Precigen, Inc.
Q1 2020 Earnings Call Transcript

Published: 7 May 2020

[Operator:]

Good afternoon, and welcome to the Precigen First Quarter 2020 Business Update and Financial Results Conference Call. I will now turn the call over to Steve Harasym, Head of Investor Relations. Please go ahead.

[Steven Harasym:]

Thank you, Operator. I am pleased to be joined today by Dr. Helen Sabzevari President and CEO of Precigen; and Tom Samuelson, Head of Financial Strategy.Please turn to Slide 2 for our forward-looking statement. During today's call, we will make various forward-looking statements. Investors are cautioned that our forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those indicated by our forward-looking statements. Please read the safe harbor statement contained in this presentation as well as the 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 over to Dr. Sabzevari.

[Helen Sabzevari:]

Thank you, Steve. I hope that this call finds all our listeners and their families safe and healthy. Since we last spoke in March, so much has changed. We are living through a historic moment that has caused profound change from all perspectives

[Tom Samuelson:]

Thank you, Helen, and good afternoon to everyone on the call. As previously reported in our last quarterly conference call, we closed the sale of $55.2 million in legacy bioengineering assets and $35 million in our common stock. These transactions, not only provided Precigen with substantial additional capital, but also significantly reduced our 2020 requirements by an estimated $46 million, based on the aggregate expenditures incurred in 2019.Please recall that segment EBITDA, which is fully defined in our SEC filings, is generally the sum of net cash operating expenses and capital expenditures. Among continuing operations, our Q1 2020 and Q1 2019 segment EBITDA losses plus corporate costs, which are not allocated to individual segments, totaled approximately $30 million and $39 million, respectively. A large component of this reduction of approximately $9 million or 23%, was a $7.8 million or 43% reduction in our unallocated corporate expenses, achieved largely by eliminating redundancies and decreasing professional fees.Despite continued advancement on our multitude of clinical and preclinical programs in oncology and immunology, we maintained a comparable quarter-over-quarter segment EBITDA therein as planned.As Helen alluded to beforehand, we made the difficult decision to dramatically decrease expenditure towards MBP Titan, which required $36.7 million in 2019 and $8.8 million during the first quarter of 2020. In the second quarter, we are already significantly reducing these expenditures, ultimately to only those required to preserve the IP and technology.At Trans Ova Genetics, revenues grew quarter-over-quarter by 12% to $16.8 million, while segment EBITDA increased by approximately $1 million. Segment EBITDA at Exemplar and ActoBio Therapeutics also improved by $0.9 million and $0.4 million, respectively, over the same quarter last year. On March 31, 2020, we had cash, cash equivalents and short-term investments of approximately $149 million and anticipate these funds to last well into 2021.In closing, we enacted many of these operational improvements during the first quarter, and thus, we expect to see even greater impact in our Q2 results. I would also like to note that as is the case for every organization today, the effects of the ongoing COVID-19 pandemic will continue to impact our company. We advise you that further developments with respect to the pandemic may have an adverse effect on our operations.I would now like to turn the call over to Helen for concluding remarks.

[Helen Sabzevari:]

Thank you, Tom. During 2020, we expect to report numerous data sets and achieve new milestones, as you can see on Slide 13. In closing our call today, I want to confirm our confidence in Precigen's potential to transform the health care's landscape with our innovative and focused portfolio.Despite the current challenges presented by COVID-19, we continue to deliver on our clinical plans and confirm our financial guidance for 2020. We are committed to managing our company in a financially prudent, fiscally disciplined and transparent manner by reaching a data-driven go no-go decision early in the development process to achieve our mission of bringing our potentially transformative treatment options to patients.With that, we will now open the line for questions. Operator, please begin.

[Operator:]

I would now like to turn the call back over to Steve Harasym.

[Steven Harasym:]

Thank you, Kevin. Joining us today for our Q&A session will be Helen; Tom, who you just turn speak; and our CFO, Rick Sterling. I'd like to turn it back to our operator, who will assemble the queue now. Thank you.

[Operator:]

[Operator Instructions]. Our first question comes from Jason Butler from JMP Securities.

[Jason Butler:]

Congrats on all the progress. Maybe just starting off on 2009. Can you discuss what you've seen preclinically with the combination with [indiscernible] alpha and how we should think about the potential for monotherapy efficacy or signals of efficacy in this study versus the combination? And how do you think about the combination for other potential combinations?

[Helen Sabzevari:]

Thank you very much, Jason. Excellent question. Actually, what -- in collaboration with NCI and the studies that have been done at NCI, we evaluated the efficiency and efficacy of PRGN-2009 in a number of the humanized mass models of head and neck and in HPV positive. And it has been actually quite encouraging data from the reduction or stabilization of the tumors that we have been in a number of different indications, HPV-positive ones, of course. And in combination, we have seen an enhancement also into the tumor -- reduction of the tumors as well as the activations of immune cells. The importance of the combinations that we currently have is with the bifunctional molecule that actually also targets the TGF-beta pathway, which in a number of indications that the basically checkpoint inhibitors are not functional. And the reason like for TGF-beta, this will add additional actually effect.One of the very important designs of -- especially of off-the-shelf immunotherapy is the way that it's designed, we are using in the clinic in a window of opportunity between -- especially in the Phase II design at the time that patients are not receiving any treatment. And I think this is going to be very exciting, and that's one of the excitement in the field. We believe that our PRGN-2009 in -- as we have seen in monotherapy, in indications that are HPV positive, but also in combination, not only with the current bifunctional molecule that may have a bit -- at NCI, but also with our -- some of our own portfolio molecules that exist, and we have done studies, and we believe that this would be a very exciting molecule to move forward. And it's very unique as it was mentioned because we used both our UltraVector, special antigen design and our gorilla AdenoVerse platform, which allows us to dose number of times as well as it gives us a larger table. And this makes the PRGN-2009, a very unique drug product that is -- and we are looking forward to the study.

[Jason Butler:]

That's great, Helen. My second question, just for both the 3005 and 3006 programs, you reiterated again that you're maintaining this 100% manufacturing success rate. Can you give us a sense of what this represents in total number of patients or manufacturing processes you've now successfully completed? Or I guess, maybe to put it different way, how far along the path are you to having confidence that a very high success rate is sustainable in a multicenter setting?

[Helen Sabzevari:]

Right. Excellent. First of all, PRGN-3005 is done at Fred Hutchinson for solid tumors and PRGN-3006 for liquid tumors, AML patients at Moffitt Cancer Center. This was very important for us that the manufacturing can be duplicated in a number of the centers. And this -- at this point, we have shown that and demonstrated that in either of these centers, they have achieved 100% manufacturing despite of the different sizes of the facilities. So we are very confident, and we have seen now both -- as we also reported in this call for PRGN-3005, we are really excited. We have finished the second dose cohort at this point. And we also have finished the first cohort in a lymphodepletion and in the second cohort of -- I'm sorry, in non-lymphodepletion. And as we mentioned, we have received the allowance, but now we can concurrently also do the lymphodepletion and do the comparison. So between all of this, there are a number of the patients, as you can imagine, these studies are 3+3. And so we have, up to this point, have dosed number of patients in either of the trials, and we have not had any manufacturing failures, which allows us for the confidence for this trial.

[Jason Butler:]

Okay, great. And then if I can just squeeze in a last one for Tom or Rick. I'm sorry if I missed this in Tom's comments before, but can you quantify the cost savings that you think you can capture from the from MBP Titan with the reductions you're -- in place for 2020?

[Tom Samuelson:]

Yes. So thanks for the question, Jason. So we're not giving specific guidance on an exact number for 2020. What I can tell you is, reiterating just that the 2019 segment EBITDA for MBP was $36 million. And the 2020 Q1 was approximately $9 million. So we would allow you to sort of draw the conclusions from there for now.

[Helen Sabzevari:]

And maybe, Jason, one thing that I can stress, we have significantly reduced, basically the cost as the MBP Titan. So this would be reflected in the next Q as it comes.

[Operator:]

Our next question comes from Swayampakula.

[Swayampakula Ramakanth:]

This is RK from HCW. A couple of quick questions. The first one, you talked about some changes on the PRGN-3006 study. Can you tell us what additional changes have you -- are you proposing outside of the concurrent dosing of patients in both the arms?

[Helen Sabzevari:]

Got it. Thank you, RK. In regard to the PRGN-3006, the original IND that we had and was discussed with the FDA, we would start with the non-lymphodepleted arm to obviously look at the manufacturing ability as well as the safety. And after we were going to finish the non-lymphodepleted arm, then we will start the lymphodepletion arm. And as you can imagine, there's -- by that design, there would have been basically a long staggered time between the 2 arms. I'm really excited that with going through the first cohort with the non-lymphodepletion, and not only showing the manufacturing ability and 100% manufacturing success, but also the safety results that we have seen -- amendment was allowed by FDA. And now we can concurrently basically enroll patients, which obviously it allows us to, not only they move more rapidly as well as get to the comparison between the arms of non-lymphodepletion and lymphodepletion.

[Swayampakula Ramakanth:]

Okay. There's going to be quite a bit of data coming up in the next couple of quarters across 4 of your programs. Trying to kind of focus a little bit on the diabetes program where you're expecting some interim data in the third quarter. Two questions. What sort of early data will we see? And also, will this kind of -- I'm trying to figure out how do you plan to take this program forward? Can you do it yourselves or you need some collaborators so that you can finish the program in terms of completing it to late-stage as well as trying to commercialize it?

[Helen Sabzevari:]

Sure. Thank you. So in regard to AG019, of course, there are 4 arms in main -- especially in a Phase IIa that compares the AG019, both in adult and adolescent by itself as a monotherapy and then, of course, in combination with anti-CD3. And the first readout that we will be reporting on from a Phase Ia would be on the safety of their molecules and also some of the -- pharmacokinetics of the drug. And the interim data, obviously, we will further advance in the 6 months observations of the patients that they have received. As you know, this molecule, it basically delivers IL-10 and also for insulin in type 1 diabetes at the onset of the disease, which is very important. These patients don't have. Really -- there's no therapy, except the diet as well as the insulin eventually. And I think this would be exciting, the readout from 6 months, and then eventually, there would be a readout on 12 months that we will be able -- allow us to see the platform as a monotherapy as well as in combination with the anti-CD3. And then based on that, the decisions will be made where we go.As far as the strategy for the portfolio, I would address this in general. Our strategy is a continuous evaluation of our portfolio with the concept of efficiency in mind. And therefore, we look at all of our strategic possibilities in front of us. And of course, all these partnerships is a big part of that. So these things will be evaluated as we move on, and this is not really specific to one program, this is across our portfolio.

[Operator:]

And I'm not showing any further questions at this time.

[Helen Sabzevari:]

Great. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.