PRME - Prime Medicine: Not Yet Primed For Retail Investment

2023-09-27 08:49:39 ET

Summary

• Prime Medicine is developing prime editing, a highly precise gene editing technology that offers advantages over traditional CRISPR-Cas9 gene editing.
• Prime editing has shown promising results in human cell lines, including correcting genetic causes of diseases.
• The company's lead program is focused on Chronic Granulomatous Disease (CGD), a rare genetic disorder that affects the immune system.

Prime Medicine ( PRME ) is another Dr. David Liu biotechnology production with a near-billion dollar valuation and no assets in the clinic. What makes Prime Medicine command such high valuation despite being merely in an IND-enabling stage?

Prime Medicine, as the name implies, is developing the relatively new gene editing technology called prime editing. Prime editing differs from both CRISPR-Cas9 and Base editing technology in important ways. It was first described in a paper published in Nature in 2019. This paper had Dr. Andrew Anzalone as its lead author, and he was at that time a postdoctoral fellow at Dr. David Liu's lab. The two together founded Prime Medicine to develop prime editing.

In that paper, the key utility of prime editing is described thus:

Prime editing shows higher or similar efficiency and fewer byproducts than homology-directed repair, has complementary strengths and weaknesses compared to base editing, and induces much lower off-target editing than Cas9 nuclease at known Cas9 off-target sites. Prime editing substantially expands the scope and capabilities of genome editing, and in principle could correct up to 89% of known genetic variants associated with human diseases.

Prime editing is a highly precise method for modifying DNA in living organisms, allowing for the addition, deletion, or replacement of specific DNA sequences with a level of precision that surpasses previous gene-editing techniques like CRISPR-Cas9. Just like CRISPR-Cas9, prime editing uses a guide RNA molecule. However, in prime editing, the guide RNA (sgRNA) contains two parts: one that recognizes the target DNA sequence and another that carries the desired edited sequence.

Prime editing also uses a Cas enzyme (usually Cas9), but it's modified to be "nickase" (cuts only one strand of the DNA) rather than the usual double-strand break.

Prime editing offers several advantages over traditional CRISPR-Cas9 gene editing:

• Precision: Prime editing is highly precise, reducing the risk of off-target edits and unintended mutations.

• Versatility: It can insert, delete, or replace DNA sequences, allowing for a broader range of genetic modifications.

• Reduced Error Rates: The error rate for prime editing is lower than that of some other editing methods.

• Less Invasive: Since prime editing creates single-strand nicks instead of double-strand breaks, it is less likely to trigger the cell's error-prone DNA repair mechanisms.

Prime editing has been tested in human cell lines. Even the original Nature paper says this:

We performed more than 175 edits in human cells, including targeted insertions, deletions, and all 12 types of point mutation, without requiring double-strand breaks or donor DNA templates. We used prime editing in human cells to correct, efficiently and with few byproducts, the primary genetic causes of sickle cell disease (requiring a transversion in HBB) and Tay-Sachs disease (requiring a deletion in HEXA); to install a protective transversion in PRNP; and to insert various tags and epitopes precisely into target loci. Four human cell lines and primary post-mitotic mouse cortical neurons support prime editing with varying efficiencies.

Now, Prime's pipeline looks like this:

Lead program is CGD. In cell lines from CGD patients, prime edited CD34+ cells generated myeloid cells that produce p47phox protein and NADPH oxidase activity. p47phox is a subunit of the NADPH oxidase enzyme complex, which is involved in a process known as the respiratory burst. The respiratory burst is a crucial step in the immune response, particularly in phagocytes like neutrophils and macrophages. It involves the production of reactive oxygen species ((ROS)) to help kill invading pathogens. Thus, the myeloid cells generated from the prime-edited CD34+ cells have functional NADPH oxidase activity, meaning they can effectively produce ROS as part of their immune response.

Now, Chronic Granulomatous Disease (CGD) is a rare genetic disorder that affects the immune system. It is a primary immunodeficiency disorder, which means it is typically present from birth and is caused by genetic mutations. CGD affects the ability of certain white blood cells, particularly phagocytes (e.g., neutrophils and macrophages), to effectively kill bacteria and fungi. Preclinical data here shows that PRME's prime editing technology was able to restore function in cell lines of patients with this disease.

These are strong but early data, which is why this company is seeing such high valuations for an IND stage company. They plan to file an IND next year for lead program CGD. More IND filings will follow in 2025. Currently, it is all very high potential but lab-based science. To get phase 2 POC data will take until 2026-27. Safety will be the primary data to watch out for in the early days. I mean, it stands to reason: if the gene is correctly edited, function will be restored - but we have to see that there are no unknown cascading effects which will create safety problems.

Financials

PRME has a market cap of $963mn and a cash balance of $221mn. Research and development (R&D) expenses were $34.6 million for the three months ended June 30, 2023, while General and administrative (G&A) expenses were $10.7 million. At that rate, they have a cash runway of some 4-5 quarters. However, the company has a strong ability to generate cash. If they can produce some good early data in the next few quarters, cash should not be a problem.

PRME is mainly held by institutions and PE/VC firms, with a small retail presence. GV 2019, Arch Ventures and Alphabet are key holders. GV 2019 has been offloading a number of shares in the last few months.

Bottom Line

PRME is an early stage, preclinical company with huge potential. While I do not invest in companies with human data, I will continue watching PRME for such data and a proper entry point.

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