Profile

Prime is building the CRISPR system for Prime Editing. This takes the CAS9 nickase enzyme and adds to it a Reverse Transcriptase enzyme from Retroviruses. This enzyme takes a RNA template, which is part of the pegRNA. The Reverse Transcriptase enzyme will use the pegRNA to write from RNA into the DNA. The CAS9 nickase will cut a strand of DNA. Then the Reverse Transcriptase will copy the RNA template into the DNA. Then the DNA repair mechanisms will fix the DNA. I have big concerns about this technology as it has not been tested as extensively as it should be. The Reverse Transcriptase makes about 1 mistake every 100,000 bases. That might not sound like a lot, but when editing millions of cells in a human, that is dozens of mistakes that get introduced into a gene. There is no way to predict what kind of side effects could come from these many mutations. Their new PASSIGE system could fix the problems with the first generation Prime Editing. It edits a place in the DNA to create a landing site for an integrase enzyme. This facilitates the insertion of the gene with minimal Reverse Transcriptase requirements. I think they know that Prime Editing has big issues with Reverse Transcriptase, and they are rushing to develop a new system to fix it.

Management

I have only followed this company since the IPO. It hasn't been very long. I have followed the CEO Keith Gottesdiener when I was an investor in Rhythm Pharma. I think he did a good job over there so he does get a level of trust that was earned developing another biotech company. Now we will have to wait and see if he can repeat that success with this company.

Science

Friedreich's Ataxia is the first program they are working on. This is in the CNS which would be a problem for delivery for this therapy. They would either have to invent a completely new LNP that works in the CNS, or they would need to use an AAV virus. That would be a real big problem as this system is way too big for any AAV. One of the major challenges all gene editing investors know is there is a huge obstacle for tissues. This would be one of those major obstacles for them to make this work.

Cystic Fibrosis is another target they are focused on. This is in the lungs. We have seen many companies try to deliver using LNP in the lungs, and they all failed badly. This is another indication where they lack delivery. They will need to find or invest in a new vector to make this work. This company will need to do a lot of inventing that isn't related to Prime Editing to make these programs work.

Wilson's Disease is a rare disease where the body builds up too much copper in the organs which leads to damage. It is estimated to be about 2,000 to 3,000 patients in the US. I think they intend to deliver to the liver for this indication. I am not sure how they are trying to target this disease yet, but I would wonder how they plan to edit the liver and affect copper deposits in all organs. We will have to see how this develops.

Chronic Granulomatous Disease is an extremely rare disease where Macrophages have a genetic defect which prevents them from being able to destroy the ingested pathogens they take in. It is estimated that only 20 people are born CGD each year. Their approach is to edit iPSC stem cells to replace the defective stem cells. With this being a stem cell therapy, all those errors by Reverse Transcriptase will be there forever to mutate and cause disease or cancer.

Valuation

Cash $294 million

Friedreich's Ataxia is estimated to be about 7,000 patients in the US. Even if they 1,000 of them at a $3 million price, that would be $3 billion. This has a very long way to go and many obstacles with delivery and the editing technology. I would give this .1 multiplier for $300 million value.

Cystic Fibrosis is about 30,000 patients in the US. I could see this being a good sized indication with $3 billion or more in sales. I think they could do at least 1,000 patients a year if the science works out. I would give this a .1 multiplier for early preclinical. That makes it worth $300 million.

I don't think Wilson's Disease or CGD are big enough to ever consider valuing at this early stage of development. I won't give any value to these programs yet.

All in, that is a $894 million market cap. Based on the 97.2 million shares outstanding, that comes to $9.19.

Partnerships

Beam License where they license technology to Prime Editing to Beam. They do have opt in rights for some of the programs in the US. Any programs they opt into would be shared 50/50 in the US. They are able to get $125 million in milestones and high single digit to low double digit royalties on all programs.

Events

Friedreich's Ataxia is 2 years from clinic

Cystic Fibrosis is 2 years from clinic

Wilson's Disease is at least 3 years from clinic

CGD is at least 3 years from clinic

Data Readouts

Should see Animal Data 2H of 2023.

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