Precigen, Inc. Q4 FY2023 Earnings Call

Thank you and I apologize for any technical difficulty here. Again, welcome to our 2023 full year financial call. With me are CEO, Helen Sabzevari; CFO, Harry Thomasian and Jim Shaffer. Please refer to our most recent filings for our forward-looking statements. With that, I'll turn the call over to Helen. Thank you.

Thank you, Steve, and thank you to everyone for joining us. And, again, apologies for this little bit of technical problems. But I think we are going through a very transformative year. 2024 is poised to be a transformational year for Precigen. We are on track to present pivotal Phase 2 data for our lead asset PRGN-2012 in Q2 and intend on submitting our BLA in the second half of 2024. This is due in part to the positive guidance and pathway provided by the FDA and to the tireless work done by our team over the last several years, starting from discovery in 2020 all the way to the potential filings in 2024. For today's call, I will focus on our AdenoVerse platform and we are working rapidly and prudently to advance our UltraCAR assets, and we are looking forward to the readout later on this year for the UltraCAR platform, as we outlined in today's press release. So for today, let me just jump into our AdenoVerse platform, why we are excited about this platform and our lead assets that it pays off. For those of you who might not be familiar with this platform, this is a very differentiated platform from the rest of the viral platform. Why do I say that? It's very simple. First of all, this platform is built based on the library of the gorilla adenovector. These adenovectors are not like other adenovectors. First of all, they have a high capacity that you can put a number of genes in them. But more importantly, they have the ability because there is no pre-immunity in humans or very little. You can keep dosing with this vector. With all of the other viral vectors, when you dose once or at best twice, you're getting this neutralizing antibody that eventually inhibits and responds. After a while, you're just shooting a blank. That's one of the major issues with other vectors and other platforms that exist. Here, on the other hand, because we don't have pre-immunity to this, you can continue administering doses. Because of the design of these vectors and the specific biological nature of these vectors, even when there are neutralizing antibodies, they are kept at bay and don't enhance the immune response. Why do I say that? We have clinical data that actually indicates that we can dose the patient, and we have dosed some patients up to 18 times. Not only have we sustained their immune responses, but we have also kept the neutralizing antibodies at bay. A final important aspect of the platform is the specialized manufacturing process, which allows high titers, and you can imagine that becomes very important especially in commercial manufacturing processes. So let's dive into our lead asset, which is our PRGN-2012. Our PRGN-2012 has been designed to identify the epitopes HPV 6 and 11, and target the cells that are infected with this virus. Why is that important? In a rare disease of basically Recurrent Respiratory Papillomatosis (RRP), the root cause of this disease is the infection HPV 6 and 11 infection in these patients, which causes benign tumors on the vocal cords or in the trachea of these patients. Therefore, they can’t talk or breathe or both. These patients have suffered through this devastating disease for decades with really no treatment except surgery. What does surgery do? It just keeps removing the benign tumor, it's like mowing your lawn; it keeps coming back. Consequently, the situation becomes worse, and there’s a continuous problem that needs to be solved. To really address this disease, we need to tackle the underlying infection, which is the HPV 6 and 11. This is exactly what we designed PRGN-2012 to do: to awaken the immune responses of these patients, identify the infected cells, and then destroy them. Based on that, we have estimated that there are between 15,000 to 20,000 patients in the United States. Ex-U.S., there are more than 125,000 patients. So as we've mentioned, this is truly a devastating disease with no current treatment. When we started our trial with PRGN-2012, we designed the trial to assess patients within 12 months prior to receiving their vaccine. These patients receive a course of four vaccinations within 85 days, after which we follow them to monitor for the recurrence of the benign tumor. In a single-arm Phase 1 pivotal trial that we ran originally, we observed that these patients have a very favorable safety profile, primarily Grade 1 and Grade 2 adverse events, which are some rashes at the site of injection or some fever, resolving within a day or two, very similar to receiving flu shots. Secondly, one distinctive aspect of our vaccine design is that it's given subcutaneously in the arm or leg, again, similar to a flu shot. We don't require any special device; it can be administered in any physician's office. Now, in terms of safety and our primary endpoints, we decided to focus on the most severe patient population. We define that as patients who have required at least three surgeries in the previous year. The average number of surgeries that our patients had in our trial was upwards of six surgeries in the prior year. Therefore, you can imagine that every couple of months, these patients are undergoing surgery; some of them had 10 surgeries in the prior year. After following these patients for 12 months, we observed that 50% of them did not require any surgery, referring to them as complete responders. If we look at the overall patient population, there is an 83% response rate. Regarding the immunological responses of these patients, the ones with a complete response demonstrated a significant increase in their immune responses to HPV 6 and 11. This is exactly what the mechanism of this vaccine aims to achieve. Additionally, we have been tracking these patients for more than 12 months; some of them have remained in complete response for upwards of 24 months, which is two years after vaccination. Again, I emphasize that these are patients with an average of six surgeries per year. Moreover, based on our safety and efficacy data, the FDA has granted us breakthrough designation for the first time in history. They have agreed that our single-arm pivotal Phase 1 data combined with a single-arm Phase 2 can act as pivotal data for the BLA submission. As previously mentioned, we finished enrollment in our Phase 2 last year, and we are excited to present the full dataset of our Phase 2 by the end of Q2. We have published prior translations of our complete Phase 1 data and the mechanisms of action, and we are poised to submit our BLA in the second half of this year. We have received confirmation from the FDA that we are on track for the BLA submission. As you can imagine, this is quite exciting and serves as proof-of-concept for our platform. Simultaneously, we have been advancing another molecule, PRGN-2009, which has already been positioned in HPV 16 and 18 cancers, including head and neck cancer and cervical cancer. The Phase 2 studies in head and neck cancers were initiated last year, and as we speak, we are currently enrolling and recruiting patients for this trial focusing on early-stage disease. This is also an exciting opportunity. When you consider head and neck cancers, the response rate to checkpoint inhibitors has been only 18%. As such, we see significant potential for improvement. Last year at ASCO, we demonstrated that we achieved 30% objective responses — including partial and complete responses — in HPV-related cancer patients who were Stage 4. Some of these complete responses were durable, lasting over a year. This is in a patient population where, as I stressed, checkpoint inhibitors in cervical cancers only have a 15% response rate, and in head and neck cases, it's 18%. Now, we are positioning PRGN-2009 in head and neck cancer in combination with pembrolizumab for early-stage disease, which is quite exciting. We also received FDA approval last year to open the Phase 2 study in combination with pembrolizumab in relapsed metastatic cervical cancer patients. Currently, we are actively enrolling patients for that trial, which is also quite exciting. As you can see, our platform has significant differentiation from all other platforms, with the efficacy it has shown in our lead asset, PRGN-2012, based on its safety, clinical efficacy, and high anticipation from KOLs and investigators is generating excitement. It has positioned us to become a leader in the treatment of this rare disease. With that highlight, I would like to now transfer to Harry Thomasian to give us, our CFO, an update on our financials. Harry?

Thank you, Helen, and good afternoon to those on this call. We appreciate your participation. As Helen mentioned earlier, 2024 is shaping up to be a transformative year for Precigen. We are well on our way to completing our drug substance manufacturing facility here in Germantown, Maryland. With the hiring of our Head of Commercial Operations in September of this past year, we are continuing to build out our commercial function and plan to be ready for the expected launch of PRGN-2012 in 2025. In addition, we anticipate multiple value inflection points in 2024, starting with our data readout on PRGN-2012 in the second quarter of this year. As we approach the end of the first quarter of fiscal '24, we're continuing to exercise sound financial management while preparing for the planned launch of PRGN-2012 in 2025 and moving our other programs rapidly through the clinic, all while maintaining efficient SG&A operations. With that in mind, I'd like to spend a few minutes highlighting certain aspects of our financial results from 2023. In 2023, our research and development expenses were $48.6 million, an increase of 3% or $1.4 million from the prior year. This was primarily due to additional investments in personnel, mostly from adding headcount to support the company's growth in development activities. Our focus on SG&A costs resulted in a decrease of 16% or $7.6 million from the prior year to $40.4 million for the full year of 2023. This reduction was primarily due to decreased legal and insurance costs, achieved while we began to build out our commercial group. We filed our 10-K with the SEC just prior to this call, and you can find more detailed financial information in the financial statements included in the 10-K. Additionally, we are continuing to evaluate various opportunities and are confident in our ability to strengthen our balance sheet as we approach the planned launch of PRGN-2012 and transition from a clinical to a commercial-stage company. This concludes our prepared remarks for today. I'll now turn it over to the operator for any questions.

Your first question comes from Jennifer Kim from Cantor Fitzgerald.

Jennifer?

Her line dropped. Your next question comes from Jason Butler from Citizens JMP.

And congrats on all the progress. So two for me. First of all, in terms of the PRGN-2012 Phase 2 trial, can you maybe just compare the trial design here, patient population, anything about trial conduct to the Phase 1 study that we already have the data from and any differences? And secondly, Helen, at this point, any more color you can give us on the design of a confirmatory study that you would conduct for 2012, assuming you've got accelerated approval?

In regards to the Phase 1 and Phase 2 study, actually, the design is exactly the same. This is why the FDA allowed us to combine the Phase 1 single arm and Phase 2 single arm and consider that pivotal. We are really excited about that. There was no different design between these two, and this will total 35 patients that the data will be reported on. Regarding the confirmatory trial, we have full agreement with the FDA already that the confirmatory trial was designed to duplicate what we've done in a single-arm Phase 1 and Phase 2. So it's the exact same design. However, one interesting point here, and I think it's very important, is that based on the safety and the efficacy that we showed, and the FDA has seen that data, they have recommended we consider an arm for repeat dosing. This is not a requirement for the confirmatory, it can be managed differently. However, we can even add it to the confirmatory trial if we wish to. The idea for repeat dosing is particularly for the other 50% of patients who didn’t achieve complete response but still benefited and reduced their number of surgeries; they might be able to achieve a complete response. We're really excited about this. We already have the design for the confirmatory trial based on what we've previously established. Clearly, once we submit our BLA, the confirmatory trial will begin simultaneously.

Your next question comes from Jennifer Kim from Cantor Fitzgerald.

Can you hear me?

Yes. Hi, Jennifer.

Sorry about before. Maybe to start off, have you decided on your plan in terms of the format or venue for presenting the Phase 2 data? And then my second question is just from a commercial readiness standpoint, can you give more color on the manufacturing side and how much capacity do you anticipate having at the timing of a potential launch?

Absolutely. We are looking at various options for presenting the Phase 2 data and will provide more guidance as we approach the date. We are excited about it. Regarding our manufacturing capacity for commercial readiness, it is progressing according to plan. At the time of launch, we will have sufficient capacity to meet the demand and will have generated thousands of doses for patient treatment.

And maybe to follow up on what you said about the arm to look at repeat dosing, is there any data or feedback that you're waiting on before you make that decision?

No, actually, that is the arm that the design has been up to us because it’s not a requirement for confirmatory from FDA. Our confirmatory trial is already agreed upon with the FDA and is in the process. Upon our submission of the BLA, we will also initiate that going forward. The repeat dosing is what we designed in conjunction with our investigators; we will also add it as part of our confirmatory as another arm. That said, it is not an FDA requirement. This should expand our label and our patient population for those who may benefit from repeat dosing, given the durability we're currently observing, which exceeds two years.

Your next question comes from Swayampakula Ramakanth from H.C. Wainwright.

This is RK from H.C. Wainwright. I have one question on 2012. In terms of commercializing the drug, can you provide insights on aspects such as your sales strategy? Given this is an orphan disease, do you focus on specific centers where it is treated? Just a bit of detail on the dynamics, please.

Yes. I'm going to ask Jim Shaffer, Head of our Commercial Operations, to provide more detail.

Yes. Thank you, Helen. We have recently completed primary and secondary market research to better understand not only the patients but also the physicians and prescribers managing RRP patients across the U.S. We continuously identify that it's a relatively small group of specialty physicians, primarily laryngologists, who manage the majority of these patients. Therefore, we will be able to efficiently create, hire, and train a specialty sales team focused on major metropolitan areas, increasing awareness, launching, and promoting our product once approved.

And then moving on to the UltraCAR-T cell therapies, specifically the 3007, where you're currently in a dose escalation study hoping to present some preliminary data. What sort of data should we expect in terms of the dose ranges? How soon can you progress to Phase II based on the data from this portion of the study?

In this trial, there is a two-dose cohort. This is an umbrella trial, as previously mentioned, addressing several indications, both hematological and solid tumors, particularly triple-negative breast cancer, which can be very exciting. We are looking to share some interim data updates by the end of 2024. Upon safety completion, this trial will move to the expansion phase, Phase 1b. Discussions regarding progress will be based on data observed; and we will engage with regulatory bodies in alignment with our current approach. Our clinical data shows encouraging results, especially in AML, where the patient population has few alternatives. As you know, other CAR-Ts and TCRs, including off-the-shelf options, haven't managed to penetrate that space effectively. Therefore, we are extremely excited about our CAR-T results and look forward to sharing more data updates by the end of 2024.

Your next question comes from Brian Cheng from JPMorgan.

First one is on your RRP platform. Based on your market research, what should we anticipate regarding the initial adoption trajectory within RRP if you were approved today? Is there pent-up demand, or do you foresee a gradual ramp-up?

I think, Brian, Jim Shaffer will provide that input, and I can elaborate afterwards.

As mentioned earlier, we wrapped up a commercial market assessment for both the U.S. and the global markets for RRP and PRGN-2012. We believe the overall uptake will be relatively swift, given that a large majority of patients are managed by a relatively small number of laryngologists throughout the U.S. As we educate and raise awareness about product availability, we expect a timely reaction from those physicians and their patients. For updates, we estimate a three to four-year uptake curve until peak sales, followed by levels of retreatment that will influence sales over time.

That does clarify things. Moving to expenses, how should we project sales-related expenses while preparing for the launch? Any insights on projected cash runway? What is the latest update on the UltraCAR-T partnership?

I can address parts of your query, and Harry may provide additional details. In terms of our financial management, as Harry mentioned, we’re assessing various strategies to supplement our financial position, and we’re confident in our ability to navigate forward. Regarding the UltraCAR-T, this question is timely, especially in light of recent changes in the field. We've all seen shifts in labels for even approved CAR-T therapies, driven by patient outcomes and complications. This scenario places additional scrutiny on classical CAR-T therapies. When looking at chronic conditions like lupus or autoimmunity, safety becomes paramount since these patients require long-term treatment. Our platform addresses these needs effectively. With over 70 patients treated thus far, we maintain a focus on the ease of overnight manufacturing at the hospital, which significantly reduces associated costs. We have also designed our CAR-T therapies with safety switches. Thankfully, we've not been prompted to use those features. However, preclinical studies support their inclusion as part of our IND package with the FDA. This combination of safety and cost-effectiveness is generating significant interest. We’ll keep you updated on our partnership initiatives, as we expect this to be an exciting year.

Addressing your question on cash runway: last year, our cash burn was about $68.5 million, averaging around $5.7 million per month. As we anticipate increased expenditures with the build-out of commercialization and manufacturing capabilities, we're making efforts to reduce expenditure in other areas. I reiterate our focus on evaluating options and our confidence in strengthening our balance sheet as we approach the planned launch of PRGN-2012.

I see no further questions. Lester, let's return to Helen for her closing remarks.

Thank you, operator, and thank you to everyone who joined us for our update call today. As you can see, 2024 is poised to be a transformative year for us at Precigen, especially as we transition from a clinical to a commercial company. With pivotal Phase 2 data underway and plans to submit a BLA in the second half of this year, we are aiming to provide health solutions for patient populations that currently lack alternatives and drive shareholder value. We look forward to further communication in the coming weeks and months. Thank you once again for joining us.

Ladies and gentlemen, this concludes today's conference call. Thank you for joining. You may now disconnect.