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Precision BioSciences, Inc. (NASDAQ:DTIL) is a great speculative biotech play to look into. That’s because it is advancing an allogeneic CAR-T pipeline, along with an in vivo gene editing pipeline.
Speaking of its CAR-T treatments, the main one in the pipeline would be PBCAR0191, which is being explored in a phase 1/2 study in patients with relapsed/refractory (r/r) Non-Hodgkin Lymphoma (NHL) and r/r B-cell Acute Lymphoblastic Leukemia. In the most recent interim update, it noted that relapsed patients given this CAR T were able to achieve a 100% response rate.
Why I believe it may have some potential upside is because Precision expects to release updated results from this very same study before the end of 2022. In addition, it has a pretty solid pipeline when it comes to in vivo gene editing as well. It has several wholly owned treatments and then it has many others which have already been partnered with a few pharmaceutical companies. With proof of concept established using PBCAR0191 for the treatment of patients with relapsed/refractory NHL B-cell ALL, plus an update on data from the phase 1/2 study expected before the end of 2022, these are the reasons why I believe that Precision Biosciences is a great speculative biotech play to look into.
PBCAR0191 For Treatment Of Patients With Non-Hodgkin’s Lymphoma And B-Cell Acute Lymphoblastic Leukemia
The main program to go over involves the use of PBCAR0191, which is being developed for the treatment of patients with non-Hodgkin’s lymphoma (NHL) and B-Cell Acute Lymphoblastic Leukemia (B-ALL). Lymphoma is cancer that develops in the lymphatic system, which is the body’s fighting immune system network. The lymphatic system is composed of: Lymph Nodes, spleen, thymus gland and bone marrow area. This type of cancer affects these organs and several others. There are two main types of lymphomas that you are likely aware of, which are:
- Hodgkin’s Lymphoma
- Non-Hodgkin’s Lymphoma
These are the two main ones, although there are some other types. Both of these types are lymphomas that have problems with the B-cells in the body, which are responsible for fighting off infections in a person’s body. The main difference is found under a microscope where each of the cells are shown to be different. This is not the only difference between Hodgkin’s and Non-Hodgkin’s lymphoma. Hodgkin’s Lymphoma is a rare type of lymphoma and only about 8,500 cases diagnosed in 2016. This compares to Non-Hodgkin’s Lymphoma which had 72,500 cases were diagnosed in 2016 and is the seventh most diagnosed type of cancer. In addition, there is a difference in 5-year survival rates, which are shown directly below:
- Hodgkin’s Lymphoma – More than 86% of patients diagnosed with this type of cancer survive 5 years or more
- Non-Hodgkin’s Lymphoma – More than 70% of patients diagnosed with this type of cancer survive 5 years or more
The main thing is that a majority of biotechs targeting the large non-Hodgkin’s lymphoma market. That’s because the global Non-Hodgkin’s Lymphoma market is expected to reach $12.5 billion by 2027. This is a very large market opportunity for Precision Biosciences.
The use of PBCAR0191 is being explored in an ongoing phase 1/2a study, which demonstrated that it could achieve high response rates in patients who relapsed after CAR T. This trial is an open-label, dose-escalation and dose expansion study to evaluate safety and efficacy of PBCAR0191 in patients with relapsed/refractory (r/r) Non-Hodgkin Lymphoma (NHL) and r/r B-cell Acute Lymphoblastic Leukemia. Speaking of dose level and dose expansions, it is expected that Precision Biosciences could reach up to 6 dose levels total.
What I will show below is that the biotech was able to achieve high response rates in a very sick patient population. How sick? Well consider that these are CAR T relapsed patients who received on average 5 prior lines of treatments. That means they gone through and failed multiple types of treatments, along with other CAR T, before entering this particular study. The positive results released as an update in June of 2022 layout the most recent dose levels which were used for this study. These dose levels used for PBCAR0191 were dose level 3 (DL3) with enhanced lymphodepletion (treatment to kill existing T-cells to make room for new ones) in 6 patients and then dose level 4 (DL4b) with reduced/decreasing lymphodepletion in another 6 patients (This dose level is referred to as the “New Cohort” or latest cohort as of January 2022).
As of the May 31, 2022 cutoff date, the breakdown for each dose level cohort noted directly above is as follows:
- It noted that 11 out of 11 (100%) of patients achieved an objective response rate (ORR)
- It was said that 8 out of 11 patients achieved a complete response rate
- 6 patients from the pool of 11 patients remain with an ongoing response for 18 months +
The data for which I highlighted above deals with both dose level cohorts (DL3 and DL4b). However, what I find intriguing is that the dose level 4b cohort (new cohort), had shown to be superior over dose level 3. This was even achieved with a reduction of lymphodepletion as well, which is always good for safety in the end. This is good news for Precision Biosciences, because it is targeting a huge unmet need. These are patients with aggressive lymphomas who fail on autologous CAR Ts and other therapies. There is no approved standard of care (SOC) for these patients and their progression-free survival for the time being is a mere 2 months. As far as a catalyst goes, there will be an update on the use of PBCAR0191 for the treatment of patients with relapsed/refractory NHL towards the end of 2022. In addition, to updates on the other CAR Ts in the pipeline which are PBCAR19B and PBCAR269A, which are being developed for the treatment of patients with NHL and Multiple Myeloma (MM) respectively. It will likely be an update on data and maybe even plans for the next study. The biotech intends to meet with the FDA to discuss the data observed and then see what it needs to do next to advance it. The hope is that it can continue to reduce the amount of lymphodepletion patients need with treating their aggressive lymphomas. This could both improve safety and efficacy of PBCAR0191.
Two Massive Partnerships Worth Billions Of Dollars In Potential Milestone Payments
The thing is that Precision Biosciences uses its ARCUS gene editing technology for its pipeline. It remains to be seen how well it does when it is actually utilized in humans, however, it has already attracted the attention of several pharmaceutical companies.
One of the most recent partnerships for licensing the ARCUS in vivo gene editing technology involves Novartis (NVS). Novartis wanted to enter this deal to get its hands on the ARCUS gene editing technology. Precision Biosciences received an upfront payment of $75 million. That’s a good start to help fund its operations, but the real deal happens if it can meet all of its milestones and earn up to $1.4 billion in cash. Of course, should any product reach the market it will obtain the usual tiered royalties on sales. Its main job will be to develop a single ARCUS nuclease that is safe and efficient for In Vivo gene insertion. The goal is to attempt to develop cures for large markets like sickle cell disease and beta thalassemia. The thalassemia market is expected to reach $3.53 billion in 2022.
On the other hand, the other market opportunity is much larger. It is expected that the sickle-cell disease market will reach $5.5 billion in 2023. These are the initial indications for which Novartis wants to happen. I believe that an in vivo ARCUS nuclease will be developed. The test is whether or not such a product is efficient when it delivered to humans in a phase 1 study. These indications are just the start of what is possible. That’s because the partnership could eventually expand to other hemoglobinopathies that exist out there.
Another major partnership happened between Precision Biosciences and Eli Lilly (LLY). That’s because Eli Lilly also liked the unique ARCUS genome editing technology and wanted to form a partnership as well. This partnership itself between both companies was announced back on November 20, 2020 but was not fully closed until January 7, 2021. The goal is for Precision to use ARCUS to develop up to 6 gene targets. The first target that Eli Lilly wants a focus on is for the treatment of patients with Duchenne Muscular Dystrophy (DMD). However, the other 2 initial gene targets are undisclosed. The DMD market is also a huge opportunity for Precision and its partner Eli Lilly. That’s because it is expected that the DMD market will grow to $1.17 billion from 2020 to 2025. It could grow even more after that, but the point here is that there is a great opportunity to advance this target first. For this deal, Precision obtained an upfront payment of $100 million and then about $35 million from Lilly’s purchase of newly issued shares of Precision’s common stock.
That’s not the crux of the deal, though. Why I view this deal as possibly a good one is because of how much Precision can eventually make for each ARCUS genome edited candidate it develops. How much? Well, for each one it gets through development and commercialization, it could receive $420 million. If you multiply 6 targets at $420 million each, that’s huge. The thing is that this is still all research-phase stuff. Therefore, it is not going to earn this money in an upfront fashion. Instead, it will be spread out over time as specific milestones are met. Still, the hope is that the first ARCUS nuclease genome editing candidate does well in treating patients with DMD.
Financials
According to the 10-Q SEC Filing, Precision Biosciences had cash and cash equivalents of $116.2 million as of March 31, 2022. It believed that its cash would be enough to fund its operations into mid-2023. However, it would have needed to raise cash at least before the end of 2022. Instead, it chose to do a cash raise which was just achieved back on June 27, 2022. That is when it sold a total of 35,971,224 shares of its common stock at a public offering price of $1.39 per share. In total it raised approximately $50 million before deducting any expenses. Not only did it do this offering, but it also had enacted a deal one week before performing this cash raise. This was the deal it did with Novartis in which it obtained $75 million and potential to earn up to $1.4 billion in potential milestone payments. The $75 million is broken down into $25 million of equity for which Novartis purchased and then an upfront cash payment of $50 million. Based on the recent cash raise, plus the partnership with Novartis it had just completed, it believes it has enough cash on hand to fund its operations until the end of 2024.
Risks To Business
There are several risks that investors/traders should be aware of. The first risk is that even though 100% response rate was achieved with PBCAR0191, there is no guarantee that a larger study with additional patients will reach the same type of response. Not only that, but the durable response at 6 months is at 50%. Still, considering these are very sick patients who have failed on average 5 prior therapies, the data is shaping up pretty good.
A second risk would be the other ongoing CAR T products in the pipeline which are PBCAR19B and PBCAR269A, which are both being developed to treat patients with NHL and Multiple Myeloma (MM) respectively. These are in early-stage testing and it is not known whether or not they will perform well similar to what PBCAR0191 has achieved thus far.
A third risk would be with respect to the recently established partnerships for in vivo gene editing. Even though these partnerships may bring in a lot of cash, they are dependent upon two items. One that each consecutive trial is successful and second that the established partner chooses not to terminate the deal. These are major risks, because Precision would lose out on so much potential with respect to milestone payments.
Conclusion
Precision Biosciences is a great speculative biotech play to look into. I state that because it has already established some proof of concept as it relates to the use of PBCAR0191 being used to treat patients with relapsed/refractory (r/r) Non-Hodgkin Lymphoma (NHL) and r/r B-cell Acute Lymphoblastic Leukemia. I believe that this biotech can provide value because of the several catalysts which are expected before the end of this year. It is expected that it will provide updated data on all 3 of the ongoing CAR T products which it has n its pipeline.
The three clinical candidates that will have data updates before the end of 2022 are: PBCAR0191, PBCAR19B and PBCAR269A. I noted the partnerships for which the company had established for its in vivo gene editing platform, with the likes of Novartis and Eli Lilly. However, it even has its own wholly owned programs for in vivo gene editing. For its own programs, it is using its platform to go after familial hypercholesterolemia, primary hyperoxaluria type 1 (PH1) and Hepatitis B Virus (HBV). I believe that the data updates for the CAR T programs expected before the end of 2022 could provide some potential upside for traders/investors.
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