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

Okay. Good morning, everyone. Welcome back to H.C. Wainwright's 27th Annual Global Investment Conference held on September 8 to 10, 2025. My name is Patrick Trucchio, senior health care analyst at H.C. Wainwright. It's my pleasure to introduce you to our next company. It's Precision BioSciences, a clinical stage gene editing company, leveraging its novel and proprietary ARCUS platform, developed in vivo gene editing therapies for disease with high unmet need. ARCUS delivers from other technologies in the way it cuts, its smaller size and its simpler structure, which enable ARCUS nucleases to drive more intended defined therapeutic outcomes. From the company, it's my pleasure to introduce you to Michael Amoroso, the CEO; Cassie Gorsuch, the CSO; and Alex Kelly, the CFO. Welcome to the conference.

Thank you. Thanks for having us.

So maybe we can start with just a reminder to the audience of the mission for Precision BioSciences and what differentiates ARCUS platform from other gene editing therapies.

Sure. I guess I'll start off and then I'll hand it over to the real boss. The mission is simple, it's cure. Patients with deadly and unfortunate morbidity and mortal diseases, unfortunately. Our 2 lead clinical programs are in HBV. While HBV has some treatments today, HBV does not have a cure. And unfortunately, up to 40% of patients still die from late-stage liver disease, often hepatocellular carcinoma and/or cirrhosis. And our second program, so we're very -- we're in the clinic now. So HBV is in the clinic, and our second program will start in the clinic early in 2026. We're finishing up our pre-IND work, and that's for Duchenne muscular dystrophy. And also the goal here is a very novel approach to use the native dystrophin gene in the body, not a synthetic dystrophin gene to try to make these patients have a much higher quality of life and longer life. So the goal for Precision is cure. And as far as how our proprietary platform of gene editing is called ARCUS. And it is unique and different, and we try to apply it in those unique and different ways. I'll let Cassie tell you about.

Yes, sure. So ARCUS is different as a gene editing platform. It's the basis of all of our clinical programs, preclinical work is all centered around ARCUS, our gene editing technology. And it's different in a number of ways, but I think most important are really the 3 things that we think about most often. It's the cut, the way that it cuts DNA. It's a very unique type of cut that enables unique applications of gene editing. The size, it's extremely small. It's the smallest gene editor that we've seen, and that really streamlines delivery. It enables unique therapeutic approaches because of the size of the protein. And then finally, the simplicity. And what we mean by that is that ARCUS is a single protein that we engineer to have a DNA recognition capability and catalytic activity. That means it can recognize DNA and cut DNA with just one protein, which is different than all other gene editors that are out there. They require 2, 3, 4, sometimes components to actually create the type of edit that they're intending to create. And so we think it's extremely differentiated, and we try to leverage those differences in ways that are meaningful for therapeutic application.

Right. That's interesting. And maybe you can talk a bit about how you prioritize your programs and decision to prioritize HBV and TMD.

Sure. So I think first and foremost, I just want to echo what Michael said is, it's important when you select your indications that from the onset, you are providing a differentiated therapeutic approach for patients. And it has to be -- the indication has to necessitate the gene editing approach. You can't just drug a target because you can with an editor. So it's really important. We take a lot of pride in the fact that our 2 lead programs are 2 programs, 2 indications where there really is an unmet need, where it really necessitate thinking differently about how you approach that disease. And so first and foremost, we think about it with the end goal in mind, what are we going to provide that patients need. In these indications, they need a different approach. We've had a lot of failures in hepatitis B. We have a lot of underwhelming results with microdystrophins or exon skippers for DMD. So you have to provide a different approach. You have to provide a meaningful upside for patients. So that's first and foremost. Second is then how does your technology fit with what you're trying to do. And so that's where it comes back to those differentiators for us, the cut, the size and the simplicity. We see those as being unique to ARCUS. And from that, using those, we think how can ARCUS provide a differentiated, unique, better approach than a different gene editor. I think there's probably a good place for any type of gene editor. There's the right indication for what the technology can do. And so we look from our perspective at ARCUS and say, is our approach using an ARCUS going to be better than any other gene editing approach. And we truly believe that for hepatitis B and for DMD. And so it's about leveraging those differentiators after you've decided on the therapeutic need for the indication, then does your technology -- can your technology really benefit people here?

Right. No, that makes a lot of sense. And then as we look out over the next 12 months, what are the most important catalysts and milestones investors should look forward to?

Yes. So the next 12 months are really, really important and exciting for Precision. We're in the clinic in our ELIMINATE-B Phase I trial. We're in Part 1, which is dose finding. So we're trying to find -- we're doing dose escalation, but we have a very unique approach. First of all, this is an LNP delivered to the liver for hepatitis B, and it's multiple dosing. It's not just a one shot because we're looking to cut out the entire cccDNA viral genome. So we have started unveiling data this year, Patrick, as you know. Patrick is usually very, very excited about HBV. I don't want to [ fool ] you with energy. But the reality here is we're now starting to get into some of our more representative dose levels where we had our nonhuman primate data, our surrogate models of where we were able to cut out and eliminate viral genomes. So we should be giving more updates until the end of this year. We just gave one recently. So that will be exciting. Also in the beginning -- at the end of the year here, we're going to be filing for our IND and/or CTA. We haven't announced the market just yet for DMD. We'll be starting in the clinic, and you can expect data for DMD, obviously, a rare disease, ultra-high unmet need, but you're talking about possibly being in pivotal after 10, 11 patients. There will be some really impactful and important late data, so to speak, it will be early and late in 2026 when we start to generate some data of our patients. We also have our partners. Our partners, iECURE is doing some wonderful work right now, a very different approach. It's using an ARCUS nuclease for gene insertion at the liver for OTC deficiency. These unfortunately are dying babies, about 72% don't live past 1 year of life. And they recently announced early this year, I probably should have started there. That's the first clinical data for ARCUS in vivo. They announced a complete response. That child is alive 1.5 years out, doing well, living and thriving. So it's amazing. They have announced up to 4 patients enrolled now just last week at a Congress in Japan. And I know they're going to be working with the regulatory authorities as early as next year for the potential of accelerated approvals and full approvals. So you've got 3 clinical shots on goal for Precision BioSciences with HBV, DMD and OTC deficiency with our partner, iECURE, over the next 12, 18 months. So a pretty exciting time.

So clearly, I identified the kind of clear unmet need and where you can differentiate in these various disease areas. How do you think about where ARCUS can be in the next 3 to 5 years?

Yes. So I'll start, and I'll ask my colleagues to chime in. I mean for me, Patrick, the vision is really simple. I kind of do the writing and Cassie, I can tell you, I write it in the journal. Approved, that's a key word I'm looking for. So I'd love to see an ARCUS-generated in vivo product changing the lives of patients. If you think about our pathway in HBV, we would -- as long as data permits, we'll be going to the expansion phase in '26. We would start to work with the regulators as soon as we unveil our first potential cure for a patient. So we'll be continuing to communicate with the market what that looks like. We'll be looking to -- this has never been done before, right? Everything in HBV is downstream. It kind of masks the serology. We're cutting out the cccDNA, the viral source. So as important as serology data, which is also easy, getting blood, we are collecting biopsies for molecular data. That's going to be really important in our opinion, for a regulatory path. DMD next year, '26 into '27, we could have a god willing and knock on wood, that is our approach is working. We could have maybe an approval in '27, right, as long as we're accruing in the right time frame. So when you say 3 to 5 years, I'd like to go 3 for 3 because the patients need it. I'd like to see us have approvals and be a commercial stage company getting these life-saving products to patients.

So if we can maybe go through some of these programs specifically. So first, with PBGENE-HBV maybe you can walk us through the mechanism of action, patient population, what makes this different from other HBV approaches? Clearly, much of what's been attempted so far hasn't worked. So why will it be different?

Sure. Yes. So as Michael mentioned, we're doing something nobody has ever done before. We are targeting hepatitis B at the root cause. And I think that you can't understate how exciting that is. Everyone in the field has agreed if you eliminate cccDNA, you will cure hepatitis B. That's never been a concern. I think a lot of other therapeutic approaches have utilized various modalities to target downstream components in the viral life cycle, whether it's siRNAs going after S-antigen, whether it's TMs, all of them really act downstream of what we all know is the root source of viral infection. The cause of chronic hepatitis B is cccDNA. We just have never had a tool to actually eliminate cccDNA directly. And so there has been a hypothesis that perhaps you could modulate different components of the hepatitis B viral life cycle and that by shutting down these various components downstream of the actual problem that maybe the immune system could turn on and control your viral infection, not actually clear your viral infection, but maybe just keep it under control. And I think the unfortunate truth is that just hasn't been supported by the data. I think even in the early PBGENE data, we were seeing up to 30% functional cure rate, and that number has really come down a lot since then. And so I think as a field, we're learning that this approach of targeting downstream antigens within the viral life cycle has just not been a successful one. And so for us, PBGENE and HBV actually cuts and eliminates cccDNA and cuts and inactivates integrated HBV DNA. And so by going after both of those viral reservoirs, our goal is to cure hepatitis B. And if you think about that approach versus what's been tried, I think there's a clear biologic rationale for why this has a much different probability of success compared to downstream targeting agents. And so that's really what we're excited about for PBGENE and HBV. That's why we, in the field are excited to try something different. I think everyone has been disappointed with what we've seen so far. And I think we have reason to believe that this will be different.

It is very interesting, and it's an interesting approach to go after both the cccDNA and integrated DNA. I'm wondering what you've seen so far in the ELIMINATE-B trial, this Phase I trial. What are the key takeaways so far?

Sure. Yes. So we had a pretty big data release in early August, where we put out data for Cohort 1. So keep in mind, where we're at with the study, we're in a dose escalation phase of the study. So we have completed dosing of our first cohort, which was 0.2 milligrams per kilogram. We shared the safety and efficacy data from that cohort. So we had 3 patients who all received 3 administrations. It was planned that each individual within this dose escalation cohort will receive 3 administrations. So all 3 of those patients at Cohort 1 have received all 3 of their administrations. And we had sufficient follow-up from those patients to really disclose the full data set for safety and efficacy. And then we also shared in that release some of the data from Cohort 2, which is still underway. But Cohort 2 is double the dose of Cohort 1, so 0.4 milligrams per kilogram, 3 patients enrolled within that cohort. At the time of the data cutoff for our press release, we had one individual who had completed all 3 dose administrations and 2 other individuals who had completed one administration. So that cohort is continuing. And we mentioned in the press release in August and then just recently yesterday that we have actually now initiated Cohort 3 as well. And so really the way that the study is designed is with multiple levers to really identify the best dose and schedule of those doses to get to undetectable S-antigen and cure. And so what we've seen so far is that we've got a good safety in Cohort 1 and now Cohort 2. We haven't talked about Cohort 3 other than it's been -- we have initiated dosing. So more data to come on that cohort. But all of the individuals in Cohort 1, good tolerability of repeat administration. Cohort 2, we also had good evidence of safety of repeat administration. And what was really exciting, again, this is the first time anyone has ever actually directly targeted cccDNA. All 3 individuals in Cohort 1 showed proof of activity. All of them had substantial S-antigen reductions during the course of treatment and one individual has a sustained about 50% S-antigen reduction now 7 months past their first administration. And so this was the lowest dose level. And to Michael's point earlier, this dose level, what were my expectations going into it? Based on the preclinical data, this is a low dose. This is a dose lower than the lowest dose we tested in our large animal model, our nonhuman primate study. And so I think we were all really excited to see evidence of activity, sustained reduction in one patient. And most importantly, keep in mind, this is a safety study. And so it was excellent to see very good safety with repeat administrations. That's also something that hasn't been done a whole lot with a gene editor is repeat administrations with an LP. So I think we're paving the way in a lot of ways, and the data are looking really exciting.

So maybe just a few follow-up questions then. Do the patients, are they on their sort of baseline nucleoside analog treatment at baseline? Or are they washed out of that treatment? And also, what was sort of the baseline S-antigen level at baseline, which I think we've seen matters? And then just on the tolerability and safety profile, what have you seen to kind of give encouragement to continue increasing the dose?

Sure. So first, yes, we are enrolling HBE antigen negative individuals who are on nucleoside analogs. And so this is sort of the real-world population. The vast majority of HBV patients are e negative. And that just is really a marker of disease progression. So these are individuals who've had chronic hepatitis B for a while, and they're on standard of care. We keep them on standard of care while we're administering our multi-dose regimen. And the goal of that is we know nucleoside analogs do a great job at suppressing viral replication. And so what we -- our goal there is while we are taking bites at eliminating cccDNA through each of those subsequent dose administrations that the nucleoside analog is keeping things that way. And so yes, they're on this baseline characteristics, yes, important because we have seen with other modalities that they work particularly well in low S-antigen. We're not observing that. We had between mid-100 -- or sorry, like 500 or so S-antigen IUs up to almost 12,000 in our first cohort. So it was a really quite wide range for e-negative, and all of them responded similarly. And so I think that gives us a lot of hope that with this particular approach that your baseline starting S isn't as relevant for how your treatment outcome could look. Obviously, early, we need to collect more data, but we're not seeing what others have seen with baseline S being an important indicator for success.

Yes. And just for a quick moment on that, Patrick. I understand the question because our minds are kind of honed and looking at the disease state based on the tools we have. If you're doing something downstream, you're right, S levels have matted, and different products are trying to find their niche. If we're cutting out the source of virus, first of all, the liver is never fully infected. The published literature says 15% to 50% of hepatocytes have disease. Each hepatocyte expresses virions and S transcriptional activity differently. It's not apples-to-apples. So in theory, to Cassie's point, our mechanism is about eradicating the source. Doesn't matter if that source is showing you that it's 15,000 or 2,000. That's why this is a real-world study. We have no cap we're enrolling into the study. That's an important point of differentiation.

That's really interesting. And then what would you consider success in ELIMINATE-B to allow for advancement to Phase II?

Yes. So I think pulling from the guidance from the field, first of all, is I think success has been defined as at least 30% functional cure rate. And that's functional cure. We're really actually talking about a complete cure with our approach here by eliminating cccDNA. And so I think starting there, if you think about, okay, 30%, where we are today is 1% to 2%. And so I think there's 30% North Star would love to be there. I also think there's room in between where we are today and 30% for successful drugs to enter the market. But our goal is cure. We want to be able to cure patients, take them off nucleoside analogs. And by eliminating cccDNA and actually curing their chronic hepatitis B infection, we can prevent all of those long-term complications that Michael talked about earlier, late-stage cirrhosis, hepatocellular carcinoma. These are the things people with hepatitis B die from. And so yes, we want to cure hepatitis B. We also want to improve their quality of life.

Right. So just Patrick, for our study, just so the audience is clear, ELIMINATE-B, your -- on your nucleoside analog so that you keep any virus from replicating and reinfecting while we're dosing not if it's 3 -- at least 3 administrations, and they're 8 weeks apart. But the goal here, the first tactic along the road that Cassie just defined would be once you're undetectable on your transcriptional activity, UAS antigen in this case, you would stop your nucleoside analog, okay? And the definition of functional cure, which frankly, is a made-up FDA endpoint for what we've had in the infectious disease HBV arena, 6 months in a day as long as it stays gone. Really, nucleoside analogs wash out in 2 to 4 weeks. We don't know based on our mechanism. Once we stop and get undetectable, you go 4 weeks and you don't see it coming back, we feel really good about our chances for 6 months in a day or 2 years in a day, for example. So that is part of ELIMINATE-B. So the first step on the path, Cassie talked about would be get them to a place where the S is undetectable, and we could stop nucleoside analogs.

Great. And maybe just moving to PBGENE-DMD. Can you walk us through the design of PBGENE-DMD and why it targets exon 45 to 55 and why that's such an important approach?

Sure. So DMD is caused by mutations in the dystrophin gene. It's a huge gene. Mutations happen all over the gene. It's a very heterogeneous patient population. However, up to 60% of patients have disease-causing mutations between exons 45 and 55. And so there's a hotspot region of the gene for disease-causing mutations. And so our approach using PBGENE-DMD is to actually excise that part of the gene, which will allow production of a known dystrophin protein. We know it has function because it occurs in nature in humans. And so it works in humans already. And so the 45 to 55 is important because it gives us access to a large percentage of the patient population. It also produces a protein that has known functional capabilities, which is different than the microdystrophins, which are synthetic versions, and we hope they have good function, but we don't know that. They don't occur in nature. so that's really the approach is a onetime AAV administration to excise that region of the dystrophin gene for DMD patients who have mutations in that region, allowing for production from the endogenous or so the native gene expression of this near full-length dystrophin protein. So that's the approach for PBGENE.

And what have you seen so far preclinically? What gives you confidence this will translate into the clinic? And what are the next steps for the program?

Yes. So we have utilized a -- the gold standard mouse model. Everybody in the field uses this MDX mouse model. We have an additional flavor within this mouse because we need the human gene to be present too. But using this well-characterized diseased mouse model for DMD, what we've been able to do is provide PBGENE-DMD to these mice and we've tracked them over time, which is really important when you think about the disease progression here. A lot of other individual or other companies have provided their gene therapy to these mice and just looked at a single point in time. We're looking out 9 months, which is like half the life of a mouse that lives in the lab. So we did this long-term durability study. And what we saw was actually an improvement in muscle function over time. So between 3 months and 6 months, the ability of these mice to exert force in their muscles actually increased, and that was maintained out to 9 months. That was also associated with the restoration of dystrophin protein and an increase again over time in the bulk tissue and an increase in the number of dystrophins expressing cells again over time. We were able to demonstrate that we target satellite cells, which are the stem cells in the skeletal muscle that give rise to new myocytes and really help resupply new muscle, especially important in a disease where you have muscle wasting like DMD. And so what this really demonstrates is the promise of the gene editing approach that you can correct the gene at the genomic location that, that correction leads to functional dystrophin protein that, that is durable through the long term and that it is -- it results in muscle function within those mice. And so I think that was -- we've done a ton of preclinical work. That's kind of where I would say is the most exciting.

So Patrick, just one moment there for the audience, which is when we talk about this dystrophin expression, you're talking about native human dystrophin. That is so important because we've seen synthetic dystrophins light up the assays, the biomarkers. We haven't seen it translate to function. And we know we've got to be resolute about what standard we're aiming for because once you use that AAV, you've used up that AAV chance. So that's really, really important. So when people say, very crowded, nothing's worked, very crowded, but none have been able to go at a unique approach of taking back almost the full length of the human native dystrophin gene. That's important because we'll never be able to give a synthetic Duchenne gene. It's the biggest gene in the body or one of the biggest genes of the body. I want to make sure we differentiate that when we talk about dystrophin that's expressing.

Right. That's interesting. And maybe just one financial question, if you could summarize the financial position and just how the extension of the cash runway to, I think, the second half of 2027 supports the strategy.

Alex?

Yes. Thanks very much, Patrick. So at the end of June, we had $85 million in cash at that point in time. And I'd remind you that we did take a strategic action to significantly reduce our cost structure at that time. So we've reduced our annual burn by about $20 million a year. And as a result, we have a cash runway into the second half of 2027, which is really important because as Michael said, we're going to have data readouts from 3 clinical programs between now and that point in time.

Terrific. Thank you so much. I'd like to thank Cassie, Michael and Alex, thank you very much to Precision for joining us at the conference. Thanks for our audience. Have a great rest of your day in conference. Thank you.

Thank you, Patrick. Thanks for having us.