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

Good afternoon. Thank you all for joining the Fifth Annual Guggenheim Genomic Medicines and Rare Disease Conference. I'm Robert, 1 of the analysts representing the Guggenheim Therapeutics team. Today, we are thankful to hosts, Precision Biosciences, Chief Executive, Michael Amoroso.

Thank you.

And Co-Founder and Chief Science Officer, Derek Jantz. Thank you both for. And Michael, I'd like to hand it over to you for an introduction to the company.

Sure. Robert, and the Guggenheim team, thank you for having us. Precision BioSciences, we are a group out of Durham, North Carolina. We are a premier gene editing group, genomic editing based on the platform of -- that this man to my left, helped co-create known as the ARCUS proprietary platform. We have an organization that does primarily the foundation of the house is in vivo gene editing, but we also have an arm where we do ex vivo application for some of our lead programs in CAR-T. Derek will tell you a lot about the differentiation of our in vivo platform today, which is really about safety, precision, hence the name, as well as really where ARCUS differentiates itself versus the other gene editing platforms, which is really an adding gene to gene insertion.

Derek, anything you'd like to add? Perfect.

He taught me well.

Beautiful. So before we jump into the in vivo side of things, let's start with your allo CAR T efforts. So based on the 4-plus years of effort into the allo CAR Ts, what are the key learnings to date and where do we go from here?

Sure. I'll ask Derek to chime in, too. He's going to give you a lot of the in vivo. But CAR-T -- actually, my background is I launched with them 2 of the autologous CAR-Ts that launched. So these are amazing therapeutic indexes for patients who are out of options with cancer. Allo CAR T, what have we learned, first and foremost as an industry? It's hard. It's hard to overcome immune rejection, right? That's something that's different with a host donor cell. The last 3 to 4 years, I think this team, Derek and Alex and the group and Alan List, who is our CMO at Moffitt, have worked really hard to put a world-class team together. And I think what we've learned are a few things. We've learned that how you make the CAR-T matters? ARCUS as an ex vivo application, so outside of the body, is still really paramount in the success we're having with our lead program, azer-cel. First and foremost, we make a single gene edit. That's really important. Most people talk about single gene edits when it comes to no translocations, you don't want to have a safety issue. Well, that's true. But actually, the more you edit a product to make exciting different constructs, the more you also differentiate the product and lose potency of T cells. Second, I told you that ARCUS was made to insert our insertion efficiency of CAR knocking into the track locus versus TCR is incredibly high. And we believe that's a big factor on why azer-cel is leading the market space. And then finally, world-class CMC team. We worked really, really hard to hold our attributes for efficacy and safety. So these areas have given us clinical outcomes that we showed at the midpoint of last year, very high response rates, durable response rates. And then ultimately, a safety profile that we're still trying to ameliorate a little bit. It's a very fragile population. We're starting in the post autologous CAR-T failure population. So truly a group that's urgent speed to market needed. And hopefully, we will be finishing up our last cohort and reaching out to speak to the agency, the FDA, more toward the midpoint of this year. So we'll give you an update on that.

So as we kind of shift into in vivo, let's start on the delivery side. So considering the present content of AAVs and LNPs for delivery, what is your strategy? And how do you think about investment into that space?

Yes, I'm going to turn it over to Derek for a minute. But if you're going to be a premier gene editing company, you have to be married to great ability to deliver your gene editing tool. So Derek, maybe you could talk a little bit about the LNPs and AAVs and our strategy.

Yes. As you said, for in vivo gene editing, where we're actually delivering the technology to a patient with the goal of treating a genetic disease, deliveries half the battle because we've got to get it to the right cells, the right tissues in the body. ARCUS has a number of properties that make it compatible with a wider range of delivery strategies than some of the other editing technologies. First and foremost is really, really small. And that makes it easy to deliver because it sort of fits into everything. It fits into lipid nanoparticles. It fits into AAV vectors, it fits into other viral and nonviral delivery systems. Because of that, we have made delivery kind of a priority for the company. We sort of scour the landscape. We look at everything that's out there. Our 2 favorites are lipid nanoparticles. And for that, we have a long-standing partnership with Acuitas, who, I think, is the best lipid nanoparticle group out there. We were fortunate to discover them before they save the world from COVID. So they were a lot less expensive when we got our deal done with them, but really use LNPs primarily for delivery to the liver. But then the other platform that we're really fond of is AAV, and that's because ARCUS is small, it's compatible with AAV delivery. That allows us to get to muscle. It allows us to get to brain. It allows us to get to lung. It allows us to get to all these other tissues where we're very interested in treating genetic disease, but where you can't go with other delivery systems and other gene editing technologies.

Thank you. Precision has access to gene editing technology that could be broadly applied across therapeutic development. Could you share the thought process of the current internal pipeline strategy versus the strategic partnership projects?

Yes. So I'm going to have Derek kind of tell you why we've made the lefts and the rights in our program. But starting off we tailor our approach of the type of delivery based on the disease we're going into. Derek's talked to you about an LNP to deliver and AAV beyond. But now we have to talk about the type of the edit. Are we trying to just do a simple deletion of a knockout or add function by restoring gene insertion. So Derek, why don't you maybe take them through the thought process of why we've chosen the programs we have?

Yes. So we talked a little bit about ARCUS being compatible with AAV delivery, which allows us to go to these other tissues other than the liver. So that's -- that's 1 axis that we use to evaluate programs that we want to put into our pipeline, can we literally get to other tissues that other technologies can't get to. But then the other axis is because of the enzymology -- because of how ARCUS actually works, it edits through a completely different process as compared to CRISPR-CAS, zinc, TALE and the other editing technologies that are out there, and that allows us to do some genetic changes that just can't be accomplished using the other platforms. We tend to call those complex gene edits. So they're edits that are more sophisticated than just going in and knocking a gene out like you do with a CRISPR or with a base editor or a prime editor. So in looking at our pipeline, what you'll see is our lead program targets chronic hepatitis B. It's our lead wholly-owned program. The reason for that is we discovered a couple of years ago that if you target an ARCUS to the hepatitis B genome, and it cuts the genome in a particular way that only ARCUS does, what happens is the virus DNA actually gets deleted. It gets chewed up by nucleases in the cell and disappears. Well, there's nothing else out there that does that. There's nothing else out there that actually makes the virus DNA go away. Every other treatment that I'm aware of for hepatitis B, impacts the virus by kind of hitting it at some different point in its life cycle, but it leaves the virus DNA intact, and therefore, the moment that therapy is removed, as long as the virus DNA is there, it almost always comes back. So we have this thing that kind of uniquely gets rid of the virus DNA, which is pretty cool. So very interested in seeing how this completely new therapeutic approach is going to play out in the clinic. So that's one that we're pushing pretty hard. Also in our pipeline, we've got a sickle cell program partnered with Novartis. This is an in vivo treatment for sickle cell. So if you heard about Vertex and CRISPR getting their ex vivo sickle cell treatment approved, that involves taking stem cells out of a patient, gene editing them and putting them back. What we're working on with Novartis is literally delivering ARCUS directly to the patient and correcting the sickle cell mutation in the patient. That's something that because of the particulars of how ARCUS works, we and Novartis think that ARCUS is really the only technology that can do this. So again, going where the other technologies can't go. We've got an OTC deficiency program partnered with a company called iECURE, which is a gene addition program. We're adding a new gene into the genome. And we've got a number of programs partnered with Eli Lilly, the lead of which is Duchenne muscular dystrophy, which involves taking a giant piece of the dystrophin gene out of the genome. So it involves making 2 cuts and deleting a 0.5 million base pair chunk of the genome, something that we think only ARCUS can do efficiently. So that's really how we're viewing our pipeline as going where the others can't.

So Robert, if you think about it, if you sum up where we really followed our science, most gene editing today, the different technologies, all formidable, all exciting, are really going and competing to go to the liver and try to knock out. We are really looking to own area of restoring function or gaining function by gene addition, we call it insertion, or as Derek talked about, a very complex, large edit, like we do in Duchenne musclar dystrophy. But again, that's beyond the liver. And I think you see examples of that with our own organic choices, but with our partners. Lilly paid a partnership to go beyond the liver to the muscle and make a large excision. Novartis, stem cells, insert, so you're seeing a trend, and that's really what we're going to continue to follow. That's the beachhead, we believe, ARCUS technology owns.

We touched on a lot there as far as the differentiating technologies. Maybe we could double-click on DMD or sickle cell or maybe both, and just expand on what differentiates ARCUS, size ability to edit in a specific way, why do we think that those diseases are well informed for the ARCUS edits?

Yes. So Derek, I'm going to turn it over to you, but it always goes through the door of delivery and then type of edit. So with that...

Yes, sickle cell, a perfect example. So for the sickle cell program, again, in vivo, where the gene editing occurs in the body, 2 things we have to accomplish. #1, we have to deliver the technology to hematopoietic stem cells, which means AAV. There's really nothing else out there that will deliver to hematopoietic stem cells. You've got to have technology that's compatible with AAV. #2, we are adding a gene to the genome. So in order to treat sickle cell, we're introducing an anti-sickling gene permanently into the genome in the hematopoietic stem cells, requires a technology that has the ability to add genes efficiently into the genome, which is what ARCUS really does much better than any of the other platforms. So Novartis sort of looked at everything else that's out there, and they already had an ex vivo sickle cell partnership that gave them access to CRISPR-CAS. and they said, CRISPR-CAS is not going to work. What we're trying to do here, so they picked ARCUS as the technology to move forward in vivo.

And Derek taught me pretty well. If I did DMD for a minute just about the uniqueness because ARCUS is so small, like Derek talked about a practical advantage, we put 2 ARCUS, ARCUS archive, 2 ARCUS into 1 AAV and again, send it to the muscle, where we make cuts at 2 different points. We take out 500,000 base pairs. And this allows what we believe, for really a restoration of function as the gene binds back together when you take out the disease portion of the gene. So this is, again, a unique feature of going beyond the liver, being able to make 2 edits one AAV. How did I do on that one?

Perfect.

Wonderful. So we've gone a little bit in depth on sickle cell and DMD. Let's touch on hep B for a moment. Preclinical studies have demonstrated reduced S-antigen and DNA. So do you think this could be a sentiment treatment? Or would you think about combining this with immunomodulator or antiviral activity?

Great question Dr. Jantz.

Yes. So the hope is a onetime stand-alone treatment. I mentioned earlier that ARCUS is really unique, and the approach that we're taking is really unique in that it actually appears to delete the virus from infected hepatocytes. Well, no one has ever tried anything like this before, which has created a lot of enthusiasm with the approach, the KOLs love it. They really want to see what it's going to do, but we're not going to know until we get into clinic just how much we can accomplish with a single administration of the drug. Fortunately, in this case, we're using lipid nanoparticles for delivery. And one of the advantages of lipid nanoparticles is we can repeat dose if we need to. So if 1 dose isn't sufficient, we can come in with a second, with a third, however many we need to hopefully eliminate the virus. In a scenario where maybe we need to erase 100% of the viral genome copies, and even a few administrations of ARCUS is not enough to get us 100%, in that case, we could think about pairing it with an immunomodulator or some other drug that allows us to get that last few percent that are remaining to get to an actual cure.

And of course, that will remain to be seen clinically. Preclinically, we've shown the ability to move integrated disease S-antigen as well as the cccDNA. We're going to be together with some of the world thought leaders actually this month. They're super excited to Derek's point about this approach because the thought process is, today less than 10% get what's called functional cure for hepatitis B. That is suppression of our S-antigen level. But we're talking about a potential cure where you could imagine taking nucleosides off permanently. That is the goal of the TPP. So preclinically, we've shown it, but we've got to put it into a human being now and accomplish the same. So we're excited.

Excellent. And let's switch to OTC, which should be the first in vivo nucleus to advance to CTA.

Yes. This is through our partnership. Derek put in place before I arrived, a very, very smart partnership iECURE cure, which is at UPenn, Jim Wilsons Group, which is a phenomenal gene delivery group out of there. First and foremost, I think what you have with iECURE is the longest term knockout primate data, which really helps across all regulators, including the FDA right now. But this is also would be approved this year, hopefully, and this is, again, through the operational know-how of our partners at iECURE. They're planning for the second half of this year, '24 an IND or CTA. This would be the first in vivo ARCUS accepted. This would be the first gene insertion accepted because you're taking a functional OTC gene and inserting it into the PCSK9s [safe harbor]. And then last, this might be an example of a locus point where we could continue to focus on for gene insertions. But I will ask Derek to describe a little bit about maybe OTC, the deficiency and how urgent the need is maybe just so we can let folks know this is kind of along what the FDA has asked us to start in these patient populations.

Yes. Yes. Part of the reason we picked OTC is 1 to really highlight is because there is an extremely high unmet need. This is a urea cycle disorder that is frequently fatal in infants. So extremely high unmet need and presumably, therefore, a lower regulatory bar, and we have an approach that we think is going to be curative by knocking in a transgenic copy of an OTC gene permanently into the genome.

No, that leads greatly into the next question, which is, what could 28% gene insertion mean for these patients? Would that be a functionally curative model therapy?

Great question. What does the literature tell us about OTC, Derek?

Yes. So what we know from the literature and from previous experience with this disease is if you can cure, if you can correct the OTC gene deficiency in about 5% of hepatocytes in the liver, that is sufficient to cure the disease. So you don't need really high efficiency gene correction. What we're seeing in nonhuman primates, as you said, it's about 28%. So we're actually far beyond what we would need to see in patients in our preclinical data. The practical significance of that is it gives us a lot of opportunity to go down in dose because we're more efficient than we think we need to be at the current doses in primates.

And a very important clarity point that I've gotten it from our helpers in the front row. CTA second half of this year, so is where we believe it will be accepted in second half of '23. Thank you to our peanut cataract. I think I said the wrong year.

This is coming very quickly.

Excellent. As we move to that point, discussions with regulators are obviously ramping up, and we've seen some back and forth depending on the type of genomic editing programs placed in front of the regulators. So what is your strategy as far as the regulators go? And how are you thinking about staggering once into the clinic?

Yes, Rob, I'll start us off and then I'll tee it over to Derek. But obviously, the genetic editing guidance has been clear. We want to be in areas of very high unmet need, right? OTC was a great example. I think you're seeing a lot of the gene editing companies starting in the most dire areas, some of them ultra rare. Second, I think you want to have long-term safety data, long-term safety data in primates. And that's something that this gentleman and team put in place with the iECURE deal several years ago. We also -- the other really hot topic right now is reproductive editing and germline editing. And we also think there's some potential advantages with AAV versus LNP, not that you can't deliver it both ways, we think you can, and we've just seen it totally, I think, come across the line with the FDA, which is great news for the whole field. But I will open it up when it comes to really, Derek, our regulatory strategy, maybe you could also talk a little bit about what we call rinse and repeat of the safe harbor?

Yes. Part of the beauty of the OTC deficiency program is what we're doing in this case is we're using an ARCUS enzyme that targets a particular location in the genome called the PCSK9 gene. And we are inserting new genes into that location in the genome. And the gene that we insert into that location can really be anything that we want it to be. And we've done this in monkeys with a pretty wide range of different genes. So strategically, what we can do is we can take the first program into the clinic for OTC deficiency, which has extremely high unmet need. We do expect a lower regulatory hurdle because of that. But there's no reason that we can't very quickly follow that with additional programs in which we've put other genes into that exact same location in the genome. So really the exact same therapeutic strategy that we can derisk as part of the OTC program, but then potentially move into areas of, say, lesser unmet need where we would normally expect the regulatory bar to be higher, but we've already largely derisked it via OTC.

Derek, could you add 1 thing there. Why is it -- there's other companies that are trying to do gene edition gene insertion, -- they go to many different albumin sites of the body -- why do we think we can go to just with an ARCUS 1 PCSK9 safe harbor and inserted? Could you speak to the reason of the why behind that?

Yes. So this -- again, this has to do with the particulars of ARCUS and how it works and what it does. It just -- it's a completely different enzymology versus CRISPR. And because of that completely different enzymology, adding genes is what it does really, really, really well. And in fact, the enzyme that ARCUS is based on, what it does in nature is it adds a gene to the genome. That's not what CRISPR does in nature. So because we can do this with such high efficiency, we can really think about indications where you need reasonably high efficiency of gene edition in order to have therapeutic benefit. And we don't think the other technologies are going to be able to get over that far.

I think we can go to the 1 locus spot and in certain the 1 spot. So it's exciting and it's foundational to our strategy.

How about persistent gene editing expression? What differentiated markets? And how are you thinking about all target toxicities.

Thank you for asking.

Yes. So that's actually really important. So part of this, I've talked about ARCUS being compatible with AAV. One aspect of that is when we deliver using an AAV vector, as opposed to a lipid nanoparticle, AAV sticks around for a long time. So it's going to express our ARCUS enzyme in whatever cell we deliver it to for weeks, months, years. Something that ARCUS does that none of the other technologies do is it inactivates itself after it has made it's gene edit. And this is part of a natural sort of on-off switch that the enzyme that ARCUS is based on evolved to prevent it from off-target gene editing despite prolonged exposure in the cell. We've been able to maintain that natural on-off switch in the current version of the ARCUS technology. And because of that, we can express an ARCUS enzyme in an animal and a cell literally for years without having to worry about off-target editing accumulating over time. And this has really been borne out in a long-term non-human primate safety study that we've been conducting with Penn, and we started way back in 2017. So we gave an AAV vector encoding an ARCUS enzyme to a bunch of nonhuman primates in 2017, and we've been following them for the last 6 years to ask this question, what happens if you express an ARCUS enzyme for 6 years in a nonhuman primate? And the answer is, well, the gene edit was made way back in 2017. We knocked out the gene that we were trying to knock out. Since then, it doesn't look like anything at all has happened. So it looks like despite prolonged exposure of the liver to ARCUS, we're not seeing any introduction of any kind of additional edits on target or off target over time?

Robert, if we could have 1 more minute on safety. Derek and I got excited when we started on the practicality of the size and ability to deliver and the propensity of what this tool wants to do at jeans. Derek, could you talk a little bit about the unique you talked about homology direct cut to repair, a unique type of repair that ARGUS does versus a CRISPR-CAS. Could you talk about the unique cut, and what the oligo tagging has done for specificity to really ensure no off-target or no consequential off-target?

Yes. This has actually been important for our regulatory strategy, something that I could have touched on earlier. Because of the way that ARCUS cuts the DNA, it leaves a particular type of scar behind in the genome that we can detect after the fact. And that's whether it cuts an on-target site in the genome or if it cuts an off-target site in the genome. And we can use that scar as a way to detect off-target editing made by an ARCUS enzyme. It just gives us a much more sensitive way of looking for and detecting off-target gene editing. Well, the regulators really, really like that because it doesn't give us the same blind spot that some of the other editing platforms have with respect to identifying off-target gene edit. We can find it, and you can't fix the off-target gene editing that you can't find. So typically, once we identify it, we're able then to refine our ARCUS enzyme to eliminate the off-target editing, which regulators have been very appreciative of in our extensive dialogue with them, largely in conjunction with our CAR T programs.

Well, gentleman, this has been wonderful. As you're going to hear the applause next door, we're quickly running out of time. So Michael, maybe in our final moments, can you walk us through the key 2023 catalysts for Precision?

Well, first and foremost, thank you for your attention. Thanks for having us today. I think the catalysts you see right now of our -- still our dual platform company is, first and foremost, we've got in around the May time frame an update from our CAR T platform. that again is ex vivo application of ARCUS, and we'll hopefully be coming forward to you with a data package that says we've locked what we believe is the final dose to move forward to a Phase II pivotal. We'll speak to the FDA about that toward the midpoint of the year, assuming the data that we get in this last cohort holds up, #1. I think #2, Derek has talked to you about the second half of '23, which is through our partner's hands, we could see the first CTA approved for in vivo ARCUS gene insertion in the OTC program. And then I think, in '24, and this is the real '24, not the 1 I talked about before, in '24, our first organic program, you will see an IND CTA for HPV. So these are some exciting times. There's some more preclinical data will show what some congresses we haven't announced yet this year, but you could think about things like high insertion efficiencies and being able to deliver gene editing technologies where others cannot go today. So these are some of the real highlights of this year. We will have 1 more major milestone at the midpoint of the year on the back of the CAR T data. which is our R&D Day. We've announced in about the middle of the year. What we'll do with R&D Day, we'll not only give updates and draw from the updates of our CAR T platform. More importantly, we'll unveil some of the last pieces of our in vivo organic pipeline. As you can imagine, it will be around gene insertion in some of those areas that we believe we can own. We've got the Lilly program with DMD. We've got the Novartis programs with sickle cell, but we want to talk to you about some more organic programs beyond just HPV, possible gene insertion programs for Precision.

Thank you very much.

Thank you for having us.