Prime Medicine, Inc. (PRME) Earnings Call Transcript & Summary

It's my pleasure to be hosting Prime Medicine for a fireside chat. I'm joined by Allan Reine, CEO of Prime as well as Greg Dearborn, Head of IR. Allan, Greg, thank you for being here. Thank you. So why don't we just start off with a little bit of background. Allan, you've been in the CEO role now at Prime for a couple of months. Just tell us a little bit about that transition and your vision for the company.

We made an announcement on May 19. So one, as you said, took over as the CEO. In addition to that, we finished what I would call sort of the final stage of our pipeline prioritization, something that we started last year. And I'd say we ultimately sort of completed at that date. Obviously, it's an ongoing thing. We're always going to be looking at how to prioritize the pipeline and the right capital allocation strategy. But I think importantly, we went from -- I think when I joined the company, we had 18 programs in the pipeline. And now I think we're really down to 3 very high-value programs in both Wilson's disease, Alpha-1 Antitrypsin Deficiency and cystic fibrosis. In addition to our collaboration with BMS, where we're working on ex vivo, CAR-T therapies for both immunology, hematology and oncology. As I think about the vision going forward from here, it's really kind of twofold. I think about it both as what's sort of my vision for the short-term, the medium term and the long-term. I think -- as I think as sort of that short-term vision, it's really generating clinical data for our 2 key programs in Wilson's disease and Alpha-1 Antitrypsin Deficiency. We expect an IND for Wilson's disease in the first half of next year, Alpha-1 just a little bit after that in the middle of next year and data for both programs expected in 2027. So 2027 becomes a really impactful year as you think about value creation for the company. If I think about sort of medium term, we've got cystic fibrosis that we're working on. That's being predominantly funded by the Cystic Fibrosis Foundation. We're going after both many of the mutations that are not amenable to current standard of care. And ultimately, we think we can treat with a handful of editors, 93-plus percent of the CF population. So as I think about the medium term, it's another very high-value program that we can ultimately drive towards the clinic into clinical data. And obviously, making some advancement with our BMS collaboration in terms of those programs, which we got $110 million upfront, but we also got $185 million in potential, what we call preclinical milestones. So even early success there can be pretty fruitful to us in terms of our balance sheet. And as I think about the long-term vision, for Prime Editing versus other editing approaches, I think twofold. One, it's the most versatile way to edit the genome, right? So we can do everything that CRISPR/Cas9 editing can do. We can do anything that base editing can do. We can -- and then we can do so much more, right? So we're not limited to just knocking something out. We're not limited to just correcting one single base pair, but we can actually fix many different types of mutations through our technology, we can insert multiple base pairs into the genome, so we could fix frame shift mutations. We can do what we call hotspot editing. We can fix transversion mutations. It's pretty endless in terms of kind of what we can target. So as I think long-term, where are we kind of most differentiated, and I think there's a lot of areas that I could see the company ultimately going into. Some of those are areas that we deprioritized in the last couple of years because given our current cost of capital, I think those investments made sense at that time. But as I think about neurological disease, other types of cell therapy, there's just a tremendous amount of opportunity for Prime Editing. And I think if I'm going to do right by this company, it's how do we maximize that potential.

Thank you for that. That was a very great intro. I want to touch on maybe something first that you haven't mentioned. It's you recently achieved the proof-of-concept for Prime Editing in humans in CGD. Let's start with that and how much read-through you see that program, that proof-of-concept data flowing into your in vivo liver assets for both Wilson's and for AATD?

Yes. So one of the announcements that came on that May 19 date as well was that we, one, had our first clinical data in a disease called chronic granulomatous disease. We've since announced a second patient. So we now have 2 patients worth of data, but also announced we're discontinuing that program. We've deviated from that slightly, and I'll get into that. But I'd say twofold. One, this is an ex vivo cell therapy. So we're taking patients hematopoietic stem cells. We're correcting the mutation and then infusing this back into patients. So what we saw was extremely rapid engraftment. So similar to we think making that single-stranded break, it's very gentle on the cells, we seem to get much more rapid engraftment than you see with CRISPR-based therapies. I think even at 15 days, which is pretty incredible. We -- it's a disease where you have essentially defective neutrophils. So these patients get a lot of infections that really are very hard to treat. They also get inflammatory like illnesses, like inflammatory bowel like illnesses. And so there's a pretty reliable biomarker that you can measure that's pretty indicative if you can essentially functionally cure these patients. And we know this from a lot of the experience that they've had with allogeneic transplant in the past. So just to cut to the chase here, we got extremely high levels, well above whatever threshold you'd expect to really think about a functional cure in these patients. One of the two patients that we treated had a very high biomarker that was indicative of inflammatory bowel disease, 15x normal that essentially normalized within a month. So it's pretty powerful data. That being said, there's not a lot of patients to treat. In the U.S., we think the majority of patients have received an allogeneic transplant. There are probably, call it, a few dozen patients, we think 30 to 50 that are still out there, either were unable to find a match or they, for whatever reason, aged out because as you get older, allogeneic transplant is more risk and is less effective. And so we think just based on the strength of this data, what I talked about before, deviating a little bit from the plan in May is we are going to go and have conversations with the agency or what we said, I think we've called FDA interactions. We think the strength of the data, even though it's only 2 patients, what I see this is a much more effective way to treat these patients and a safer way to treat these patients in allogeneic transplant. And so the FDA, they've talked about testing things in the commercial setting and other things. So again, we'll see how the conversation goes, but we just think based on the strength of the data, it makes sense to have interactions to use that word again. Just to be clear, because I think it's an important point, we are not allocating additional capital to this program. We're not going to be enrolling any more patients in CGD. This really is to assess if there's a way to get this drug to patients. But again, it's not going to be from further investment from Prime at this time.

If you were to go positive with FDA and you were to gain approval for CGD, would you consider commercializing the asset yourself? Or is this something that would be partnered?

If it was financially in our favor to go for approval and market it ourselves, then we would do that.

Okay. Understood. So then maybe shifting to the in vivo assets. Let's -- I would just love to hear your thoughts on what makes both Wilson's disease and AATD good indications specifically for Prime Editing. Wilson's, I think you're unique in the gene editing space, but you have a competitor for AATD. So I would just love your thoughts there.

Yes. So for Wilson's disease, the predominant mutations that we're going after, so there's -- there will be probably a number of different mutations we ultimately go after. But the 2 prominent ones that we're going after, one in the Caucasian population, so the most prevalent mutation you see in both the U.S. and Europe and also there's another mutation that's more prevalent in the Asian population. So those are the first 2 that we're going after. One is called 1069Q (sic) [ H1069Q ], the other one is called R778L, but those are both transversion missense mutations. So there really is no other gene editing technology that can correct for that. So we're very differentiated when we think about Prime Editing. When it comes to A1AT, so investors obviously know a lot more about A1AT because there's about, I don't know, a dozen companies that are doing something within the space. Wilson's is becoming a bit more of an education, but for a lot of different reasons, we're actually really excited about Wilson's as well. First off, there isn't a lot of competition. But second of all, it's a very large market opportunity, which we can get into later. But for Alpha-1, so when we think about going into a disease, and this is some of the work that we did last year as we kind of analyzed all 18-plus programs that we had in the pipeline. So obviously, you're looking at competition, you're looking at differentiation. We're thinking about the commercial opportunity, technical feasibility, clinical tractability and everything else. And so for something like A1AT, we know there's a lot of competition. So the question is, do we think we can really be a best-in-class therapy when it comes to A1AT. And I think given the preclinical data that we've generated to date, we truly believe this can be a best-in-class therapy. So as we think about Prime Editing versus other editing approaches or RNA editing, et cetera, there's really no other technology that I've seen to date that is taking a patient back to wild-type protein. And we think ultimately, if you're thinking about curing these diseases, the -- or fixing the mutation, the desired effect should be take a patient back to wild-type under endogenous control. And there's no other technology that is doing that. So with the RNA editors, obviously, there -- we're seeing some initial data that looks promising. But there's still a question of do you get the acute phase response and over what period of time? So when you think about Alpha-1, that's a disease where Alpha-1 levels are going to go up two to fourfold in response to stimulus. So not sure that's going to be the desired approach. It's probably the reason the replacement therapies may or may not work. And so -- and with base editing, we've seen some very promising data as well, but they do have the bystander edit. So it's not all wild-type proteins. So we really believe this is a superior technology when it comes to Alpha-1.

So you're setting the bystander edit aside for a moment, when you're thinking about what the bar is that has been set thus far by the base editing approach, they're getting over 11 micromolars of M-AAT. I'm wondering, do you think that you need to go higher than that? Like is there an -- is it advantageous to go higher than that from a clinical perspective? I'm curious on your thoughts on what the actual bar is here when you are looking at wild-type AAT.

Yes. I mean I don't -- obviously, the FDA has had a bar in the past for replacement therapy, which I think is a very different approach where they've looked at that 11 micromolar level. There's some talk has that gone up to 20 for new replacement therapies that are coming out. It's a complicated question in my mind because, again, I come back to when you're under endogenous control, what does that mean? Well, that means in response to infection, in response to inflammation, which is kind of what's propagating this lung disease, am I getting my alpha-1 levels to the level they need to be to effectively inhibit what's called neutrophil elastase in the lung, which is what's protecting these patients and what these patients are missing. Do I get to those levels with a level of 11 and maybe you do, right, because you have that acute phase response. And if I have a replacement therapy at 20, maybe I'm not protective because I'm not getting to 30 or 40 or whatever I need to get to or even higher. We can have the same question when we think about the RNA editing therapies. So I think there's a lot of questions we have to answer. I just think we all compare across and just look at absolute levels. And I think when you're thinking about endogenous control and gene control, you have to ask a bit of a different question is, am I having the right response at the right time? And I think you can get there with gene editing. Will the FDA look at 11 and say that's the right number? I don't know, right? I think the higher, the better. That's what we've seen. We want to see very low levels of Z protein in the periphery, and we at least have seen historically that we think heterozygotes seem to be fairly protected and they seem to be in the 11 to 20 range. Normals are 20 and above. Again, I think the higher, the better, but you want that acute phase response active. And it's the gene editing approaches that are going to get you there.

And what do you think the market opportunity is for your AATD asset?

I mean I'm not going to put a dollar number on ours necessarily, but what I'll do is just give you what the market size is. So there are 100,000-plus patients that have the mutation. It's what we call incomplete penetrant. So not all patients -- not all people that have the mutation get the disease. It's estimated that there's about 10,000 to 15,000 patients diagnosed in the U.S. It may be something that's underdiagnosed. There's a strong belief that, that could be the case as well. But that's essentially what you're looking at. Now when you think about a genetic disease, Alpha-1s -- there's not many like this, but it's really one mutation that makes up 99% of the disease. So for example, in Wilson's disease, in the U.S., and we can get into this later, but we can get to maybe 60% of the patients with a handful of different editors, in Japan, Asian countries that might be a little bit higher, closer to 70% with a handful of editors. With Alpha-1, it's one drug product and you can get to 99% of patients. So it always obviously comes down to pricing and people can do the math on how you think these things will be priced. I think ultimately, these gene editing therapies are going to get fairly high market share within this disease. I think they should get high market share, given the benefit they'll have in this disease. And so within the U.S., within Europe, if you got 20,000-plus patients to treat, I think you've got -- I'll say, $20 billion on the very low end, but this could be a $30 billion, $40 billion plus market opportunity. A little different with A1AT because it actually doesn't really exist in the Asian population. So you've got kind of the U.S., you've got Europe and maybe some other countries, but you're sort of limited to those markets just based off the patients affected.

And you're working towards an IND or CTA for mid-26 for AATD, how quickly once you get clearance for that, do you think you could initiate a Phase I study?

Yes. I mean, look, I think I mean I'll probably make my CMO upset when I say this. But look, I think you can get these done pretty quickly. I think sometimes like, look, it's a gene editing therapy, and so it's not as trivial getting through IRBs, et cetera. There's a lot of prework that can be done though, so you can get these done pretty quickly. I mean we've seen competitors get from at least -- I won't comment maybe on INDs because some of these have been through CTA, not IND, and I don't have the exact dates always. But at least first patient dosed to a pretty healthy data set even in 9 months, right? So you can get pretty -- you can go from a pretty rapid clip from patients getting dosed to -- first patient getting dosed to getting data. And you can be sure we'll be driving as hard as we can to make sure we're getting sites up and enrolling as quickly as we can.

All right. Looking forward to that. So I know you can't comment on this directly, but I do want to ask, you are in arbitration with Beam for your AATD program. When could we hear an update on how that's progressing, not necessarily what we could hear, but when?

Yes. I mean I don't think we're going to provide updates in terms of an ongoing arbitration. So I don't think there's a lot I can say there. I think what we have said is we'd expect a resolution sometime in the first half of next year. But that's really, I think, all we're willing to comment on.

Understood. Okay. Maybe we turn it back to Wilson's then. Can you share a little bit about that opportunity? As you mentioned, some people are less familiar with this disease than AATD. So what is the market opportunity? What percentage of the patients that have the mutation that you're targeting?

Yes. So the 1069Q (sic) [ H1069Q ] mutation that I talked about in the Caucasian population, that's somewhere between, call it, 30% to 50% of patients. So call it 40%. There's maybe a handful of additional mutations that are 8%, 7%, 5%. So if you start to add those up, we can get to, call it, 60-plus percent of patients. After that, it really falls off to like 1% or even just single mutations that will be a little bit likely won't have the -- make financial sense to develop, but we'll try and go down probably to even 1% at some point might make sense. That's because we really think we can leverage sort of all of the sort of preclinical work we do for one can be leveraged for the other. You're essentially using the same LNP the same mRNA and you just have a slight change to your guide sequence. So we think the ability to leverage that both to get into the same IND. But obviously -- ultimately, if we have success with more than one, potentially even just getting to approval at a pretty fast pace. So we think each successive program within the same indication will be significantly less expensive to bring to market. So if we think about 60%, I think Wilson's, the estimates are somewhere between 10,000 to, I think, 11,000 patients in the U.S., I think a similar number in Europe. And then in Japan and some of the Asian countries, the prevalence of Wilson's disease is actually higher. So there are more patients per capita, but there's also -- if you look at the mutational breakdown, we can actually get more of those patients, right? So when we add up those, R778L there is, I think, 40% to 50% even or 50% plus in Japan. And then we look at a few other mutations, you actually get to 70%. So Japan can end up being almost as big of a market as the U.S. and Europe. And so when you kind of add that all up, sort of on a gross patient basis to us, it's almost a similar market size when you think about Wilson's to Alpha-1, it might even be a larger market size with a lot less competition when you start to include some of these other geographies. So we think globally, this could be a $20 billion to $40 billion ultimate opportunity with a reasonable kind of incidence rate as we think about that going forward. As I think about -- we talked about vision before, if we ultimately get at a number of different diseases that have an incidence rate of, call it, 100 to 200 patients a year or more then you start to increase that. Well, now you actually don't have a -- I just have to treat the curve, right? If you can kind of build those up on each other, now you've got a real long-term business with real long-term revenues that you can bank on beyond sort of treating those prevalence rates.

Got it. Interesting. And as you move towards IND/CTA first half of '26, I guess, what is left to do for that filing? Because you have the development candidate you've disclosed, I believe. So what are we looking for those filings?