8-K: Precision BioSciences Licenses CAR T Therapy to TG Therapeutics for $17.5 Million Upfront, Potential $288 Million in Milestones

Precision BioSciences has granted TG Therapeutics an exclusive license to develop and commercialize its allogeneic CAR T therapy, azer-cel, for non-oncological applications, receiving $17.5 million upfront and near-term payments and potentially up to $288 million in milestone payments.

Summary

• Precision BioSciences has entered into a licensing agreement with TG Therapeutics for the development of its CAR T therapy, azer-cel, in non-oncology indications.
• The agreement includes an upfront payment of $10 million, with $5.25 million in cash due within 30 days, $2.25 million in cash due within 30 days in exchange for shares, and a deferred $2.5 million cash payment due within 12 months in exchange for shares.
• An additional $7.5 million payment is expected upon achievement of a near-term clinical milestone, with $5.25 million in cash and $2.25 million in shares.
• Precision BioSciences is also eligible for up to $288.6 million in additional milestone payments and tiered royalties on net sales of the licensed product.
• Up to $10 million of the payments may be made in Precision BioSciences common stock, with a minimum price of $0.3722 per share.
• TG Therapeutics is restricted from selling the shares for a period of two to three years and must vote the shares as instructed by Precision for three years.
• Precision BioSciences expects to have approximately $116 million in cash and cash equivalents as of December 31, 2023.
• The company anticipates its cash runway will extend into the first half of 2026, sufficient to achieve first-in-human Phase 1 clinical data for its lead in vivo gene editing programs.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the significant licensing deal, upfront payments, potential for future revenue, and extended cash runway. The partnership with TG Therapeutics is also viewed favorably. However, the potential dilution from stock issuance and reliance on a partner temper the overall sentiment slightly.

Positives

• The licensing agreement provides a significant upfront cash infusion of $10 million, with a further $7.5 million expected in the near term.
• The potential for up to $288.6 million in milestone payments and royalties offers substantial long-term revenue opportunities.
• The deal extends Precision BioSciences' cash runway into the first half of 2026, providing financial stability.
• The agreement allows Precision to focus on its in vivo gene editing programs while monetizing its CAR T assets.
• TG Therapeutics' expertise in the multiple sclerosis space is expected to benefit the development of azer-cel in autoimmune diseases.
• The equity investment by TG Therapeutics demonstrates confidence in Precision's technology and future prospects.

Negatives

• A portion of the upfront and milestone payments will be made in Precision BioSciences stock, potentially diluting existing shareholders.
• The company is reliant on TG Therapeutics to successfully develop and commercialize azer-cel for non-oncology applications.
• The agreement includes restrictions on TG Therapeutics' ability to sell the shares and engage in certain corporate actions for a period of time.
• The financial results for the year ended December 31, 2023, are preliminary and unaudited, and could be subject to change.

Risks

• The success of the licensing agreement depends on TG Therapeutics' ability to achieve clinical, regulatory, and commercial milestones.
• There is a risk that TG Therapeutics may not successfully develop and commercialize azer-cel, resulting in lower milestone payments and royalties.
• The company's cash runway is dependent on achieving operational efficiencies and receiving expected payments.
• The company faces competition in the gene editing and biopharmaceutical fields.
• There are risks associated with the development and commercialization of gene editing therapies, including regulatory hurdles and potential safety issues.
• The company's stock price may fluctuate due to market conditions and other factors.

Future Outlook

Precision BioSciences expects its cash runway to extend into the first half of 2026, sufficient to achieve first-in-human Phase 1 clinical data for its lead in vivo gene editing programs. The company will continue to evaluate potential partners for other assets from its allogeneic CAR T platform.

Management Comments

• Michael Amoroso, President and CEO of Precision BioSciences, stated they are excited to extend the utility of their allogeneic CAR T assets into immunology by collaborating with TG Therapeutics.
• Michael S. Weiss, Chairman and CEO of TG Therapeutics, said they are excited to bring azer-cel into their portfolio as they look to expand their offerings for patients suffering from autoimmune diseases.
• Mr. Amoroso also noted that the transactions are expected to extend their runway and will fund continued development of their wholly owned in vivo gene editing programs.

Industry Context

This announcement reflects a trend in the biotechnology industry where companies are increasingly seeking partnerships to develop and commercialize their assets, particularly in the CAR T therapy space. Precision BioSciences is leveraging its ARCUS platform to generate value from its allogeneic CAR T assets while focusing on its in vivo gene editing programs. The deal with TG Therapeutics, which has a strong track record in the multiple sclerosis space, is a strategic move to expand the application of azer-cel into autoimmune diseases.

Comparison to Industry Standards

• The licensing agreement with TG Therapeutics is similar to other deals in the biotech industry where companies license out specific assets to focus on core competencies.
• The upfront payment of $17.5 million and potential for $288.6 million in milestone payments is within the range of similar deals for early-stage therapeutic assets.
• The tiered royalty structure is also standard in the industry, with rates varying based on the stage of development and market potential of the product.
• Companies like CRISPR Therapeutics and Editas Medicine have also entered into similar licensing and collaboration agreements for their gene editing technologies.
• The focus on in vivo gene editing programs aligns with the industry trend towards developing more precise and efficient gene editing therapies.

Stakeholder Impact

• Shareholders will benefit from the increased cash flow and potential for future revenue.
• Employees will have more job security due to the extended cash runway.
• Patients with autoimmune diseases may benefit from the development of azer-cel.
• TG Therapeutics will gain access to a promising CAR T therapy for non-oncology applications.

Next Steps

• TG Therapeutics will initiate development activities for azer-cel in non-oncology indications.
• Precision BioSciences will continue to focus on its in vivo gene editing programs.
• The company will evaluate potential partners for other assets from its allogeneic CAR T platform.
• The company will file the License Agreement as an exhibit to its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Key Dates

Keywords

CAR T therapy, gene editing, licensing agreement, milestone payments, royalties, allogeneic, autoimmune diseases, azer-cel, TG Therapeutics, ARCUS platform