Precigen, Inc. (NASDAQ:PGEN) Q3 2022 Earnings Conference Call November 9, 2022 4:30 PM ET
Steve Harasym - Vice President, Investor Relations
Helen Sabzevari - President & Chief Executive Officer
Harry Thomasian - Chief Financial Officer
Conference Call Participants
Jason Butler - JMP Securities
Ben Burnett - Stifel
Arthur He - H.C. Wainwright
Jennifer Kim - Cantor Fitzgerald
Good day, and welcome to the Precigen Third Quarter 2022 Financial Results Conference Call. Today, all participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that today's event is being recorded.
I would now like to turn the conference over to Steve Harasym, Vice President of Investor Relations. Please go ahead.
Thank you, operator, and thank you for joining us today. With me are Dr. Helen Sabzevari, President and CEO; and Harry Thomasian, CFO of Precigen.
Helen will provide an update on the significant progress we have made across our pipeline programs and highlight our anticipated upcoming milestones. After which Harry will review our third quarter 2022 financial results. Following our prepared remarks, we will open the call to Q&A.
Before we begin, please note that during today's call, we will make various forward-looking statements. Investors are cautioned that such forward-looking statements are based on current expectations and are subject to risks and uncertainties that could actual -- that could cause actual results to differ from those indicated by our forward-looking statements. Please read the Safe Harbor statement in the press release as well as risk factors contained in Precigen's most recent SEC filings for a more complete discussion of these risks and uncertainties.
I will now turn the call to Dr. Sabzevari. Helen?
Thanks, Steve, and thank you for joining us today. I'm pleased to report to you today that Precigen made significant progress during the third quarter of 2022, while focusing on the assets in our portfolio offering the greatest potential for increasing shareholder value in the most efficient way possible.
Focus is on mantra here at Precigen, and our strategy is straightforward. First, we focus on markets with ultra high unmet need. The indication we are pursuing offer the potential for an accelerated regulatory and developmental pathway.
Second, we continue focusing our research, development and manufacturing operations by making early decisions to pursue therapies with higher probabilities of success. The ability to create consistent manufacturing at multiple sites also figures into our decision-making as we seek to decrease product costs and provide therapeutic access to a broader patient population. We need to move away from traditional concepts of centralized manufacturing, especially when we are dealing with patient population suffering from diseases where earlier treatment makes a big difference.
Finally, we are focused on advancing therapies that are not only differentiated in their utility, but also potentially in their pricing as we change the paradigm in manufacturing and development. I will talk about how our UltraPorator technology is proving to be a game changer when it comes to enabling overnight local manufacturing and distribution. We believe that we are entering a new era of value-based care and want to be ready with products that meet the future requirements of our healthcare system.
Another area of focus is fiscal discipline. Thanks to our efforts, we have reduced the cost of SG&A and are now allocating further resources towards our clinical and commercialization efforts.
I will now update you on our clinical programs. First, our AdenoVerse immunotherapy platform, for PRGN-2012 in Recurrent Respiratory Papillomatosis or RRP, a devastating orphan disease with the severe unmet medical need as recurring surgeries remains the only option for these patients.
The burden on these patients is immense with many requiring hundreds of life time surgeries at a very high cost. Furthermore, recurring surgeries only temporarily treat the symptoms of RRP and do not lead to remission.
These surgeries can actually worsen the condition of RRP overtime, as it can increase the spread of the virus, leading to Comorbidities, including significant breathing problems and lots of local function.
There is an urgent need for the therapeutic treatment options such as the PRGN-2012. PRGN-2012 has been orphan drug designation for the patients with RRP. We are extremely pleased with the rapid progress of this clinical program.
To recap, we dosed the first patient on the Phase 1 study in March 2021, during the highest heights of the COVID-19 pandemic. Enrollment and dosing are complete in the Phase 1 dose escalation and dose expansion cohorts with 15 patients' treated and 12-month follow-up with near completion.
PRGN-2012 has demonstrated an excellent safety profile with all subjects receiving full treatment course with four PRGN-2012 administrations. There have been no dose-limiting toxicity and no treatment-related adverse events greater than Grade 2.
We are looking forward to presenting what we believe will be highly compelling safety and efficacy data from the dose escalation and expansion cohorts of PRGN-2012 at the virtual R&D event in early January 2023, which is timed to coincide with the 41st Annual JP Morgan Healthcare Conference.
We believe there is a significant market opportunity for this drug in RRP. Our estimate of the U.S., EU adult and juvenile patient population is approaching 30,000 cases. We feel there are substantial case numbers outside of the U.S. and EU that could bring the global population to over 75,000.
We also believe that due to limited disease awareness reported numbers would understate the true prevalence of this disease. This could present a market opportunity for the U.S. and EU alone of over $1 billion.
These are our preliminary estimates, and we plan to provide further details on the patient population, burden of the disease on patients and market opportunities during the date of presentation.
Dr. Clint Allen, Senior Investigator at NIH and a Lead Associate Investigator for PRGN-2012 clinical trial will lead the presentation. At the same time, I'm pleased to report that enrollment in the Phase II study is progressing rapidly with 16 patients enrolled to date. Given the high unmet medical need for this patient population, we have been in ongoing discussions to evaluate the various regulatory path with FDA.
Now for an update on PRGN-2009, our AdenoVerse Immunotherapy in HPV-associated cancers. We completed enrollment in the Phase I monotherapy and combination on with six and 11 patients enrolled, respectively. All patients were in Stage 4 recurrent or metastatic HPV-associated cancers and failed multiple prior therapies, including checkpoint inhibitors.
Interim data from the Phase I combination arm demonstrated encouraging safety and efficacy with a 40% objective response rate, both complete and partial responses in a patient population that has failed previous checkpoint inhibitor treatment. Patient follow-up is ongoing and we are looking forward to hosting an investigator-led Phase I data presentation in the first half of 2023.
Enrollment is nearing completion in the Phase II monotherapy arm in newly diagnosed oropharyngeal squamous cell carcinoma patients with 19 or 20 anticipated patient dose and patient follow-up ongoing. Based on our encouraging data thus far, PRGN-2009 immunotherapy has a broad potential to address the estimated 5% of all cancers, which are attributed to HPV-associated malignancies, including cervical, head and neck and anal cancer.
Let's now turn to our UltraCAR-T trial . We completed enrollment for PRGN-3006 in the Phase I dose escalation cohort of the Phase I/Ib study in relapse refractory AML patients. Dr. David Solomon of Moffitt Cancer Center and the lead investigator for the PRGN-3006 study will present Phase I safety and efficacy data at ASH on December 12, 2022. We are encouraged by the results to date and are looking forward to the presentation in patients with relapsed/refractory AML, which represents a potentially significant benefit to this patient population.
The Phase Ib study of PRGN-3006 UltraCAR-T has been expanded to Mayo Clinic in Rochester, Minnesota, at the first of several new sites expected as part of the multicenter extension of this study. And the first patient was successfully dosed at this expansion site. Additionally, as previously announced, we received FDA clearance to incorporate repeat dosing in the expansion phase of this study. This is an important milestone for Precigen as well as for the field of immunotherapies, as it demonstrates the proof-of-concept for a scale out of overnight the centralized UltraCAR-T manufacturing using UltraPorator.
Site activation is in progress at several additional major cancer centers across the US. UltraPorator is a game changer for the field, and we are pleased that the renowned institutions such as the Mayo Clinic are partnering with us to advance its development. PRGN-3006 has been granted orphan drug designation as well as fast track designation for patients with relapsed refractory AML.
Now for PRGN-3005, our ultra CAR-T treatment for advanced ovarian cancer. Enrollment is complete in the Phase 1 dose escalation cohorts of the intraperitoneal and intravenous arm without lymphodepletion as well as in the lymphodepletion cohort in the IV arm. Patient follow-up is ongoing, and we expect Phase 1 data to be presented in the first half of 2023. You may recall that during our second quarter of 2022 call, we announced FDA's clearance to incorporate repeat dosing in this study and we are pleased to report that the first patient has received a repeat dose via IV infusion.
Enrollment is ongoing in the Phase 1b expansion study at Dose Level 3 with lymphodepletion prior to IV infusion. Site activation is in progress at multiple major cancer centers in the US, yet another point of validation for the scale-out of our overnight decentralized UltraCAR-T manufacturing using UltraPorator. This is an extremely important study. There have been minimal therapeutic advances in this patient population with 10% or less response rate in ovarian cancer with current treatment.
I participated in a panel at City earlier this week with some of the prominent figures in the cell and gene therapy, including the CAR-T space. And it is clear that there remains significant unmet need and opportunity for innovation in solid tumors. We believe with our UltraCAR-T platform, we have a unique solution to address these limitations. Finally, our UltraCAR-T trial in PRGN-3007, which is being evaluated in the treatment of advanced ROR1+ hematological and solid tumors.
PRGN-3007 uses our next-generation UltraCAR-T technology and incorporate intrinsic PD-1 down regulation in addition to the three effector genes a CAR, membrane-bound IL-15 and a kill switch. Intrinsic blockade of PD-1 expression is a, at addressing the inhibitory tumor microenvironment and eliminating the need for the checkpoint inhibitor combination. The Phase 1/1b umbrella study in hematological and solid tumor is on track to initiate dosing this quarter. We look forward to an investigator-led trial-in-progress presentation of PRGN-3007 at ASH on December 11, 2022.
I will now turn the call over to Harry, who will review our third quarter 2022 financial highlights. Harry?
Thanks, Helen, and good afternoon to all of you on the call. I'd like to start by highlighting the great progress we've made over the past quarter and strengthening our balance sheet. As previously announced, during the third quarter, we completed the sale of our wholly-owned subsidiary, Trans Ova Genetics for $170 million. The proceeds from this sale have provided us the ability to retire our convertible notes.
In regards to those convertible notes, during the third quarter and through today, we have executed opportunistic open market repurchases, retiring $144 million of our outstanding convertible notes that are due July 2023, bringing our outstanding debt balance as of today to $56 million. The volume weighted average price of the repurchase activity was approximately 98.4% of par. Taking into consideration the discount to par and the savings on future interest through the stated maturity date, we will realize a cash savings of over $5.4 million.
I'd also like to spend some time highlighting certain aspects of our operating results for the third quarter and year-to-date. As a reminder, Trans Ova's historical results are reported as discontinued operations as was the case beginning with the second quarter. As I've stated on previous quarterly update calls, we have pursued a variety of cost reduction initiatives over the past couple of years, specifically as it relates to our SG&A costs. These initiatives have borne fruit.
As you can see in our financial statements, by comparing SG&A expenses quarter-to-quarter and year-to-date to the prior year-to-date, those costs have decreased 8% and 9%, respectively. Based on these reductions in our overhead costs, we are now able to focus on the continued advancement of our programs and the potential future commercialization of such programs.
As for non-operating expenses, with the retirement of our convertible notes, cash interest expense was lower for the three and nine months ended September 30, 2022, versus the prior year periods. Looking at the remainder of this year and into next year, cash interest expense will be significantly lower in the fourth quarter of this year and the first half of next year through the maturity of our remaining notes. With the sale of Trans Ova and the retirement of debt, our balance sheet is much stronger than it was earlier this year.
We ended the third quarter with cash, cash equivalents, short-term investments and restricted cash of $153.8 million. This provides us with a cash runway into the early part of the fourth quarter of 2023. Overall, we have been successful in implementing our strategies to date, and we look forward to continued success in moving our product candidates through the clinic.
That concludes our prepared remarks for today, and we are now happy to take your questions. Operator?
We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jason Butler with JMP Securities.
Hi, Thanks for taking the questions and congrats on the progress. Two for me. First of all, on 2012, can you just give us any color on the patients enrolled into the Phase II trial in terms of their baseline characteristics and specifically baseline surgeries. And then secondly, for 3005, any more color you can give us on the patient who was retreated -- was the procedure successful? And anything you can say about safety so far. Thanks.
Sure. HI, Jason, Well, in regards to the PRGN- 2012, the patient population that actually we have been treating is the patients with the most severe cases. They have at least three surgeries and more, but majority of them are much more than that. And some of them have been continuously almost on a monthly report four to six weeks requiring surgery. So we did not go after a very, very early on disease, but actually the patient population that we have in our trial is the most difficult if someone wants to say it that way to treat.
And from a perspective of what we will be reporting in the upcoming is on the -- obviously, the safety, both on dose escalation, but also on an expansion cohort, which, as I mentioned, contains the patients that I discussed. And we will -- we are very excited about the data that will show as was mentioned, there is really no treatment for this patient, except consecutive surgeries. Some of them, they have hundreds and hundreds of surgery throughout their life. And as you can imagine, this is a very, very difficult disease to treat. And up to this point, there has been absolutely no treatment and surgery is just a matter of removing followed by recurrence continuously. And this is what these patients have to look forward to.
In regards to our PRGN-3005 -- the -- I've mentioned, we have redosed the patient IV infusion, and the patient is doing very well, and we are really excited. And this patient actually had received the first dose a while back as well as -- and have been doing well, very well, and it continues and after the second dose. So we are very excited for the reports coming in first half of next year.
And as I mentioned actually in prepared remarks, I just came back from a meeting at the City actually, it was a special panel for the cell and gene therapy with some of the renowned people in this field. And it was very clearly mentioned that really the field has nothing for the solid tumors at this point and how the current including the CAR T are not able to address anything in the solid tumors and the discussion around our overnight basically manufacturing and the ability of the sustainability of these cells that are not exhausted and going into the solid tumors such as ovarian. So, it is a very exciting time for us. with -- especially the solid tumor indication. And we look forward to the presentation next year.
Thanks Helen. I appreciate all the details
The next question comes from Ben Burnett with Stifel.
Hey. Thank you very much. I wanted to ask a question about the AML UltraCAR-T program. Can you just talk about what went into your decision to focus on dose Level 3? And I think there's some -- maybe some discussion in the ASH abstract around expansion and expansion kinetics, but what was the decision for folks on just Level 3 and was it efficacy?
And I guess also maybe just a clarification. Can you remind me for the AML program, will -- for patients to get multiple doses, will the product be made all at once and it's split into two doses? Will it be two separate manufacturing runs?
Great. Thanks. First of all, for PRGN-3006 and the decision on dose Level 3 was really based on, first of all, the efficacy that we reported. If you recall, in the ASH last year, we already at the dose Level 1 and 2, we already have shown objective responses, 50% objective responses. And we are talking about dose levels that were between basically 100,000 to 1 million -- 100,000 to 300,000 or 30,000 to 100,000 per kilogram. So, very low doses. The maximum dose that we have infused was around 28 million.
So, because of the ability of this platform, both the B cells are not exhausted, and they don't require activation outside. We believe that we do not need to infuse hundreds of millions and billions of these cells, which also leads to the very severe CRS and some of the toxicity and neurotoxicity that has been seen with other type of cell therapy, especially the CAR-T.
So, for that reason, and based on both safety, the efficacy, we decided the third dose and the ability to re-dose would be sufficient for us to stop at our third dose level and then expand and go after the efficacy. Because as you know, it's still with very encouraging data from dose escalation we are still on Phase 1 and the efficacy data has to include a larger number of patients in there. And we believe that we have a very good position, especially with the fast track designation that we have as well as the orphan drug, but positioning this therapy rapidly in a larger patient population and looking at the clinical data, especially the efficacy, both safety and efficacy. And that was the main reason for going after that. We also had shown that, of course, incorporation of lymphodepletion has led to the much faster expansion of these cells and we showed that kinetic of expansion of the cells in the ASH last year. And that also was another reason that we believe, therefore, our dose – the third Dose Level was sufficient to go through our expansion.
So we are really looking forward and now with the Mayo Clinic having come on board a number of other major clinical centers that will be joining us in the next few months. We are looking at recruiting patients rapidly. And what it really for the first time, and I cannot stress this enough. This is the first sign in the field that you have been able to do a decentralized manufacturing and various sites being able to manufacture these ultra cars overnight. This is not one side anymore. This is now a number of sites. And obviously, it is really exciting because we have shifted the paradigm here. And for the first time in this and allowing us the re-dosing what you asked about PRGN-3006 and if that is the split dose.
So currently, obviously, there are a number of ways that you can do this. You can freeze back T cells and split it and dose at the time that you want. And we have been working also on the process that you can generate your ultra cars at once and then move towards that. So those process development work is ongoing. But at the current, we are able to basically provide a number of doses, which is, again, is unique and paradigm shifting. Why? Because the other companies, the concept of re-dosing as the $400,000, $500,000 per shot is almost impossibility as far as the cost is concerned.
And for us, the cost of this is a lot different. And I think this is what makes this platform unique and allows the ability for the patient, not only to receive the treatment but to receive it multiple times at different points if they need it.
Okay. Excellent. That's super helpful. And if I can just ask one more just on the ROR1 3007 UltraCAR-T program, I guess what's gating to initiating patient dosing for that?
So I'm going to be very frank and open. It has been a lot of the changes that has happened in Moffett and internal processes that they had for their various committees. Our broad product is there. And basically, our investigators are now ready. The manufacturing is set and it's just passing through the last committee and some of the bureaucracy that is taking place.
Okay. Understood. Thanks so much. I appreciate it.
[Operator Instructions] Our next question is from Arthur He with H.C. Wainwright.
Hi, Helen and the team. Good afternoon. This is Arthur on for RK.
Hi. So first -- my first question is regarding the 2012? Could you remind us what's the dose level for the 2012 for the expansion cohort? And on average, how many dose is the patient received for the date?
Yes. So our dose levels to be 5x 10 to the 11 and our patients received the course of four basically infusion or not infusion, sorry, it's the subcu injection. I apologize.\
So that is the course of four and with five times sent to the ALM to them.
Got it. Thanks for that. And I noticed that for the Phase 2 study, you tend to enroll up to like 48 patients according to the clinical that done. Have you stick with the FDA regarding the size of the study, how would that be efficient for as a registration trial data?
That's an excellent question, and that's exactly some of the discussions that we are having with the FDA in regard to the regulatory path for this molecule in view of the safety and efficacy that we are seeing in our expansion cohort.
Okay. Got you. Thanks for the color. And my last question is for both 3005 and 3006, the repeating -- repeat dosing regimen. Just curious, how you guys determine the dosing interval for the repeating dose for the patient. It's more a fixed schedule or it's more personalized for the patient at the physician discretion.
Yes. Excellent question. Unlike off the shelf, because as you know, the conventional cars, they do see one does, and that's all they can produce and they receive that. The only ones that there are multiple dosing within the first two or three weeks is off the shelf. And the reason for that is because the cells that as the clinical data has shown they don't sustain themselves, and that goes hand-in-hand with upwards of almost $300 million each time every week for three weeks and close to 1 billion cell infused with a very, very heavy lymphodepletion, which obviously has had a number of issues with the talks.
And eventually, if you still look at the how the cells maintain themselves and with the time it's pretty much up there once they are gone. So with that in view, actually or redosing as you mentioned, we don't need to do it on a weekly basis because ourselves directly the expand and manufacturer actually inside the patient, we don't do any expansion outside. We sell because they have been member in bound IL-15, they are capable of upon seeing the tumor antigen expand, and we have shown the kinetics and continue the kinetics over the period of time as a follow-up with this patient, but also in the absence of antigen, for instance, while they are circulating to get to the site of the tumor, then they can sustain themselves because, again, of a membrane-bound IL15 and that they have. So for those reasons, we are very differentiated from what you see off-the-shelf and the need in those settings, they absolutely have to do that. In our settings, we do not need to do this because of the mechanism of action of this UltraCAR-T. And as a result, the redosing is at the discretion of the -- basically our oncologist and the need of the patient. That's how it takes happen. And again, still with a tremendous difference in the number of the cells that are being infused because obviously, in the case of off-the-shelf, there are hundreds of millions to billions and ours is much a log of the difference there.
Awesome. Thanks for the additional color and thank you for taking my question and congrats on the progress.
Next question comes from Jennifer Kim with Cantor Fitzgerald.
Hey everyone. Thanks for taking my questions and congrats on the progress. I have a few questions here. Maybe the 2012 assets. Given the exciting expansion data you're expected to present in early January, is the timing of that R&D event also coinciding with when you believe you'd be able to give a greater level of color around those potential regulatory pathways?
I think, yes. That's an excellent question. At this point, I will not make any comments in regard to that. But obviously, as soon as we can, we will make comments in regard to the regulatory aspect. But what I can say is we are definitely looking forward to this presentation because we are really excited for this patient population and what PRGN-2012, is currently showing both in regard to the safety and efficacy, and we are pleased that basically our investigators can present this data early in January.
Okay. That's fair. And then I have a few questions on the 2006 asset. First, in terms of the timing that it takes to get that tech transfer in site activations, like all those activities done for the decentralized manufacturing UltraCAR-T, has that all been in line with your expectations in terms of how long it takes to get that done? And then my second question for this asset is the repeat dosing in the Phase Ib, is that still anticipated to start this year?
Well, the repeat, first of all, let me take tax transfers. Originally, when this platform has been designed and advance the whole concept was that this platform can be basically taken up on any of the cancer centers and the tech transfer and the ease of technology had to be in such a way that any clean room in the hospital can do this. And even though at the very beginning, it was considered almost a dream to achieve something like that. We are so thrilled that almost 2.5 years post starting these trials, Phase 1, not only we have shown the capability of this UltraCAR-T to -- actually to manufacture it, but also in patients to be kinetically expanding it and show the preliminary signs of efficacy there.
Now, in regards to the tech transfers, yes, I have to say the answer is what we anticipated and SOPs that we had provided to the center is self-sufficient. Our teams are not at the site to actually execute manufacturing of these cells. So the staff of the clean room in the hospital, they do this and through the SOPs, that we have developed and the tech transfers that we do. And that is not a lengthy time. We are not talking about month or six months of training, we are talking about during the COVID, I can tell you, when every manufacturing sites were shutdown, we continued with our tech transfers. And actually, we did that overview.
So this is the advantage of this platform, and also the incorporation of UltraPorator, which makes the semi-closed system, which is central part of this technology, has allowed this basically sites to move very rapidly. And we are really pleased. We have now a number of sites that are coming out, both for our hematological trials in 3006 and 3005. And you will see that in the next few months as they roll out and they start actually enrolling patients.
Okay. And then, if I could squeeze one more question in for the 3006. Specifically at the dose level 3, those patients, what kind of upgraded data? And I guess, how meaningful can that -- can we expect that updated data to be in the ASH presentation beyond what was revealed in the abstracts?
I think what you will see is complete all of the doses, both in with and without lymphodepletion. I think some of the most -- not only the safety of everyone and having no basically toxicity, but also the efficacy that is being set in this patient population. As you know, this is a patient population that has two to three months to live. They have failed multiple treatment before these are all stage fourth, have fell a minimum of three to four, if not this five or six, and they have also all failed bone marrow transplant at some point.
So they really have no option in front of them. And to see objective responses in this patient population is extremely important. And I think we will be reporting on those and also the science of how some of the UltraCAR is working directly in the patient. So this is quite an exciting part for us.
Okay. Great. That's really helpful. Thanks guys and congrats on the quarter.
Thank you very much.
At this time, we are showing no further questioners in the queue. And this concludes our question-and-answer session. I would now like to turn the conference back over to, Dr. Sabzevari for any closing remarks.
Thank you, Operator. As you can see, we have made substantial progress across our clinical pipeline and corporate goals this year. We continue to focus on fiscal discipline and maximizing our balance sheet to drive our lead clinical programs through the clinic and towards commercialization.
Retiring a substantial portion of our debt reduces overhang and add additional operating capital to our balance sheet. On the clinical side, we are eagerly anticipating releasing the complete Phase 1 dose escalation and expansion data from our PRGN-2012 trial in early January. We are also looking forward to the true upcoming presentation for our UltraCAR-T programs at ASH in December.
As always, we are deeply appreciative of the support from our shareholders. We continue to strive towards creating a shareholder value and focus on bringing in treatment to the market with differentiating prices to address the high unmet medical need. Thank you.
The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.