Precision BioSciences Makes Impressive Progress On Mission To Change CAR-T Therapy Landscape – Seeking Alpha

Precision BioSciences (DTIL) is a biotech that should be on everyone's radar. While it is still an early-stage speculative biotech, it holds so much potential in the CAR-T space. It has a unique off the shelf approach to utilizing CAR-T, which will likely set itself apart from all the competitors in the space. Preliminary data was good, in the sense that PBCAR0191 was active, but the stock fell initially as some investors were not as impressed with the initial data. I believe that it is too early to write off this biotech, because there are a few key areas that must be addressed as it relates to results from the Phase 1/2a study using this particular CAR-T to treat patients with relapsed/refractory hematological malignancies.

I feel that Precision BioSciences was mistreated in terms of the reaction from the clinical data it had released at ASH. It released results from its Phase 1/2a study using PBCAR0191 to treat patients with relapsed/refractory B-cell precursor acute lymphoblastic leukemia (r/r B-ALL) and relapsed/refractory non-Hodgkin's lymphoma (NHL). In the r/r NHL population, there were 4 out of 6 patients who responded, for a 66% overall response rate (ORR). I believe that investor disappointment came from the next dataset, in which it was noted 2 early responders given this CAR-T had progressed.

On the r/r B-cell precursor ALL front it was decent as well with 1 out of 3 patients responding, or 33% ORR at day 28+. The good news here with respect to this patient is that it was a complete response. There are a few changes that can be observed in eventually seeing an improvement in data, which is why I believe the sell-off was irrational. Especially, since the stock had hit a bottom of $9.50 per share on December 9, 2019. Since then, it has traded higher to where it is now around $14.60 per share.

The first item to notice is that this is a new type of technology. Precision is basing its CAR-T as an allogeneic type of treatment. This is new territory, but one worth exploring. For instance, allogeneic means that engineered T-cells are modified from a healthy human donor and not the patient themselves. This brings a more rapid process for developing treatments, because patients don't have to wait weeks to be treated. With autologous CAR-T, T-cells must first be extracted from the cancer patient in question. Then sent to a lab to be engineered/modified with CARs needed to go after cancerous cells. Then those engineered cells are shipped back to the treatment center. Such an autologous process can take a very long time.

For example, Novartis (NVS) has its CAR-T Kymriah and Gilead Sciences (GILD) has Yescarta. The point here is that the vein-to-vein time (length of time of T-cell recruitment, CAR modification, and back to treatment center) can take 3 to 4 weeks. That means the patient must wait this long of a period of time before they are even ever treated. That's why I believe it is imperative that the allogeneic approach to CAR-T is perfected. If anything 3 to 4 weeks of waiting for a treatment is not a good thing for these cancer patients where time is of the essence.

The second item to note involves a small sample size. In my opinion, it works both ways. If a small sample size doesn't guarantee clinical success, then the inference can't be that it also proves the failure of a treatment. The Phase 1/2a study only recruited 6 patients for r/r NHL and then 3 patients for r/r B-cell precursor ALL. There needs to be a larger sample size like other late-stage CAR-T studies to really see whether or not PBCAR0191 is effective for these patient populations.

The third item involves dose escalation. As is the norm, Phase 1 studies look more towards safety of a drug. In other words, the goal is to see if there are dose-limiting toxicities (DLTs) which occur during the study. Since Precision BioSciences didn't see anything major in earlier doses (dose 1 and dose 2), it is able to assess the next set of clinical data expected in Q1 of 2020 using dose 3. The 3rd dose level of 3x106 cells/kg will be used for this study and next data readout. Even then, the next set of data expected at that time may not be the final dose eventually used towards a mid-stage study.

The key point here being that dose escalation will continue until the maximum tolerated dose (MTD) is established. Once an MTD is used for a mid-stage study, then the focus falls on efficacy of the drug at that time. At this point, it is really too early to say that PBCAR0191 is not effective in these patient populations. At least for the time being, the company was able to generate some response rates with lower doses, which is impressive early on. This bodes well for higher dosing in the coming cohorts.

The final item to highlight is the need for a more safer alternative CAR-T. Especially, as you may be aware that these types of treatments require lymphodepletion before treatment is administered to patients. Precision is taking a more moderate approach to lymphodepletion. In a study with 9 patients there were Grade 3 and Grade 4 adverse events typically associated with lymphodepletion, but no infections. That means the Flu/Cy lymphodepletion regimen being given in a moderate treatment approach, spares patients from severe adverse events such as infections which are associated with biologics. This is another key positive for those patients who are treated with allogeneic CAR-Ts. The advantage here being that with a more moderate approach of lymphodepletion, pending no SAEs, there could even be combination therapies explored for these patients. This also makes it easier to potentially increase to a higher level 4 dose.

Setting aside that the data reported from the Phase 1/2a study with the use of PBCAR0191, it's important to note the context of this CAR-T. This particular candidate targets cancer cells that express CD19. This is why the therapy is good, specifically for the treatment of NHL and ALL. However, Precision already had another CAR-T candidate lined up directly behind PBCAR0191.

This other candidate is known as PBCAR20A and is named as such that it targets cancer cells that express CD20. Therefore, some cancer indications appropriate for this target are NHL, chronic lymphocytic leukemia (CLL) and small lymphocytic leukemia (SLL). This is a good backup candidate just in case PBCAR0191 doesn't make it to the finish line for marketing approval. Even then, that CAR-T is still in the dose-expansion phase. The Phase 1/2a study using PBCAR20A will be initiated in the coming weeks/months. That's because the IND has already been cleared by the FDA so that the biotech can get this study initiated soon.

The ARCUS technology platform utilizes a synthetic ARC nuclease enzyme. The key advantage here being that the ARC nuclease enzyme is similar to the natural genome process of a homing endonuclease found in Eukaryotic species (species that have cells with an enclosed nucleus with membrane). Why is the ARCUS technology flexible? Well, above it was shown that Precision was able to establish off the shelf CAR-T cells based on this genome editing platform.

In the same way it can engineer or manipulate CARs, it can cut into DNA sequences as part of genome editing against other diseases. That's all great, but isn't this early stage technology? It is quite early in the process for genome editing, but Precision is definitely onto something with its ARCUS platform. This can be proven in that Gilead Sciences was already willing to generate a deal with Precision. This is a good deal, because Precision is eligible for a potential of $445 million in milestone payments. Not only that, but Gilead will fully fund the research and development of the Hepatitis B product being explored with this partnership.

According to the 10-Q SEC Filing, Precision BioSciences had $206.3 million in cash and cash equivalents as of September 30, 2019. With this cash on hand, it believes it can fund its operations into 2021. Based on this projection, I don't foresee a near-term cash raise. If anything, I believe a cash raise may be done during the 2nd half of 2020. The only way an earlier raise will be done is if the biotech has other expansion plans in mind. In the long term though, as long as good data is observed in the genome editing product for the treatment of Hepatitis B, then Precision will be eligible for millions in milestone payments.

The main risk deals with the first CAR-T product highlighted above PBCAR0191. That's because even though there is potential for improved efficacy at a higher dose level, there are two items to keep an eye on. The first is whether or not dose level 3 is safe. This means that there aren't highly toxic events that forces the biotech to not move forward with a higher dose. The second would be to see an improvement in clinical data. In this regard, it will be important to note if improved response rates are achieved as the dose is increased.

If the data stays the same or gets worse, that will be very troublesome. Lastly, it falls back on being patient as the trial progresses. A small group of 3 or 6 patients will not predict final clinical outcome in other studies. Eventually, it will be important to see a mid-stage study that incorporates 30 or more patients. That will be a better sample size, in order to determine whether or not PBCAR0191 is effective in treating relapsed/refractory NHL and ALL patients.

Precision BioSciences still holds potential to advance its first CAR-T product PBCAR0191 in treating patients with relapsed/refractory NHL and ALL. There is another CAR-T therapy that is already in the clinic known as PBCAR20A, which is expected to begin a Phase 1/2a study in the coming weeks/months. This will help reduce investor risk as it relates to the allogeneic CAR-T therapy pipeline. The genome editing platform is another potential area where the biotech can capitalize on. It's too early to state whether or not all products stemming from this platform will be successful.

However, it is bullish that Gilead Sciences has already made a commitment to fully funding research and clinical studies towards developing a gene therapy product for patients with Hepatitis B. The stock recovered after the initial fall based on the early allogeneic CAR-T PBCAR0191. I believe that there is potential for a recovery of the stock and if dosing continues to escalate without major toxicity issues, then an improvement in clinical outcomes can be achieved when data is reported again in Q1 2020.

This article is published by Terry Chrisomalis, who runs the Biotech Analysis Central pharmaceutical service on Seeking Alpha Marketplace. If you like what you read here and would like to subscribe to, I'm currently offering a two-week free trial period for subscribers to take advantage of. My service offers a deep-dive analysis of many pharmaceutical companies. The Biotech Analysis Central SA marketplace is $49 per month, but for those who sign up for the yearly plan will be able to take advantage of a 33.50% discount price of $399 per year.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.