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

Thank you for standing by. Hello, and welcome to the Precision BioSciences Business Update Conference Call. I would now like to turn the call over to Naresh Tanna, Head of Investor Relations. Please go ahead, sir.

Thank you, Dustin. Welcome to Precision BioSciences Muscle Program Update. Thank you all for joining today. I'm joined today by Michael Amoroso, President and Chief Executive Officer of Precision BioSciences. I'm also joined by Dr. Cassie Gorsuch, Chief Scientific Officer; and Dr. Russell Butterfield, Director for the Center for Gene Therapy University of Utah, School of Medicine and thought leader in the field of Duchenne muscular dystrophy. Also available during Q&A are Jeff Smith, our Co-Founder and Chief Research Officer; Cindy Atwell, our Chief Development and Business Officer; and Alex Kelly, our Chief Financial Officer. During this morning's call, we may make forward-looking statements. I would invite you all to review our 10-Q, which was published today. The 10-Q includes risk factors that could cause actual results to differ from any forward-looking statements disclosed today. I'd like to now turn it over to Michael Amoroso.

Thank you, Naresh. And good morning, and thank you to our investor community for joining us today. We're excited to share today's updates. 2025 has been a fast start to Precision with our first in vivo clinical validation. First, in our wholly owned HBV program, chronic hepatitis B, the first design to eliminate the root cause of hepatitis B by ARCUS mediated viral elimination. We shared a safety update at this meeting, supportive of our repeat dosing approach and communicated earlier this year, mechanistic proof of antiviral activity at our lowest dose level. In addition, to our partners at iECURE, an ARCUS-mediated gene insertion program in neonatal patients with OTC deficiency, a complete response with strong safety was communicated earlier this year. Yesterday and after sharing some very exciting proof-of-concept data showing preclinical evidence of corrected human dystrophin expression, leading to functional outcome in our disease models. We announced that PBGENE-DMD, our clinical stage candidate for Duchenne muscular dystrophy will now be our second wholly owned program. Today and shortly, Cassie will take you through a deep dive on why we are so excited about the unique approach that Precision employees with PBGENE-HBV -- PBGENE-DMD, excuse me, our clinical candidates. PBGENE-DMD is designed with 1 main criteria and goal in mind, providing a safe and durable muscle functional improvement to the majority of patients with Duchenne muscular dystrophy. This novel mechanism is designed to correct the most common hotspot region mutation that most children are afflicted within this disease making a correction to enable the body's native dystrophin to produce functional protein. In addition, this approach shows exciting data from yesterday's preclinical presentation at lower dose levels of AAV, where gene correction does not rely on constant expression. Today, Duchenne muscular dystrophy has the highest of unmet needs with few treatment approaches and limited functional muscle improvement benefit over time. We are working closely with the FDA and global regulators to rapidly advance our program to the clinic, utilizing, of course, established and novel biomarkers that must be linked to functional improvement as this is the solution and innovation that patients need. Today's options are several microdystrophins and exon skippers. And you will see that the current treatment options, while a step forward are not yet accomplishing long-term muscle functional improvement. We believe an ideal therapy must do exactly that and a correction in the human dystrophin gene is foundational in accomplishing that. Cassie will do a deeper dive walking you through our approach in a few moments. In 2025, we will complete our preclinical IND-enabling work, and our study design will be as follows with updates to come. Of course, we will use the novel biomarkers established with the FDA and many of the functional improvement markers for endpoints in this disease. A Phase I/II study design followed by expansion once we establish a therapeutic index will be a clinical approach we employ in 2026 when we'll expect data. Finally, today, global Duchenne muscular dystrophy remains an endemic, about 300,000 to 400,000 patients globally a year, 20,000 births. And in the United States alone, that's about 15,000 patients with 550 births each year. Innovation is poised in this landscape as necessary for patients. As you can see, the growth projections of the Duchenne muscular dystrophy market over the next years to come. Most importantly, those numbers represent patients with the highest of unmet need who need solutions, who need functional router. With that, I will turn it over to Dr. Gorsuch. Cassie, please.

Thank you, Michael. Michael has shared with you the many reasons we have prioritized the acceleration of our DMD program. Now I would like to spend some time diving into our approach and some of the exciting data we have generated thus far to give us confidence as we advance this program. Slide 12, please. First, a quick introduction to DMD. Duchenne muscular dystrophy is a genetic disorder resulting in progressive muscle degeneration and early death. While only a subset of patients experience brain involvement and cognitive impairment, all people with DMD suffer from progressive muscle loss of skeletal muscles, eventually resulting in loss of ambulation. Patients with DMD eventually succumb to the disease either from cardiac failure or pulmonary insufficiency in the second or third decade of life. As Michael mentioned, the unfortunate reality here is that the current treatment options are limited, and there remains a need for therapeutics that offer curative potential. Slide 13, please. DMD is caused by mutations in the dystrophin gene that prevent production of the dystrophin protein. On the left side of this slide, you can see a schematic of a healthy dystrophin gene with each of the gray boxes indicating 1 of the 79 exons that encode this protein. The shape of each of these boxes indicates the reading frame, which must match perfectly like puzzle pieces. When the gene is functional, dystrophin protein is made and can serve its role as a scaffolding protein for many other proteins to bind to it and protect the muscle from damage. Dystrophin is absolutely essential in cardiac and skeletal muscle for muscle maintenance and repair following injury. In the case of DMD, mutations in these exons prevents production of the dystrophin protein. An example of a deletion of exon 50 through 52 is shown here on the right. As you can see, exon's 49 and 53 do not fit together, indicating a disruption in the reading frame and the inability to produce dystrophin protein. Without dystrophin, the muscle degenerates with muscle mass being replaced by fat and fibrosis. While DMD is caused by a number of mutations throughout the gene, up to 60% of patients have disease-causing mutations within Exon's 45 to 55. This region is known as a hotspot. Slide 14, please. Our approach with PBGENE-DMD is designed to provide a durable functional improvement for patients with mutations in the hotspot region of the gene. Here is how PBGENE-DMD works. A single AAV encodes 2 ARCUS nucleases that have recognition sites in the introns surrounding exons 45 to 55. After the ARCUS nucleases generate their compatible overhang cuts, the hotspot region is excised, restoring the body's ability to produce a near full-length form of the dystrophin protein with known functionality in humans. This protein retains the vast majority of the natural functional domains and can serve as that scaffold and shock absorber within the tissues. Next slide, please. ARCUS is uniquely positioned for DMD gene editing due to its unique features that set it apart from other gene editors. First, the way in which ARCUS nucleases cut DNA is fundamentally different than other editors. The overhang cuts that are generated by the 2 ARCUS nucleases contain complementary base pairs which we know promotes the reliability of the relocation. We have found that the vast majority of edits with PBGENE-DMD contain the perfect relocation of the 2 ARCUS binding sites promoting safety and efficacy of editing. The second advantage of ARCUS is the size. Because ARCUS is so small, we are able to package all of the components necessary for this 45 to 55 excision into a single AAV. This is incredibly important as we know that high doses of AAV which would be necessary for 2 or more AAV system can pose safety issues. Finally, ARCUS is a single component editor, meaning the DNA recognition's ability and the catalytic activity are integrated into a single protein. Because it is an all-protein system, we have utilized protein engineering to ensure that 2 nucleases used in PBGENE-DMD have complementary kinetics to drive high-efficiency gene excision. This type of coordination is possible because of the all protein nature of our nucleases. For all of these reasons, it is our view that ARCUS is uniquely positioned to deliver safe and highly efficacious editing for DMD. Next slide, please. As Michael mentioned, PBGENE-DMD is designed to provide durable functional muscle improvement. We believe this is made possible through the novel mechanism of PBGENE-DMD, which corrects the human dystrophin gene resulting in a functional dystrophin protein. And of course, we have designed PBGENE-DMD with safety top of mind and are excited by the efficacy we have observed using lower doses of AAV. Next slide. I'd like to spend some time now walking through the preclinical data, demonstrating the durability of functional improvement over time. Slide 18. With the goal to look at durability of functional effect after PBGENE-DMD treatment, we have conducted a long-term mouse study out to 9 months. Here, we are using an in vivo assay to measure the maximal force output. In this graph, force is shown relative to untreated disease animals, which are shown here in light gray on the left. You can see in the positive control of a healthy non-disease mice, as you would expect, there is a significant difference in force output at each of the time points compared to the DMD mice. When you look at the mice treated with PBGENE-DMD, you can see that at both dose levels, we see a statistically significant increase in force output at 3 months, and the force output actually increases out to 6 months and then is maintained up to 9 months. This is a similar trend in what you see in the healthy animals. These treated animals have forced outputs up to 93% of the healthy control mice, and we believe these data demonstrate the potential long-term durability of PBGENE-DMD as we look to the clinic. Slide 19. One of the contributing factors driving muscle improvement over time is the fact that dystrophin protein is actually increasing between 3 and 9 months in these treatment with PBGENE-DMD. Here you can see that across both cardiac and skeletal muscles, the naturally produced near full-length dystrophin protein that is generated after PBGENE-DMD editing increases over time in each of these tissues, potentially due to the ability of PBGENE-DMD to edit satellite cells, which I'll show you momentarily, and the fact that this larger protein is incredibly stable and may actually accumulate an abundance over time. Next slide, please. While the amount of near full-length dystrophin protein is important, the number of myofibers expressing that protein is also important. Here, we are looking at a section of the calf as an example, to see the type of dystrophin expression we've observed using immunofluorescence within the tissue. As you can see, there is broad and substantial amounts of dystrophin protein being produced after PBGENE-DMD treatment, which has resulted in improved tissue architecture as can be seen with the laminin staining in purple. When you compare the healthy and diseased laminin staining, you can see the tissue has really deteriorated in this disease model. The PBGENE-DMD treated mice show a very similar myofiber pattern to the healthy animals. Next slide, please. As I mentioned earlier, the ability to edit satellite stem cells is essential for durability. Satellite cells are the resident stem cells and skeletal muscle and are essential for muscle regeneration. Satellite cells can divide into myocytes, which then fused with the myofiber to allow for tissue maintenance. In DMD where myofiber degeneration is continuous, editing satellite cells is absolutely essential for long-term durability of muscle function improvement. Slide 22. When we look within the tissue of PBGENE-DMD treated mice, we have consistently observed the ability to edit Pax7+ cells. Pax7 is a marker for satellite stem cells. As you can see here in this representative image, we've used RNA scope with a probe that recognized Pax7 shown in blue and another probe designed to recognize the splice junction between exons 44 and 56, which would indicate PBGENE-DMD editing, that probe is shown in purple. Here you can see multiple examples of Pax7-edited cells after PBGENE-DMD treatment. This is important for a number of reasons. The literature has suggested that the dystrophin protein may actually play an essential role in the ability of satellite cells to not only contribute to new myocytes, but also to maintain their pluripotent satellite cell pool within the tissue to regenerate new satellite cells. The ability to edit these cells and restore the dystrophin protein within them may confer a competitive advantage of the edited satellite cells, increasing their abundance and contributions to myocytes over time. Next slide, please. The ability of PBGENE-DMD to drive durable functional improvement is due in part to its unique mechanism of correcting the DMD gene of the root cause and the resulting dystrophin protein that is made. Next slide. We've already discussed the mechanism of PBGENE-DMD, but I'd like to highlight an important aspect regarding the use of AAV. While both PBGENE-DMD and microdystrophin gene therapy is utilized AAV, the role of the AAV is quite different. For PBGENE-DMD, the AAV delivers the ARCUS nucleases, which then correct the dystrophin gene and allow for a naturally expressed near full-length dystrophin protein from the endogenous gene. Because the dystrophin protein is being expressed from the human genome, this approach does not require the persistence of the AAV genome. Just enough AAV needs to be delivered in order to generate the edit and then the dystrophin expression is maintained even if the AAV genome is lost to cell division or AAV genome silencing. In contrast, microdystrophin gene therapies utilize the AAV to deliver the synthetic microdystrophin gene. This mechanism requires the persistence of the AAV genome in order to continually express microdystrophin which has really driven the trend of pushing to higher doses of AAV to try to allow for a longer-term persistence of that AAV genome. And since today, we cannot redose AAV, this has been the strategy of the microdystrophin gene therapies. In our view, it is the unique mechanism of PBGENE-DMD with a different payload within the AAV that allows for lower doses of AAV for therapeutic benefit. Slide 25. Another important differentiator between the PBGENE-DMD approach and the synthetic microdystrophin approaches, is the resulting protein that is made. Microdystrophins are synthetic highly truncated versions of the normal dystrophin protein. When you compare these to the PBGENE-DMD generated functional dystrophin protein, you can see this protein is much larger and retains the majority of important protein domains. As you can see from the quote here, we have known even from the early days of the microdystrophin literature that the truncated protein, even at high levels is not fully functional. Next slide, please. In contrast, the functional dystrophin protein that is made as a result of the PBGENE-DMD gene correction has known functionality in humans. We know this protein is functional because it occurs in a subset of Becker patients who have the Del45-55 genotype, which creates the exact same protein as PBGENE-DMD. Individuals with Del45-55 genotypes have a very favorable overall prognosis with mild or even no symptoms. From the literature, we expect that as little as 5% of this version of the dystrophin protein may be needed for therapeutic benefit. Slide 27. If we revisit the protein data from the mouse study we discussed earlier, you can see across all of the tissues shown here, we have far exceeded the 5% threshold in cardiac and skeletal muscles with up to 25% dystrophin protein expression in the calf. Slide 28. As I mentioned, individuals with the dystrophin Del45-55 genotype have a very good prognosis, especially compared to DMD patients. As you can see here, these individuals often live into their 60s or 70s. Most of them are ambulatory throughout their life with normal muscle function and respiratory function. While there are a subset of individuals with this genotype who have cardiac involvement is a manageable through standard medications. So it's really our goal with PBGENE-DMD to bring this transformative improvement in both lifespan and quality of life to patients living with DMD. Next slide. Of course, we have designed PBGENE-DMD with safety top of mind. Let's talk through the various steps we've taken and plan to take to ensure safety of PBGENE-DMD. Slide 30. As I mentioned before, due to the unique mechanism of PBGENE-DMD that does not require the persistence of AAV, we do not expect to need to use high doses of AAV. To correct the dystrophin gene, we need just enough AAV, which we think will prevent the need to really push the dose. Additionally, we have developed the capability to produce very high-quality AAV at Precision. With a very high full to empty capsid ratio, we know that we are then delivering productive capsids, not in excess of unproductive viral particles. Further, we are working with experienced world-class teams and our Scientific Advisory Board and with our clinical sites who have extensive experience with AAV. Through all of these measures, PBGENE-DMD has been designed with safety in mind. Slide 31. If again, we revisit the mouse study that we discussed earlier, you can see here that even at the lowest dose of AAV tested in the study, we had substantial and significant force improvements that looks similar to the higher dose. It's this data that really gives us a lot of confidence that just enough AAV is needed for PBGENE-DMD in order to do its job to correct the dystrophin gene and allow for the functional dystrophin protein expression. Next slide. To summarize, PBGENE-DMD has been designed with a desirable target product profile in mind. Our goal is to provide hope for people living with Duchenne muscular dystrophy by offering a unique mechanism that has shown promising preclinical data thus far. We are excited about the potential of PBGENE-DMD to not only stabilize function, but actually improve muscle function durably over time. The single administration approach corrects the human dystrophin gene, resulting in the natural production of a near full-length protein that has known function in humans. We have shown the potential for PBGENE-DMD to reach cardiac and skeletal muscles, even with lower dose AAV. It is for these reasons that we believe PBGENE-DMD has the potential to provide best-in-class therapeutic profile for patients with DMD. Next slide, please. Now I'd like to welcome Dr. Russell Butterfield, the Director of the Center for Gene Therapy at the Utah School of Medicine. Thank you, Dr. Butterfield so much for joining us today.

Good morning.

I think I'd like to start, if you could please share with us a little bit about how your experience has been interacting with patients with DMD? And share a little bit about the disease trajectory.

Well, I've been taking care of patients with muscular dystrophy for more than a decade now. And I'm getting older as they get older. So it's been quite a journey to work with some of these kids who are now adults, young adults planning their lives, but having known them for -- since they were 4 or 5 years old. And when I started in this game, we had no therapies besides oral corticosteroids, and those come with a raft of side effects, and we do our best to try to manage them. And in the last really decade, but especially in the last 5 years, we've seen so many different opportunities to do clinical trials to engage our patient community to offer them hope for something that can slow down progression of this really devastating disease. And we're starting to see the fruits of that. That's really exciting.

Thank you for sharing that perspective. I think that leads me right into the next question is, where do you think we stand today in terms of the therapeutic landscape with current microdystrophin and exon skippers? And what do you think patients are looking for that's not currently being offered to them?

Yes. Well, we have some progress, and I think the microdystrophins are interesting and the exon skippers are interesting, but we can do better. And what we see in the data is that we struggle to meet end points, and we struggle to find a space where I can demonstrate clinical efficacy in a clinical trial. And to me, that suggests we can do better in the drugs. And I think this is an opportunity to do better, and we desperately need it.

So how do you view the potential role of PBGENE-DMD in the treatment paradigm?

Well, I think there's some really unique advantages in terms of well, 2 different things. First, the edit that's made is a known dystrophin. And what we see in microdystrophin is that we don't have a good read on their clinical efficacy regardless of the expression level, we just don't know how well they work. And we've seen that play out over the last couple of years. But for this 45 to 55 edit, we have lots of examples of individuals with Becker muscular dystrophy to have that mutation. And so we have a lot better sense for how that dystrophin works. And it works -- it's not perfect, but it works pretty well. So that's -- it's a really important distinction. And the other one is that the editing in satellite cells, which can provide durability. And I think some of the data that you presented show that we see better dystrophin expression between that 3 month and 9 months space, and that's really impressive because that's not always been our experience with microdystrophins.

So what do you think excites you most about the potential for PBGENE-DMD as it heads into the clinic?

I think that bit of durability and that better dystrophin. And that's a thing that I think we made assumptions about microdystrophin that we're probably not based in reality that it would work just as well as a full-length dystrophin. And I think that we can do better and this is better.

Yes. We are also really excited about those differentiators for PBGENE-DMD. Now let's turn a little bit to AAV safety. We are really encouraged by the preclinical data demonstrating that lower doses of AAV may be effective for PBGENE-DMD, so how do you think about that given the clinical experience with AAV? And how do you think about managing safety with AAV gene therapies in general?

This is a really important topic that I think about every day is safety and AAVs. I think we're new at this. Everybody is new at this, and understanding safety is really critical. And I think of 2 things that connect to safety. One is just the overall dose, how much AV are we putting in. And that's, I think, if we can use lower doses by whatever means possible and still get the same transduction efficiency, still get a good amount of dystrophin, we're going to have safety. That's probably the most critical one is the dosing, I think. Some of it is just our own experience treating patients with AAVs and we've had accumulating experience both in Duchenne and SMA and now other therapies that are coming on board. So safety -- it's tricky. It's always tricky and we sort of learn about the different capsids and the different nuances of each of these things over time. But getting the dose down, I think, is critical.

And how do you think about the role of immunosuppression regimens for managing AAV gene therapy safety profile?

Yes, that's a good question. We're learning a lot about that, and we haven't done a lot of clinical trial works in setting up an ongoing clinical trial, and there's a lot of investigation right now about what can we do in a more targeted approach than just high dose oral corticosteroids, which is sort of the plan right now. That's a fast-moving field. And I think we're learning really quickly about regimens like rituximab and sirolimus, for example, that have been studied at the University of Florida, which seemed to do better, but also perhaps avoid some of the side effects of steroids. Steroids always an issue for boys with Duchenne, because they have chronic steroid use, not just intermittent steroid use as we dose. So these are issues that we're learning rapidly in terms of both prevention of predictable serious adverse events, but also treatment of this when they arrive.

Yes. Thank you for sharing your perspective on that. I think maybe the last question is, how do you think patients will feel about a gene editing approach with PBGENE-DMD?

I think the essential features will be very compelling to the patient community. And that in terms of durability, the ability to transduce satellite cells in a permanent way that can be propagated. That's a big deal. And I think the end result of a better dystrophin is also a really big deal. I think patients are wanting those 2 things. and they'll see the value there. I see the value. It's a critical step. It's critical next step to get to a better dystrophin.

Well, thank you very much, Dr. Butterfield for sharing your thoughts with us and spending some time with us this morning. Now I'd like to hand it back to Michael Amoroso, to talk through next steps.

Thank you, Cassie, and thank you, Dr. Butterfield. Greatly appreciate it, and very, very interesting conversations. So let's talk about exactly where we're at today with DMD. First, I think you've heard today what we believe is a very compelling path to follow. You've heard us talk about onetime corrective therapies for human dystrophin gene. You've heard us talk about editing satellite cells. And I hope if you heard us talk about anything, a very defined regulatory path, but 1 that must link biomarkers to muscle functional improvement. We are all very excited by the first of its class. We've seen disease models before. We've not seen these time points 6 and 9 months out where we're improving and sustaining functional improvements. This has us poised for success we believe, and why we're urgently pushing this program forward into the claim. Thus far, where we're at for our development on PBGENE-DMD and what you can expect next. Our clinical candidate is finalized. We have had 2 interactions with the U.S. regulators. First, our Interact meeting where we've had complete alignment on our analytical path for on and off targeting, paramount for safety when you have a gene-edited product as well as we recently had our pre-IND feedback to understand exactly what a trial design could look like in the U.S. with the FDA. We are currently in toxicology, our final pre-IND-enabling step and we are also simultaneously manufacturing drug product. Our process design and engineering work is near and complete, and we will be moving to our final clinical trial material later this year. That takes us to a targeted date of filing a CTA and/or IND. We have not yet announced exactly what markets will start our clinical trial. We have talked to you a lot about our interactions with the FDA and we are targeting to file our regulatory CTA and/or IND by the end late 2025. That would have us into the clinic in 2026 where we believe that will be an important time frame within Precision's runway to prove clinical data with PBGENE-DMD in 2026. We will continue to give you updates throughout the year on our IND-enabling work as well as our clinical design as we become more near to the clinic. That's what it means for PBGENE-DMD as our second program, organic, wholly owned for precision behind our HBV program. Let me tell you what it does not mean, PBGENE-3243 our mutant mitochondrial DNA elimination program has also had wonderful proof of concept showing therapeutic heteroplasmy shift for patients with these -- with this 3243 mutation and these terrible debilitating muscle myopathies. We are equally excited to date about this program. We are pausing this program for fiscal reasons to make sure that we have the resources, the people to fully push program 1, HBV and Program 2 DMD to Phase I clinical readouts. But what we are not pausing is our commitment to the patients with mitochondrial disorders. This program is ready to go into final toxicology stages. And once we complete our Phase I ELIMINATE-B trial in HBV and enter the clinic in DMD, it is our plan to commence activities again for PBGENE-3243. This is not a lack of belief in our program, but what the 3243 program, there is still some work to do clinically, such as establishing clear biomarkers as we enter for endpoints in this real nascent disease landscape. We want to thank the patient groups and our investigators and partners for all the work we've done with PBGENE-3243 in mitochondrial disorders, and we want to again reiterate our commitment. What we also thought it was very important today to provide clarity of why and when we will commence operations against 3243. We will give more updates as appropriate later on this year and into next. Next -- so finally, where this leaves Precision. We're currently in the clinic with our ELIMINATE-B trial, PBGENE-HBV, chronic hepatitis B, impacting 300 million patients around the world. We have given some updates last week at our EASL Congress on cohort 1, our lowest dose level, and the repeat safe dosing, very important for us to establish and be able to eliminate all viral DNA impacting these patients, the only therapy designed to go with the root cause of HBV. We will continue to give you updates on data. Actually, this Friday, we'll show our Cohort 2 data, some safety updates. And later in the year, as we complete all administrations in a dose level, we'll start to share complete antiviral activity. So you can expect from us ongoing updates clinically throughout 2025 from the ELIMINATE-B trial. Second, as we just discussed, PBGENE-DMD, now our second program. We'll complete all IND-enabling activities and CTA-enabling activities this year, and we will target filing at the end of this year. We look to start in the clinic as early of '26 as we can to make sure we have some impactful data for these patients in 2026. Updates again will continue to follow as we achieve each of these steps. In addition, the iECURE-OTC program, where we announced -- our partners announced actually a complete response in one of these children earlier this year. That study is still accruing. Our partners will give you operational updates there, but I know Joe and team have talked about more updates later this year and into 2016. What that means for ARCUS, three, gene-edited in vivo programs. Over the next 18 months, throughout 2025 and '26 will continue to yield data, most importantly, for patients afflicted with these diseases as well as continue the clinical validation of ARCUS. Our cash runway has been discussed into the second half of '26, and we believe within our runway, we absolutely can meet our Phase I clinical requirements and data readouts. That being said, I will now open it up to the operator to open up Q&A from our investor community. Thank you again for joining us this morning and thank you to Cassie and Dr. Butterfield. Operator, we can now open for Q&A, please.

[Operator Instructions] our first question comes from Debjit Chattopadhyay from Guggenheim.

As you think about your CTA or IND, maybe this is a premature question. But are you planning any baseline MRIs to exclude patients with fat and fibrosis. I'm trying to understand who the ideal patient is to position the product for initial success?

Michael, do you want to start?

Yes. Yes. Debjit, I think we've not gone deeply. We are working with our clinical partners like Dr. Butterfield here, we have our SAB. We have not necessarily unveiled exactly what the inclusion/exclusion criteria will be in our Phase I just yet. But Dr. Butterfield, is there anything you would add about Debjit's question here, please feel free.

Yes. I think likely, the age range for the study will be a bit younger where you wouldn't be excluding patients based on MRI criteria, although MRI criteria can be a really nice readout to clinical efficacy.

Got it. And -- how are you thinking about the dose on the therapeutic window here? I know you sort of talked about maybe potentially lower doses, but what could those -- what could that dose range be? Any clarity would be helpful here.

Yes, Debjit, I'll tip it off to Cassie here in a moment. But I think one of the major hopefully takeaways from this week's data is with a corrective gene editing approach. We do not need to stick around with an AAV for expression a long time. We need to get to the correct muscle cell edit and move off. And I think what you're seeing in the functional data, at least in the humanized mouse at 3.6 and now 9 months is the difference between 3e13 and 1e14 bulk doses tested, we didn't see a difference in improvement there. So the goal here is just to get to saturating levels from a gene editing standpoint. Cassie, can you please add to that, some of your thoughts? And I think this is probably a good proxy Debjit of what you will see in our toxicology work and in the clinic. Cassie, please go ahead and feel free to add.

Sure. I'll echo that we're really excited so far with the mouse data that we've been showing very good efficacy even with lower dose AAV. I think one important step that we are still in process right now is looking at species transduction similarities or differences as we move between mice and primates. And so that will also be an important factor as we think about what the clinical starting dose level is. It's too early to say right now, although we had some preliminary data suggesting pretty good continuity between species in terms of overall transduction. And so I think it's too early to say where we'll be for our starting clinical dose, but we're excited by that potential of lower dosing as our starting dose given the mouse data we reviewed today.

Yes, Cassie, the only last point I'd just like to make for your wonderful questions. Look, safety is paramount for us, but we feel pretty good. We think, again, the field is moving forward. We know today we need viral delivery to muscle. We like to give the least efficacious doses but between the immunosuppressive regimen, the clinical experience, very, very high-quality manufacturing. We feel very good that PBGENE-DMD will be the right therapeutic index for these children, and that's safety and efficacy.

Got it. And 1 last question, maybe I'll put you on the spot here a little bit. While the program is clearly differentiated, how are you thinking about neutralizing antibodies because you are still behind Sarepta, Solid, REGENX, et cetera. I believe substantial portion of the prevalent population is likely to get AAV gene therapy. So how are you defining the commercial opportunity if this program becomes successful clinically?

Yes. Debjit, I appreciate that question. We take it very, very seriously that in today's landscape for Duchenne, when you send a viral vector product, we want to make sure the capsid delivers the best possible payload to get the therapeutic index we want. So we know right now the newly incident population, for example, I spoke about today in the U.S. alone, somewhere around 500, 550 patients a year. We will absolutely have some level of screening for antibodies. This will be important because today, as you know, patients who have already received AAV therapies may not be eligible here. We talk about in the development landscape, having these antibody clippers and hopefully being able to revisit therapies, conventional gene therapies with an AAV even though muscle turns over slower than, for example, liver cells, actually, Duchenne turns over faster than the nonafflicted. So we take it very seriously that when you provide an AAV gene therapy like PBGENE-DMD, you have to have the right payload and there will be a screening process. And right now, we'll probably be starting in the incident population.

Our next question comes from the line of Maurice Raycroft from Jefferies.

This is Farzin on for Maury. So maybe more on the historical thing. Like down this time last year, Lilly returned the DMD program back to you. Maybe talk about how the preclinical profile has changed since then? And how much more optimization of the ARCUS nucleases was necessary to give you -- to get it to this point to move the program forward?,

Yes. Farzin, I appreciate the question. I will turn to Cassie in a moment. I will say a couple of comments, very, very appreciative of Lilly. They were a great partner. Remember, Farzin, one of the major reasons we took back DMD is as we exited the ex vivo -- the ex vivo marketplace of CAR-T, we were now solely focused on our main -- our main muscle here at Precision, which is in vivo editing. The Duchenne muscular dystrophy program, as we've discussed in the past, is a very important part for that. Right now, our North Star is highest of unmet need diseases and we felt this definitely checked that box. The work we did at Lilly was foundational because we were able -- the reason we're at technology today is because much of the proof of concept work, much of the safety work, much of the capsid development is shared from some of the work we did there as well as with our mitochondrial program, right? That's also delivering to muscle. So I wouldn't look at it as much as an optimization for us versus a continuation. And that's the truth here. I think I would look more about some different business priorities of why we were able to take this program back from our Lilly partners. That being said, Cassie, is there anything you would add to the scientific work we did together and how the PBGENE-DMD final candidate exists today from really our early partnerships?

Yes. I would just say that I think the Lilly partnership was really fruitful, great scientific collaboration for this PBGENE-DMD program. And really, it was contributions from both teams that really led to the nuclease candidate identification. Since we've had the program back, there has been some additional work, primarily on the manufacturing side, to really improve the transducability of the drug product. And that has really leaned on the experience of the PBI CMC team that was really gained through the 3243 program and has direct applicability for the DMD program. And so I think it's really a culmination of a lot of work from our time while this program was in partnership with Lilly and then as well as some of the time that we've had it back, and it's been really exciting to see the data continue to grow and to really give us a lot of excitement and confidence as we've now prioritized this program.

Yes, Cassie, that's an excellent point. Basin, the last thing I would share with you is I think the absolute go decision for us was the last piece. We knew we had the proof of concept. We felt we had a very distinct and differentiated approach. We know that there's patients walking around with this human length dystrophin that are, in some cases, not phenotypical, living into their 60s, 70s. To us, that's the best model in the world. But really, the final piece for us and the work we did after the handoff from Lilly was now the 9-month durability data in the diseased mouse. That was really humanized mouse, of course. But that was really important for us. We've seen functional improvements. We've never seen improvement and durability, sustained improvement over time. I think that was the final check in the box for us, Farzin to give the goal. And that was the work done at Precision once we took the program back.

Got it. That makes sense. And then the other question is on the editing satellites so that certainly exciting for durability. But just curious that if you have done more quantitative assessment of the extent of editing that you're getting?

Yes. I'm going to turn that over to -- it's a million dollar question, Farzin, that we hear a lot, especially when we're sitting in the ad boards, I'm going to let Cassie speak on in a minute. I think the short answer is this is a qualitative assay but what is the right quantity Farzin? And the right quantity is whatever leads to the right protein expression at dystrophin levels that in the published literature are giving us functional muscle improvement. Cassie, do you want to speak a little bit to the qualitative versus the quantitative nature of some of the Pax [indiscernible]?

Sure. Yes, I think Farzin, it's an excellent question and it's definitely one we've heard before. As Michael mentioned, the assay that we're using this histology assay, the reason we like it is that you can look within the tissue and observe satellite cells where they should be located within the tissue. So you have high confidence that those Pax7-positive cells are truly indicative of satellite cells. There are other methods that are more quantitative for analyzing satellite cells, but they don't maintain the tissue architecture. And in my view, they reduce the reliability that the cells that you're actually counting are satellite cells. And so we really value looking within the tissue architecture to confirm through high stringency that we are targeting these satellite stem cells. The downside is that it is not really possible to quantitate them using this method. And so what we've relied on is the functional data. I think this is part of the reason we wanted to do a long-term durability study out to 9 months was really to examine the potential for satellite cells to contribute to new myofibers over time that could really drive increased muscle function. And that's exactly what we're observing is that over time, we see after PBGENE-DMD treatment an increase in the muscle force output compared to untreated DMD mice in some ways, similar to the healthy animals. And so I think it's really rather than focusing on various methods to quantitate the frequency of satellite cell editing, which today is an arbitrary number because nobody knows the exact frequency of satellite cells needed to have impact, we're looking at the whole picture together as a readout on muscle force. And so I think it's a good question, but we've put together our data package strategically really focused on -- with the end goal in mind of muscle function.

That makes sense. One more philosophical question. Now with the changes in leadership at the FDA, do you still believe that target endpoint-based biomarker can be used for accelerated approval?

Yes. Farzin, I'm glad you asked that question. So I think we believe it more than ever. I think, again, we're very respectful and appreciative to other partners in the industry who are working hard in this devastating disease. In no way, shape or form, we all have the same goal, and the North Star is helping these children. But Farzin, I think that we're in a bit of a hyperbolic landscape today. I think what you're hearing from the new head of the FDA in prior cancer conversations was hey, when the biomarkers are super important to get to human beings with highest of unmet need, we just got to make sure we hold ourselves, our R&D responsible that those biomarkers linked to the long-term outcome we're trying to get to in a given disease. We couldn't think that supports our story more. We are absolutely going to look at the dystrophin-established biomarker. That's part of the clinical pathway in Duchenne, but it must link -- must link to functional improvement for these children. And we think that's what really differentiates our approach. So I think it's highly in line with the new FDA.

Our next question comes from the line of Konstantinos Biliouris from BMO.

This is [indiscernible] Konstantinos. Congrats and progress. So we have a couple of questions on DMD program. So specifically on a slide that shows the maximal force output from 3 to 9 months. I was just curious because we see that the level of the force output is kind of flat from the month 6 in contrast in healthy mice, you do see like a substantial increase in the output. So just curious if that kind of correlates with the dystrophin expression, if you have tried to look at the expression of dystrophin in the 6 months? And our second question is on the dosing -- the potential dosing level in a clinical setting, again, as a follow-up question. So given that AAV-driven fatal [indiscernible] Elevidys, so would you think about passionately using a lower dose of the -- for the DMD program, for example the lower dose that you have tested in a preclinical study, which could be lower than what Elevidys has been using in the commercial setting. Can you comment on that, please?

Yes. Cassie, why don't you start off with the functional and feel free to stop the dosing category, you can kick it back to me, your call.

Sure. I can start with the dystrophin protein expression and how it correlates with functional outcomes. So this particular mouse study, what you're looking at in the slide that's shown right now on Slide 18 is the exact same cohort of mice that were measured. As I mentioned, this is an in vivo force measurement, which I think is important to point out especially if you're attempted to compare to microdystrophin force output. There are many different ways to measure force output in mice, and we think the most clinically translatable is the muscle in vivo in its location with all of its normal attachment. There is also -- there's taken approach where they dissect out the muscle and then measure force output. So I just point that out to caution against comparisons. But here, we're looking within the exact same mice because we do an in vivo assessment, we are able to measure forced outcomes over time. And so it's the exact same mice looking at 3, 6 and 9 months here. What you're looking at in the dystrophin protein expression data, which is the next slide on Slide 19 is actually in 2 different cohorts of mice. In order to measure dystrophin protein expression in mice, we had to euthanize a subset of the mice. And so we didn't take mice down at 6 months. So we don't have dystrophin protein expression at 6 months, just at the 3- and the 9-month time point. And so one of the challenges there is we know dystrophin protein expression went up between 3 and 9 months as we showed. We don't know exactly when that protein expression went up, if it was between 3 and 6 months or 6 to 9 months. However, we do know that this much larger protein, the normal dystrophin, full-length dystrophin has a very long half-life that can stick around for months. Micro-dystrophins have very short half-life, which is why the persistence of AAV is so important in order to continue to crank out additional protein. We expect that this near full-length dystrophin protein that's made from the PBGENE-DMD edit has a much longer half-life similar to that normal dystrophin protein. And so what we think we're observing here is actually an accumulation of protein, also contribution of satellite cells over time that has really led to the increase in protein expression between 3 and 9 months. What we're excited about in the functional data is that once you have that improvement between 3 and 6 months, it's maintained out to 9 months. I take your point, it's not all the way to the level of the healthy animals. Those are animals that have full-length, wild-type human 2 copies of human dystrophin protein, dystrophin gene, which creates that full length protein. And so you may have a small delta between that healthy animal and the PBGENE-DMD treated animal because of the differences in the protein. However, we're extremely excited by this muscle improvement, which, in our view, has not actually been observed preclinically before you see stabilization of the force, but you don't ever see improvement over time in that muscle force output and so we think that it's really this differentiated approach of editing satellite cells and creating this near full-length dystrophin protein the ability of that protein to accumulate over time, that's really giving rise to that muscle function improvement and then durability over time.

Cassie, could you just speak before -- I'll take the dosing question in a moment. Could you just speak really quick on the published literature, I think it's in here at some. We talked about this near full-length dystrophin. The best model in the world, we have to prove that it works as human beings. There are people living into the 60s, 70s, some of them. There's a heterogeneity in this group, but some of them who are literally walking around non-phenotypic. Obviously, that's a huge advantage versus what Duchenne patient looks like today. Can you go back to the slide we just looked at, can you talk a little bit about this protein expression level and what we've seen in the literature that we think is kind of the threshold? Because I think that's the real answer for me. You always want to see improvement and then definitely stabilization over time, but this expression level is above the levels that we're seeing in these patients that are allowing them to thrive life. Cassie, could you talk about maybe what the published literature threshold is and kind of compare to, if you will, or axis here or Y axis here.

Sure. So if you look across the published literature, we know that patients who -- Duchenne muscular dystrophy patients in general create very little to no dystrophin protein, less than 5% for sure, in the single -- low single-digit percent dystrophin protein, if they make any at all. What we have observed through looking at other types of muscular dystrophy, not Duchenne is that anywhere from above 5% dystrophin protein expression leads to phenotypic improvement, better ambulation, longer ambulation, better long-term outcomes. When we look specifically at the Del45-55 individuals, as Michael mentioned, these patients produce the exact same dystrophin protein as the protein that's made after PBGENE-DMD treatment. And so while it's largely unknown, how functional the synthetic microdystrophin proteins actually are in humans, we know that the protein that's made here after PBGENE-DMD editing is functional because of those individuals with that Del45-55 genotype. And you can see here in the slide we're looking at, we have far exceeded that 5% threshold in all of these tissues, including the heart, calf and quad and we're seeing that increase over time. And so I think it is really based on a lot of natural history from humans as well as this experimental data that we're showing here that we're really excited about this potential of this particular protein at these particular levels having therapeutic benefit for patients.

And [indiscernible], I'll take the other -- thank you, Cass, I'll take the other half of the question. First, I just want to point out one last point here. Super important that we realize we're measuring near full-length humanized dystrophin, not a synthetic dystrophin. So that's important. The goal here isn't to get a biomarker number higher. It's to have a biomarker threshold met that leads functional durable muscle improvement. To your question on AAV doses. I think you see here, what we talked about a bit here at the end of the conversation is the 3e13 did not do worse than the 1e14. And again, this goes back to the mechanism. If you look at conventional gene therapies, which is what microdystrophins are. Those doses need to be as high as possible to express over time. That is the exact opposite approach of a corrective gene editing approach. It's get enough dose there to the progenitor or muscle stem cell to make the corrective edit. And now those corrected cells can, if you will, give birth to more corrected cells. So our delivery is to get there, make the correct edit and then take the AAV out. That's the goal. So I think you see some doses here that we feel very good or within a tolerable safe range. And I won't make comments comparing other doses or other capsids and trials. Patients have different baseline characteristics. These capsids are different. These products are different. So I think what you're seeing here in the 3e13 to the 1e14th, this is something we believe with the right quality manufacturing, the right supportive care in the right clinical expert hands, we'll be able to safely deliver to patients.

Our next question comes from the line of Patrick Trucchio from HC Wainright.

Just a couple of questions for us. First, for Dr. Butterfield. Can you discuss the preclinical data that's been generated by PBGENE-DMD? How it compares to data you have seen with other modalities and how likely it is you believe these data should translate as we move ahead in preclinical and potentially to clinical development? And then for management, I'm wondering if -- how did you observe muscle fiber transduction levels of PBGENE-DMD preclinically compared to other AAV-based programs, especially in cardiac and key skeletal muscle groups and separately realizing we're looking ahead a bit here with clinical data expected in 2026. Can you talk more specifically what the key milestones are for PBGENE-DMD over the next 12 months that would indicate we're on track for that initial data? And what data would you anticipate at that time?

Okay. Dr. Michael, please.

Sure. I can speak to the preclinical data here in the sense that I think they reflect well on the translation in terms of dose and in terms of dystrophin restoration, percent dystrophin expressed, et cetera. I probably couldn't comment too much on how that relates to other products out there, because I don't think they're particularly comparable by mechanism. And I think the ability to -- and this is maybe the most important part of the preclinical data is the transduction of the satellite cells in a permanent way that can be expanded later on. So I think those are hard to compare apples-to-apples. I think the dosing at 1e13 -- sorry, 3e13 reflects well on a potential lower dose than existing products that we use in the clinic, even in approved products. So which I think usually 10e14 sort of range. So I think that likely translate -- well, there's a lot of work to be done in nonhuman primates to really get to the bottom of that. But I think that reflects well on the possibilities of a lower dose.

Yes. Cass, before I go to you and Patrick, I might ask you to reiterate some of that middle part of your question. I'll just give you confirmation here of 2025 will be spent. We're in talks now and we'll finish our talks and making our final clinical drug candidate and our filing of our submissions to the regulatory authorities. We'll look to start the clinic in '26. Obviously, we'll talk more about our clinical design at a later date. We're not -- we haven't gotten into that yet today. That's not something we've divulged yet. But what I will tell you is, you can imagine muscle biopsies will be important. Biomarker data is absolutely paramount for these patients, but it's -- we're going to be measuring humanized dystrophin that we're taking back from the body here as we correct the hotspot out and then obviously, coupling that, the key here with functional endpoints. So in '26, we'll be starting on Phase 1. And hopefully, obviously, 5-10 patients, and I don't know exactly what our patient numbers will be in '26, we need to see when we get started, gives us some really meaningful data in human being. There's no doubt about that in a disease with an incidence of -- in the U.S. alone of 500 patients or so a year. So -- and then obviously, the doses that you're seeing here will always look to recapitulate. We're always going to look at what's the least efficacious dose and be in a range that we believe is safe. Patrick, you'll need to reiterate the middle part of that question, and I'll turn it over to Cassie if there was -- I'm not sure I caught the middle part of your question.

Yes, I was just wondering if how the observed muscle fiber transduction levels preclinically compared to other AAV-based programs, especially in cardiac and skeletal muscle group?

Sure, yes, I can comment on that. In terms of the percent positive dystrophin fibers, meaning how many fibers are now expressing dystrophin, I would say our numbers are in line or better than what I've seen from some of the microdystrophin approaches. In terms of the amount of protein that's being produced, I think this is where, as Dr. Butterfield said, it almost doesn't make sense to compare or maybe I'll make that even stronger. It doesn't make sense to compare because the proteins are so different. The microdystrophins are highly truncated synthetic versions of the dystrophin gene that don't occur naturally in humans. And so we don't really know what their functionality is. In contrast, this protein has known functionality in humans that we've talked extensively about at this point. And so I think it's -- while it's tempting to want to compare this approach to the microdystrophin, the mechanism is entirely different. And therefore, I think it's important to focus on really the functional outcomes. The functional data that we've demonstrated in our view is the first time we've ever seen muscle function improvement over time versus just stabilizing functional improvement -- or sorry, muscle function. And so we're really excited about that improvement we've observed and really think that that's due to the novel mechanism and the known proteins being produced by PBGENE-DMD.

And our next question comes from the line of Matthew [Mary] from Jones Trading.

This is Matt on for Soumit. I just want to say congrats on all the progress you guys have been making with the DMD program. I just had 2 quick questions. So the first is in regard to your preclinical data. When I'm looking at the dystrophin restoration levels in the different muscle groups. It seems as though everything is looking great between the high dose and the low dose, but that low dose seems to be doing a little bit better. And then when you have the diaphragm, that's kind of where the data switches, and it looks poor. I was just wondering what your thoughts on were -- for the biodistribution of your AAV? And then looking at the max force output, and especially comparing between the 6 months and the 9 months in both doses, they're looking pretty flat lining, as we've said. But I'm wondering if that could be potentially due to the max capability of the DMD version of the dystrophin protein. So I'd love to hear your thoughts on that.

Thank you, Cass?

Sure. Yes. Thanks, Matt, for the good questions. So we did not review the diaphragm data, but it is included in the poster that was presented at ASGCT this week. And I think it's a good point that we wanted to be transparent with the scientific community on that right now with the PBGENE-DMD approach is achieving low levels of dystrophin protein expression in the diaphragm. However, we have some newer data that has come out that hasn't been included in the presentation showing the ability to transduce an edit in other important muscle groups for respiratory capacity primarily intercostal muscles, which we know contribute to pulmonary function as well as the diaphragm. And those particular muscles are showing good transduction, good overall editing. And so we are hopeful that this approach can still have therapeutic improvement for DMD patients on the respiratory capacity. In terms of the maximum force output at 6 to 9 months, I think it's a good hypothesis that is frankly difficult to prove or disprove and so I don't have exact data I can point to in terms of the ability to show improvement between 3 and 6 months and then durability between 6 and 9 months, but we are overall excited again about the improvement that we're observing and the fact that we are seeing durability of the effect out through 9 months, I think, really speaks to the potential durability. If you think about mice in the lab, they don't typically live past 2 years. And so a 9-month study is really quite a long study in mice. And so we are overall still very encouraged by the improvement in muscle function. And I think as we've mentioned, we have some additional ongoing nonhuman primate studies to really shore up the translatability as we move into the clinic.

Thank you. Operator, do we have any questions?

No, sir, there are no further questions.

Okay. Well, I thank you for the wonderful questions and the engagement today. I think they were very thoughtful questions. And hopefully, that's a sign that you're as excited as we are with this differentiated approach moving into Duchenne's, which desperately needs solutions for patients. So thank you to the team. Thank you to Dr. Butterfield and our KOLs who have -- our key investigators who have continued to guide us over the last year as we made progress here to get ourselves to almost the clinical stage here, final steps to prepare for clinical stage. Please stay tuned for some of the data we'll be showing on Friday with our PBGENE-HBV program here at the ASGCT conference and you'll continue to get updates throughout the year. So thank you very much. We appreciate your participation and look forward to giving you continued updates. Take care, everybody.

The meeting has now concluded. Thank you all for joining. You may now disconnect.