8-K: Precision BioSciences Regains Control of Gene Editing Programs Following Prevail Therapeutics Collaboration Termination

Precision BioSciences has regained control of three gene editing programs after Prevail Therapeutics terminated their collaboration agreement, while also reporting a cash balance of approximately $137 million as of March 31, 2024.

Summary

• Precision BioSciences received notice from Prevail Therapeutics, a subsidiary of Eli Lilly, to terminate their collaboration agreement effective July 10, 2024.
• The agreement, focused on developing ARCUS nucleases for gene therapies, covered three initial targets including Duchenne muscular dystrophy (DMD), a liver-directed target, and a central nervous system target.
• Under the original agreement, Precision received $135 million in upfront investment.
• The amended agreement in June 2023 shifted preclinical research and manufacturing responsibilities to Prevail.
• Precision was eligible for up to $390 to $395 million in milestone payments per licensed product, plus royalties on sales.
• Precision has exercised its reversion option to regain control of the programs and plans to explore further development opportunities.
• Prevail is required to transfer all related data and materials to Precision.
• Precision estimates it had approximately $137 million in cash and cash equivalents as of March 31, 2024.
• The company's near-term clinical priorities in Hepatitis B (HBV) and Primary Mitochondrial Myopathy (PMM) are not impacted by the termination.
• Precision is exploring opportunities to develop the returned programs independently or with new partners.
• The company's cash runway is expected to extend into the second half of 2026.

Sentiment

Score: 5

Explanation: The document presents a mixed picture. While the company has regained control of its programs and has a solid cash position, the termination of the Prevail collaboration is a setback. The company's future success depends on its ability to secure new partnerships and funding.

Positives

• Precision BioSciences has regained full control of its gene editing programs, allowing for independent development or new partnerships.
• The company has demonstrated compelling in vivo proof-of-concept data for ARCUS gene excision and insertion.
• The company's cash runway is expected to extend into the second half of 2026, unaffected by the collaboration termination.
• Precision's near-term clinical priorities in HBV and PMM remain on track.
• The OTC deficiency program with iECURE is progressing with first-in-human clinical dosing expected in 2024.
• The company has a strong cash position of approximately $137 million as of March 31, 2024.
• Precision has the option to explore new partnerships for the returned programs.

Negatives

• The termination of the collaboration with Prevail Therapeutics means the loss of potential milestone payments and royalties.
• Precision BioSciences will now bear the full cost of development for the returned programs.
• The company will need to find new partners or funding to advance the programs.

Risks

• Precision BioSciences may not be able to secure sufficient funding or new partnerships to advance the returned programs.
• The company faces risks associated with the development and clinical trials of its product candidates.
• Other genome-editing technologies may provide significant advantages over Precision's ARCUS technology.
• The company's ability to assess the safety and efficacy of its product candidates is limited.
• There are risks associated with the company's capital requirements and ability to raise additional capital.
• The company's operating expenses are difficult to predict.
• There are risks associated with the company's limited operating history.
• The company faces competition in the genome editing, biopharmaceutical, and biotechnology fields.
• There are risks associated with public perception about genome editing technology and its applications.

Future Outlook

Precision BioSciences plans to explore opportunities to further develop the returned programs independently or with new partners, while continuing to advance its wholly owned programs for HBV and PMM. The company expects its cash runway to extend into the second half of 2026.

Management Comments

• Michael Amoroso, President and Chief Executive Officer of Precision BioSciences, stated that they enjoyed a productive gene editing collaboration with Prevail Therapeutics and appreciate their contributions.
• Michael Amoroso also mentioned that the decision to regain control of the programs brings exciting development opportunities to Precision's pipeline.
• Jeff Smith, PhD, Co-Founder and Chief Research Officer, noted that the next steps will be to prepare for GLP toxicology studies followed by potential IND and clinical trial application (CTA) submissions.

Industry Context

The termination of the collaboration highlights the inherent risks in pharmaceutical partnerships, where strategic priorities can shift, impacting ongoing projects. Precision BioSciences is now positioned to compete with other gene editing companies, including those using CRISPR, base editors, and prime editors, with its ARCUS technology.

Comparison to Industry Standards

• The 45% gene insertion efficiency in non-dividing cells of non-human primates is a notable result, as other gene editing technologies like CRISPR, base editors, and prime editors have not demonstrated such high levels of efficiency in vivo.
• The company's focus on in vivo gene editing for genetic and infectious diseases aligns with a growing trend in the biotechnology industry.
• The company's cash runway into the second half of 2026 is a positive sign, as many biotech companies face funding challenges.
• The company's progress with its OTC deficiency program, partnered with iECURE, is comparable to other companies developing gene therapies for rare diseases.
• The company's plans to submit IND and CTA applications for its HBV and PMM programs in 2024 and 2025 are in line with industry timelines for clinical development.

Stakeholder Impact

• Shareholders may be concerned about the loss of the Prevail collaboration and the potential impact on future revenue.
• Employees may be affected by the shift in development responsibilities.
• Customers and patients may benefit from the continued development of gene editing therapies.
• Suppliers and creditors may be impacted by the company's financial performance.

Next Steps

• Precision BioSciences will prepare for GLP toxicology studies for the returned programs.
• The company will explore potential IND and clinical trial application (CTA) submissions for the returned programs.
• Precision will explore opportunities to develop the returned programs independently or in partnership with others.
• The company will continue to advance its wholly owned programs for HBV and PMM.
• The company will continue to progress the OTC deficiency program with iECURE.
• Precision will host a conference call and webcast on April 16, 2024, to discuss its in vivo gene editing business.

Key Dates

Keywords

gene editing, ARCUS, Precision BioSciences, Prevail Therapeutics, Eli Lilly, Duchenne muscular dystrophy, HBV, PMM, in vivo gene therapy, clinical trials, milestone payments, collaboration, cash runway, OTC deficiency