prime medicine(PRME) - 2022 Q4 - Annual Report

Part I Business Prime Medicine develops one-time curative genetic therapies using its proprietary Prime Editing technology, addressing approximately 90% of disease-causing mutations Overview Prime Medicine develops one-time curative genetic therapies via Prime Editing, targeting approximately 90% of known disease-causing mutations with 18 programs - Prime Medicine develops one-time curative genetic therapies using its versatile and precise Prime Editing technology[27] - Prime Editing technology has the theoretical potential to repair approximately 90% of known disease-causing genetic mutations[32][93] - The company has a diversified portfolio of 18 investigational therapeutic programs across four strategic categories[32][36][39] - Preclinical proof-of-concept achieved in vivo for sickle cell disease program, and PM359 selected as development candidate for chronic granulomatous disease[41] - The first Investigational New Drug (IND) filing is anticipated as early as 2024, with additional filings possible by 2025[43] Our Strategy Prime Medicine's strategy leverages Prime Editing leadership to develop one-time curative therapeutics across diverse indications and continuously innovate the platform - Maintain leadership in Prime Editing through continuous investment in technology and team to deliver its broadest potential[50] - Deploy technology across four strategic indication categories to treat a wide range of diseases[50] - Advance a pipeline of 18 programs while enhancing the Prime Editing platform, focusing initially on immediate and differentiation targets[50] - Continuously innovate by optimizing Prime Editing technology and investing in a full range of delivery modalities[50] - Opportunistically evaluate synergistic partnerships to maximize platform potential, retaining worldwide rights to most internally generated programs[50] Our Prime Editing Platform Prime Editing is a next-generation gene editing technology capable of correcting approximately 90% of disease-causing mutations with high versatility, precision, and efficiency - Prime Editing is described as a "word processor" for the genome, capable of precise DNA replacement or repair, unlike nuclease "scissors" or base editor "pencils"[34][64] Comparison of Gene Editing Technologies | Feature | Prime Editing | Non-Targeted Gene Delivery | Nuclease-Based Gene Editing | Base Editing | | :--- | :--- | :--- | :--- | :--- | | Versatility | | | | | | Corrects insertions/deletions | Yes | No | Limited (HDR) | No | | Corrects all 12 single base pair types | Yes | No | Yes (HDR) | No (4 of 12) | | Precision | | | | | | Avoids double-stranded breaks | Yes | Yes (most) | No | Yes | | Minimal off-target activity | Yes | No | No | Yes | | Limited bystander editing | Yes | N/A | N/A | No | - The Prime Editor mechanism uses a Cas protein and reverse transcriptase with a pegRNA template, incorporating three "edit checks" for enhanced precision and minimal off-target effects[75][79][80] - The platform is enhanced via high-throughput screening, PEGASUS™ machine learning for active molecule prediction, and development of novel Prime Editor proteins and engineered pegRNAs[119][120][123] - Advanced techniques like dual-flap Prime Editing enable precise deletion of thousands of DNA bases, and PASSIGE™ inserts gene-sized DNA sequences[130][136] Translating Prime Editors into Product Candidates Prime Medicine employs a multi-modal delivery strategy (LNPs, electroporation, AAVs) for Prime Editors, demonstrating preclinical in vivo editing and manufacturing modularity - The company employs a multi-modal delivery strategy using Lipid Nanoparticles (LNPs), electroporation, and Adeno-Associated Virus (AAV) for therapeutic delivery[143][145] - Preclinical LNP delivery to mouse liver achieved over 40% PCSK9 gene editing, resulting in greater than 90% reduction in circulating PCSK9 protein[147][149] - Dual AAV delivery to mouse CNS showed high precise editing: ~90% in cortical cells and ~80% in neurons (of transduced cells)[152][153] - Comprehensive off-target analysis for chronic granulomatous disease program detected no off-target editing across 550 potential sites in CD34+ HSCs[159] - Manufacturing strategy focuses on modular platforms for Prime Editor components to enable rapid product candidate creation, initially using third-party CMOs[164][174] Our Portfolio Prime Medicine's portfolio includes 18 programs across four strategic categories, with lead programs in CGD and REDs demonstrating significant preclinical progress - The portfolio is organized into four strategic categories: Immediate, Differentiation, "Blue Sky," and "March up the chromosome" indications[177][180][182][186] Prime Medicine Therapeutic Pipeline | STRATEGIC CATEGORY | TARGET TISSUE | INDICATION | DELIVERY | | :--- | :--- | :--- | :--- | | IMMEDIATE | BLOOD | Sickle Cell Disease (Beam), Chronic Granulomatous Disease, Fanconi Anemia | ex vivo | | | LIVER | Wilson's Disease, Glycogen Storage Disease 1b | LNP | | | EYE | Retinitis Pigmentosa (Rhodopsin & Usher), Fuchs' Dystrophy | AAV, viral/non-viral | | | EAR | Usher Syndrome Type 3, Non-Syndromic Hearing Loss | AAV | | DIFFERENTIATION | NEURO-MUSCULAR | Friedreich's Ataxia, Myotonic Dystrophy Type 1, ALS, OPMD, Huntington's, Fragile X | viral/non-viral, LNP, TBD | | | MUSCLE | Duchenne Muscular Dystrophy | AAV | | | LUNG | Cystic Fibrosis | LNP | - In the Chronic Granulomatous Disease (CGD) program, Prime Editing achieved ~55% precise correction in human HSCs, restoring ~80% protein expression and function, with PM359 selected as a development candidate[199][201][207] - For Repeat Expansion Diseases (REDs), dual-flap Prime Editing achieved >75% precise removal of pathological repeats in Friedreich's Ataxia and >90% in Myotonic Dystrophy Type 1 patient cells[273][279][296] - The company explores complementary retrotransposon-mediated gene-insertion technology via a collaboration with Myeloid Therapeutics for an all-RNA approach[359][361] Our License and Collaboration Agreements Prime Medicine has key strategic agreements with Beam Therapeutics and the Broad Institute, licensing foundational Prime Editing rights and exploring new technologies - A strategic collaboration with Beam Therapeutics grants Beam an exclusive license to Prime Editing for transition point mutations and sickle cell disease[365][367] - Prime has the right to opt-in to a 50/50 profit/loss share in the U.S. for Beam-developed licensed products, with a payment trigger for "protected products"[373][375] - The company exclusively licensed foundational Prime Editing patent rights from the Broad Institute for human disease, including the first issued U.S. patent ('770 Patent)[388][390][428] - A collaboration with Myeloid Therapeutics provides an exclusive option for retrotransposon-based technology, involving a $30.0 million upfront cash payment and $12.0 million in stock[411][413][415] Competition The gene editing and therapy field is highly competitive, with Prime Medicine facing rivals using various gene editing technologies and larger pharmaceutical firms - The company faces competition from various gene editing platforms, including CRISPR/Cas9, base editing, ZFNs, and TALENs[423] - Emerging competitors are developing novel technologies like Gene Writing™, new genome editing systems, and epigenetic editing[423][594] - Many competitors possess significantly greater financial resources and experience in R&D, manufacturing, clinical trials, and commercialization[425] Government Regulation Prime Medicine's products are subject to extensive and evolving regulation by the FDA and international authorities, with a complex development and approval process - Biological products, including gene therapies, require FDA approval of a Biologics License Application (BLA) under the FD&C Act and PHS Act before marketing[435] - The development process involves preclinical testing (GLP), IND submission, and three phases of clinical trials (GCP) to establish safety and efficacy[437][446] - The FDA offers expedited development programs like Fast Track, Breakthrough Therapy, Accelerated Approval, Priority Review, and RMAT designation for eligible product candidates[464][470] - In the EU, medicinal products require marketing authorization from the European Commission via the EMA's centralized procedure, which includes programs like PRIME designation[486][496] - Healthcare reform legislation, including the ACA and the Inflation Reduction Act of 2022 (IRA), impacts drug pricing, reimbursement, and market access[511][515] Risk Factors The company faces substantial risks including significant losses, funding needs, unproven technology, regulatory uncertainties, IP reliance, and intense competition - Financial Risks: The company has a history of significant losses ($121.8 million in 2022) and will require substantial additional funding, with failure to raise capital potentially delaying or eliminating programs[524][528] - Technology & Development Risks: Prime Editing is a novel, unproven technology with high risks of clinical failure, adverse events, or off-target edits[545][551][576] - Regulatory Risks: The gene editing regulatory landscape is uncertain and evolving, with lengthy, expensive approval processes and potential for restrictive regulations due to ethical concerns[551][723] - Intellectual Property Risks: Heavy reliance on third-party licenses, particularly from the Broad Institute, poses risks of losing critical IP rights in a dynamic and litigious landscape[651][660][690] - Competition & Commercialization Risks: Intense competition from better-resourced companies, potential negative public perception of gene editing, and smaller-than-estimated market opportunities for rare diseases[592][599][604] Unresolved Staff Comments The company reports no unresolved staff comments from the Securities and Exchange Commission - None[812] Properties Prime Medicine leases office and laboratory spaces in Cambridge and Watertown, Massachusetts, with a significant future expansion planned - The company leases multiple office and laboratory facilities in Cambridge and Watertown, MA[813] - A significant expansion is planned with a new lease for approximately 148,941 sq ft at 60 First Street, Cambridge, expected occupancy in 2024[813] Legal Proceedings As of December 31, 2022, Prime Medicine was not a party to any material legal proceedings - As of December 31, 2022, the company was not a party to any material legal or arbitration proceedings[816] Mine Safety Disclosures This item is not applicable to the company - Not applicable[817] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Prime Medicine's common stock began trading on Nasdaq in October 2022, with no cash dividends paid, and IPO proceeds of $180.2 million remain unused - The company's common stock began trading on the Nasdaq Global Market under the symbol "PRME" on October 20, 2022[819] - The company has not paid any cash dividends since inception and does not intend to in the foreseeable future[821] - The company received $180.2 million in net proceeds from its October 2022 IPO, which remained unused as of December 31, 2022[828][829] Management's Discussion and Analysis of Financial Condition and Results of Operations Prime Medicine, a preclinical biotech, reported a $121.8 million net loss in 2022, with increasing R&D and G&A expenses, and $293.9 million cash expected to fund operations into 2025 Financial Performance Summary (2022 vs. 2021) | Metric (in thousands USD) | 2022 (in thousands USD) | 2021 (in thousands USD) | Change (in thousands USD) | | :--- | :--- | :--- | :--- | | Research and development | $86,725 | $70,550 | $16,175 | | General and administrative | $29,819 | $13,924 | $15,895 | | Loss from operations | ($116,544) | ($84,474) | ($32,070) | | Net loss | ($121,821) | ($165,367) | $43,546 | - The $16.2 million increase in R&D expenses in 2022 was driven by increased lab supplies ($24.5 million), personnel costs ($20.9 million), and facility-related expenses ($10.4 million)[866] - The $15.9 million increase in G&A expenses in 2022 was due to increased personnel costs ($7.5 million), professional fees ($4.9 million), and facility costs ($3.5 million)[867] - As of December 31, 2022, the company held $293.9 million in cash, cash equivalents, and short-term investments, projected to fund operations into 2025[840][898] - The company has significant future commitments under license agreements, including potential milestone payments, royalties, and a $5.0 million annual pledge to Broad Institute and Harvard[901][907][911] Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate sensitivity on its $293.9 million investment portfolio, with no material impact expected from a 10% rate change - The primary market risk is interest rate sensitivity on its $293.9 million portfolio of cash, cash equivalents, and short-term investments[930] - A 10% change in interest rates is not expected to materially impact the fair market value of investments due to their short-term, low-risk nature[930] - The company has no outstanding debt, thus no associated interest rate risk[931] - Inflation is a potential risk for labor and R&D costs but has not had a material impact to date[932] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for FY2022, including balance sheets, statements of operations, equity, and cash flows, with detailed notes Consolidated Balance Sheet Highlights (As of Dec 31, 2022) | Account (in thousands USD) | Amount (in thousands USD) | | :--- | :--- | | Assets | | | Cash and cash equivalents | $187,620 | | Short-term investments | $98,467 | | Total Assets | $360,314 | | Liabilities & Equity | | | Total Liabilities | $44,044 | | Total Stockholders' Equity | $316,270 | Consolidated Statement of Operations Highlights (Year Ended Dec 31, 2022) | Account (in thousands USD) | Amount (in thousands USD) | | :--- | :--- | | Research and development | $86,725 | | General and administrative | $29,819 | | Loss from operations | ($116,544) | | Net loss | ($121,821) | | Net loss per share (USD) | ($4.19) | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31, 2022) | Account (in thousands USD) | Amount (in thousands USD) | | :--- | :--- | | Net cash used in operating activities | ($131,827) | | Net cash used in investing activities | ($47,096) | | Net cash provided by financing activities | $181,494 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on any accounting or financial disclosure matters - None[934] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2022, with no material changes to internal controls during Q4 2022 - Management concluded the company's disclosure controls and procedures were effective as of December 31, 2022[935] - A management report on internal control over financial reporting is not included due to the transition period for newly public companies[936] - No material changes were made to internal control over financial reporting during the fourth quarter of 2022[939] Other Information The company announced its 2023 Annual Meeting of Stockholders for June 14, 2023, with a March 16, 2023, deadline for stockholder proposals and director nominations - The 2023 Annual Meeting of Stockholders is intended to be held on or about June 14, 2023[940] - The deadline for stockholder proposals and director nominations for the 2023 Annual Meeting is March 16, 2023[941][942] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[943] Part III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2023 proxy statement - Information is incorporated by reference from the forthcoming 2023 proxy statement[945] Executive Compensation Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the forthcoming 2023 proxy statement[946] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information on security ownership of beneficial owners, management, and related stockholder matters is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the forthcoming 2023 proxy statement[947] Certain Relationships and Related Transactions, and Director Independence Information on certain relationships, related transactions, and director independence is incorporated by reference from the 2023 proxy statement - Information is incorporated by reference from the forthcoming 2023 proxy statement[948] Principal Accountant Fees and Services Information regarding principal accountant fees and services is incorporated by reference from the company's definitive proxy statement for the 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the forthcoming 2023 proxy statement[949] Part IV Exhibits and Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Annual Report on Form 10-K, including corporate and contractual documents - This section includes the consolidated financial statements and the report of the independent registered public accounting firm[951][952] - A comprehensive list of exhibits filed with the report is provided, including corporate governance documents, material contracts, and SEC certifications[954][955] Form 10-K Summary The company indicates that no Form 10-K summary is provided - None[960]