards having an effective cell therapy product. And I think the answer thus far has been very encouraging on that front. And that leads us now towards the next frontier, which is, again, can we establish durable responses? And -- but the -- one of the questions there that you kind of posed is, is T cell persistence or CAR T cell persistence directly related to these more durable responses? And that's a question that is still outstanding. And I think we and others in the field are hoping to start answering more of those questions as we move forward with additional data sets and as we start exploring some additional parameters. And one of the things that has been interesting as we've looked at data that's emerged in the field is that often we see these CAR T cells rejected at fairly early time points, say, day 14, day 21, somewhere in that range. And yet, we're still seeing very high response rates, which if you think about, really flips over a lot of the dogma that's existed in the autologous CAR T field, which has suggested that these sort of response rates are strongly associated with much longer-term cell persistence, whereas the data that started emerging now is really suggesting that the vast majority, if not all, of cell killing actually happens very, very rapidly, which is, we think, a very interesting finding and something that, I think, gives us a lot of encouragement around how quickly this field is advancing and the potential for it to have a real impact on the treatment paradigm.

Great. And how are you thinking about business development or collaborations here? Are there new technologies or new types of cells that you're interested in bringing in just to complement your toolkit?

Yes. The short answer is we are always thinking about business development. So with a platform like ARCUS that has the potential to very uniquely address such a broad array of unmet needs, I mean, we're always exploring a wide variety of ways to further support these existing programs we have in allogeneic CAR T as well as in vivo gene editing and potential new programs. But within CAR T, we are highly interested in any means by which we can best optimize the different parameters we're exploring right now in our CAR T studies. We're interested in unlocking new targets to find creative ways to approach solid tumors. And all of those are quite interesting for us. On the in vivo editing side of things, we've talked a lot in the past about the importance of being able to efficiently and safely deliver ARCUS along with any additional cargo to specific tissues of interest. So anything that might help us to optimize our toolkit in this area is, of course, a very real interest for the company.

So moving on to CAR0191. So you presented your Phase I data for this drug in NHL and ALL at ASH of last year. To start, can you just review for us the findings from the initial dose cohorts?

Absolutely. And I'm glad you brought this up because it was, I think, a really important set of findings for us to share with the community. And just to revisit a few things I said earlier, one of the big questions in the field was, would we see a graft-versus-host disease with the cells that we had engineered? The next question had really been around, would we see clear evidence of cell killing without the need to severely lymphodeplete the patient's T cells? And I was very happy to be able to report positive findings on both fronts. So within this data set, we saw no signs of GvHD. Another interesting finding was that we didn't see any signs of severe CRS or neurotox and no signs whatsoever of infection. So a really encouraging, albeit early, safety profile. And yet we saw -- we also saw a very robust response rate. We were, I believe, at 67% responses in the NHL cohort at day 28. And across both NHL and ALL, we were able to report 2 CRs and a really interesting case, where we were able to dose a patient that had previously received Yescarta, the autologous CAR T, had responded and then further progressed and then was able to enroll into our study and was put on a 6-month PR. So some really interesting but, again, early findings that, again, I think doesn't happen all that quickly this early and so really encourage us to continue moving forward with this study and building out the knowledge base.

And you've implemented, I think -- or you have some amendments to the trial protocol that have been accepted by the FDA. Can you review for us what these amendments are on the back of the early data? And have you implemented any of these amendments to date?

Yes and yes. So absolutely. So again, this combination of safety and responses and, really, safety that drove this enabled us to go back to the FDA and request to be able to do all the things we had wanted to do from the outset of the study but really needed to have that safety bar cleared before we can do so. And so there's 3 different areas that we think are critical to explore going forward in the field of allo CAR T. And you're seeing this, I think, across the space. And I'll try to cover each of these as succinctly as I can. One, this is a dose escalation study. So of course, we want to be able to continue going up in dose, and we can do that now. And this is with an eye towards kind of following a lot of the learnings from the autologous CAR T field and then -- particularly as we see an increased peak expansion from these increased doses. We -- obviously, we're raising up the peak of the curve or the Cmax of the drug. We're often seeing better and then ultimately more durable responses. So increased doses are things that we are interested in exploring. We talked a little bit about lymphodepletion earlier, and the idea here is to create this -- think of it as a therapeutic window. And so we're interested in seeing what happens if we open or close that window a bit to see what that does to cell persistence. And then does that translate into higher response rates and then ultimately into more durable responses? Because again, that is the goal we have in the field is to start moving towards durable responses. And the third thing we were allowed to do, and this is really interesting, and this is the ability to repeat administer the allogeneic CAR T. So think about this for a second. Allogeneic CAR Ts are so much different from the first-generation autologous cell therapy products that you're -- that are really thought of as more of a one-and-done approach. But allogeneic CAR Ts are made to be highly accessible, consistent cell products, much more like a traditional biologic that one would find available in a hospital pharmacy. And so we look at this -- we look at the idea of repeat administering these cell products as a really interesting way for the entire field to move towards more durable responses. You can think of giving an initial dose of an allogeneic CAR T and being able to eliminate much but maybe not all of the patient's tumors and then being able to come in at a later time point and get down to that final tumor cell to put the patient into a much more of a longer-term durable response. So it's an exciting time for us in the entire field because we all have these levers now that we can adjust to start determining which one or maybe -- and which combination of levers might most rapidly move us towards these durable responses.

And what is the rationale here for the split dosing and I guess -- and/or repeat dosing now that you've seen some of the other data coming out from Allogene? And how would you manage this in the context of the need for lymphodepletion? And then help us understand as well the level of response you're looking for as you advance to higher doses and what's clinically meaningful.

Yes. Sure. Absolutely. So we are -- as we talked about, we are exploring a variety of different dosing amounts and strategies. And one of those has been to go to a larger total dose but to administer that at different time points after an initial lymphodepletion dose has been given to the patient. And this is a means by which to, again, increase that total dose without running into any safety issues, and we learn what this strategy might enable for the patient. With the repeat administration, I think that -- important to kind of call this out again. In this scenario, we would lymphodeplete the patient. Again, we use doses of fludarabine and cyclophosphamide, administer the cell product, monitor the patient for a response. And then if we see the patient respond and maybe further progress at a later time point, we can lymphodeplete again and, again, with a goal towards re-administering the cell product with the hope that we can get down to that last tumor to enable us to get to more of a durable response and something that would be really difficult to imagine doing on a routine basis with an autologous CAR T product due to all the logistical and other technical challenges that we really don't face in the allogeneic side of things. So I think something that's really exciting for the field itself. In terms of levels of responses, kind of as we go to these different doses and different dosing strategies, at this stage, our core goal really is to understand what these cells can do under these different conditions and do it quickly. And I think only then -- only when we can really understand the full response and the safety profile, I can't emphasize that enough, can we really start thinking about how we position the product so that it can be most impactful for the patient.

And how about changes to the lymphodepletion protocol? I guess we talked about this earlier, but is this another lever that you play in, in this process or just would be looked at kind of later on or in different programs?

No, this is something that we are actively exploring right now. We think it's really important for us to understand the interplay between the lymphodepletion agents that we provide to patients, how that does or does not impact cell persistence and how that may translate into better and perhaps more durable responses. And it's important for us to understand these things now and quite quickly so that we can continue to rapidly optimize these products and enable this field to continue marching forward.

And what should we expect when you present updated data later this year? How mature do you anticipate the data set to be?

Yes. So I think another great question. And I just want to reaffirm, we are anticipating that we will be able to share additional data from our lead CD19-targeting allo CAR T program. And this is both in adult ALL and adult NHL. In terms of what we're trying to learn and be able to share with the field is really -- it's exactly what we've been talking about today. It's how these different levers may take us down the path towards more durable responses. So we want to be able to inform the field as much as we can this year around the importance of any of these individual levers and/or if there are combinations that start to give us some strong indications that one or more of these pathways might be very effective at getting us to really the core goal of the field, which is to establish safe and durable responses.

And then if we do get data sets from the patients who've been treated under amended protocols here, would those patients -- I guess would you kind of pull out those patients and explain to us what the levers were in the context of those groups?

Yes. So we're not committing at this point to a specific data set or a specific grouping of patients. But if data that we generate from the study provides what we think is a much sharper view into significant advancement in our field, this can absolutely be shared when we bring data out this year.

Great. And then with COVID-19 disruptions potentially limiting some of the patient follow-ups here, how are you thinking about study integrity and how these programs are progressing?

Yes. So we've been, I think, very fortunate thus far that our CD19 program has been able to continue enrolling throughout this pandemic. And it's a big credit to the internal team at Precision, our third-party suppliers and everyone involved with the logistics but, most importantly, our clinical sites and the patients who have been willing to enroll into these studies. So hats off to all of them. We are continuing to monitor the situation as carefully as we can. Certainly, we could see disruptions at different clinical sites as the year moves forward, but we're trying to do the best we can to be able to maintain our ability to safely enroll these patients. I also recognize that there could be some stresses on patient follow-ups and the like. Thus far, we haven't seen anything that significantly disrupted the study, and we're hopeful that, that continues. But we're doing our best to try to get in front of that right now.

And then how much confidence do you have that the increased volume of blood draws will be sufficient to allow for analysis of the cell expansion? And then how important is this measure in understanding the subsequent therapeutic benefit here?

Yes. I think these sort of correlatives are always nice to have and always can help inform a new field as to what do things -- parameters like cell expansion, cell persistence and a host of other parameters, how do they give us indicators towards kind of understanding what these cells are likely to do in larger sets of patients. And these are things that we will understand as we gather more and more data. So certainly, we want to have those correlatives. But I'll say, again, the core goal here is not that. Really, the core goal is to generate these durable responses and to do so safely. And so that -- while that's not our focus, we certainly want to have those correlatives, and it's something that as we're able to gather them and bring data forward, we would look forward to share with the space.

So as you look to the other allogeneic CAR T programs that you're conducting, can you help us understand what read-through you're applying to those should success in one really increase the likelihood of success in the others when you're applying it with the others?

Yes. Absolutely. So I think the question is, I think, around read-through or can we take learnings from, say, our lead CD19 program and apply it to our CD20-targeting allo CAR T or a BCMA-targeting CAR Ts which -- by the way, I'll just mention briefly, both of those programs, we've been able to start enrolling patients on through this pandemic. And I was actually really happy to announce just this Monday that we'd enrolled and dosed our first patient with our BCMA-targeting CAR T. So again, big thanks to everybody involved with that effort and a deep respect to all the patients that enrolled in the clinical site that's been supporting it. But absolutely, these products are very similar. They're made through a very similar manufacturing process, the key difference really being the CAR itself or the targeting portion of the drug product. And so we do think that as we move forward with our lead CD19-targeting program and explore these key levers that we've talked about around dosing, lymphodepletion, repeat administrations, all these key parameters, we absolutely think we'll be able to pull those learnings forward and run the other programs very efficiently and be able to discharge risk across the rest of the portfolio. And I'll mention one in particular. We have -- our second program is a CD20-targeting allogeneic CAR T. And here, we dosed our first patient just this April. And one of the first pull-throughs we've been able to have is that based on the safety profile that we were able to establish last December, the FDA allowed us to skip -- entirely skip our planned first dose level and go right to the second dose level. And this is going to create a more efficient study, enable us to get to these higher doses to learn as much as we can about this program quite quickly. And I'm optimistic that we'll see many additional learnings and advantages from having such a modular platform as we move forward.

Great. And congrats on starting the multiple myeloma program. Do you think you can just walk us through what the trial's going to look like here and maybe time lines associated with when we might see first data?

Yes. Absolutely. Again, we're thrilled to get this program into the clinic and be able to announce that just this Monday. The protocol design for our BCMA-targeting CAR T, very, very similar to our lead CD19 program, albeit here we're -- in patients with -- adult patients with multiple myeloma, dose range -- or the dose that we're starting with is 6 x 10^5 cells per kilogram with a current top dose of 6 x 10^6 cells per kilogram. And again, we're dosing by weight. Also, like our lead CD19-targeting program, we are using a dose -- we're starting with doses of fludarabine and cyclophosphamide that are very similar to what you see with autologous CAR T products. And we're not using any harsher biologics that might push the patient's immune system back for extended periods of time. So again, very happy to have this study launched. And we haven't commented on when we might be thinking about sharing any additional -- or any data from this particular program. But again, I'll highlight, we do expect to have data presented during 2020 for our lead CD19 program.

And Matt, so your anti-CD20 CAR T program is ongoing with the first patient dosed in April. Can you briefly remind us on the trial line here?

Again, very similar to what we started with, with our lead CD19-targeting program, albeit here we're in -- we're targeting adult patients in NHL or CLL or SLL. We started dosing our first patient here with a dose of 1 x 10^6 cells per kilogram. Again, we dose by weight in this study and are currently top out at 6 x 10^6 cells per kilogram. Often -- or I should also probably note that we were also able to get orphan drug designation for any patients we dose with MCL. And again, very excited to have that program moving forward and looking forward to continuing to pull learnings in from the lead CD19 program into this study. Just briefly mention as well, very -- we're starting with the same lymphodepletion strategy, utilizing doses of fludarabine and cyclophosphamide that are quite similar to what you see with autologous CAR Ts.

And I believe that here, you're bypassing the first dose cohort that you used in the anti-CD19 study and then starting immediately with the second. Are there any other levers, I guess, that you're playing with, with regard to optimization here?

Yes. At this point, you pointed out the key parameter that we've been able to take from the CD19 program or really we've really been able to take that safety profile that we were able to demonstrate from the CD19 program and enable us to skip our planned first dose. And yes, we do expect, as we move forward, to be able to look for opportunities to continue to pull learnings in from the CD19 program into these follow-on programs. But we haven't disclosed any additional changes that we're thinking about making at this point.

And when might we see data from this program? I think you had mentioned previously that it would be potentially year-end this year?

So we haven't disclosed any time points for sharing data with the CD20 program because, really, I think the focus for our platform is on the CD19 program because that's where we're able to more rapidly explore these 3 key levers that I mentioned earlier, whether it's higher dosing, modifications to lymphodepletion or repeat administrations, and be able to do so at higher doses because we're further along in this study. And so this is -- the CD19 program is where we expect to see the greatest, most impactful learnings this year. But obviously, we're also going to be monitoring for any interesting findings from both the CD20 program and the BCMA program as well.

Great. And then can we talk about your in vivo gene editing platform here? Where do you stand with optimizing the technology at this point? How does your technology address this maybe differently versus some of the other gene editing tool sets? And when could we see your first program enter the clinic?

Yes. So I'm glad you brought this up as well because the heart of all of our programs is this radically differentiated gene editing platform that we developed at Precision. It's something we call ARCUS. And ARCUS was designed to really overcome some of the limitations that we've seen from the older gene editing platforms, namely the propensity to randomly off-target within a given genome, and I should say permanently off-target in the genome and the second being to be optimized for delivery to different cells and tissue types. And so to do that, we went to nature. And we found this really cool enzyme called I-CreI. And what I-CreI does in nature is it genome edits. It finds a single site within the context of a large genome, it inserts a small copy of DNA into that site and then it turns itself off. It actually makes a small change in its shape such that it can no longer cleave DNA without being productively bound to that intended target site or very, very similar to it. So you can almost think of this as a built-in safety switch. And we think this is -- enables us to take a big step forward in the field of in vivo gene editing. It's also really, really small. It's about 1/5 size of a more typical genome editing approach, which has -- and offers us tremendous advantages around the efficiency in the types of delivery systems that we can utilize for it. And so today, our lead programs are one that we were working on with Gilead to develop a potential treatment for chronic hepatitis B. And there, we've guided towards an IND in 2021. And the second program and our first wholly owned gene editing program is one targeting -- or potential treatment for primary hyperoxaluria type 1, where we target the HAO1 gene. And so our goal this year is to select a clinical candidate for that program and move it on to further IND-enabling studies. So exciting time on the in vivo editing side as well.

And then you've identified HAO1 as your second gene-correction target here and first wholly owned, as you just mentioned, for PH1. Can you just talk about why you chose this as your second program? What were the metrics that you used to evaluate your various programs and decide this was the one you wanted to advance?

Yes. Sure. Sure. So we selected PH1 as our lead wholly owned program through a fairly robust set of large animal experiments, where we evaluated a number of targets in different nonhuman primate models to have established the efficiency of the edits and our best understandings of how the edit itself or, in this case, a knockout would likely translate into a positive therapeutic outcome for the patient. And this is a patient population that has quite poor outcomes and really is in need of good and, we think, a permanent therapeutic option. Remember, our expectation is these gene edits should be permanent. And thus far, that has been what we have seen in all of the large animal studies that we've conducted, some of which have gone out now over 3 years. HAO1 is also a highly validated target. And this is important for us. This is our first wholly owned gene editing program, and we want to minimize the biology risk with this first program. So a combination of editing validation that we've done in nonhuman primates, a high degree of confidence in the biology around the target and in a patient population that is sized appropriately for a company like Precision to be able to address on its own, we think, make this a really attractive initial program for us to focus on and potentially open the doors to a number of other in vivo editing approaches using ARCUS. So exciting times.

Great. And then maybe you could just comment on your next programs here. What work is being done now to identify -- I guess to determine what you're going into next based on targets in large animal models? I think we've touched on PCSK9s and APOC3s in the past. So how should we think about the trajectory here and the time frame?

Yes. So we're -- we haven't commented on which of the other programs that we've been exploring that will -- that we may or may not select as additional programs for us to move forward on today. Really, our core focus as we start moving as part of our pipeline forward is on the 2 key programs we talked about already, which is, one, targeting chronic hepatitis B and the second is being primary hyperoxaluria type 1. As you note that we have shared data previously on a number of other approaches, PCSK9 being a really interesting case, where we now have over 3 years of safety and editing data that really clearly shows that with a onetime administration of an ARCUS nuclease, we can see PCSK9 levels be reduced by about 90% and has just translated into an LDL or bad cholesterol reduction by about 50%. And this has remained remarkably consistent now for about 3 years with no signs of any safety issues due to the nuclease. So I think, a really exciting time in the field of in vivo editing, quite similar to what we've been talking about in allo CAR T, a field that has obviously attracted a lot of attention but now is moving forward really quickly, as you're starting to see a number of preclinical programs starting to move into the clinic and a number of different approaches for a number of different tissue types starting to show a lot of merit. So I think this is an area that we think is going to be one in which ARCUS is particularly well suited due to its ability to avoid the random off-targeting we talked about and its ability to be delivered so efficiently. So I think this is a space to be highly aware of as you start thinking about Precision as we go into the future.

And Matt, maybe just one last question here. Is the food agriculture business or vertical here no longer a focus? Or is that just put on the back burner for now?

No. We're really excited about the potential for our wholly owned food-focused subsidiary, Elo Life Systems. But it is a separate subsidiary, and it is managed separately, separate facilities team and all the rest. But the potential impact that Elo can have, again, leveraging this really interesting editing platform that we call ARCUS I don't think can be overstated given the stresses that are on our food supply due to -- due largely to climate change and other issues. And also a major shift in consumer preferences for healthier foods have put kind of editing really at the forefront of what could be some major solutions in this area. So certainly, we look forward to future updates from the Elo Group as well. And it's an exciting time for ARCUS's potential, I think, across all these areas.

Great. Well, with that, Matt, thank you so much for your time today.

Thank you, Salveen. It's been great to catch up, and glad to hear you're doing well.

Yes. You, too. Thanks.

All right. Thanks. Bye.