Eli Lilly has agreed to use Precision BioSciences’ ARCUS® platform to research and develop potential in vivo therapies for genetic disorders, through a collaboration that could potentially generate about $2.7 billion for the Durham, NC, developer of therapies based on genome editing as well as “off-the-shelf” CAR T immunotherapies.
The companies will initially focus on Duchenne muscular dystrophy (DMD) and two other undisclosed gene targets, then potentially work to develop three other gene targets that were also not disclosed by Lilly and Precision.
Lilly will use ARCUS, a proprietary genome editing platform derived from a natural genome-editing enzyme called I-CreI, a homing endonuclease that can be optimized to control for potency and specificity. According to Precision, I-CreI enhances ARCUS by offers users of the editing tool:
- Specificity: I-CreI is designed to recognize a large target site (22 base pairs), then self-inactivate after editing, to avoid editing off-target sites.
- Editing Efficiency: I-CreI’s 3’ “sticky ends” are intended to promote homology-directed repair (HDR), enabling efficient DNA insertion and DNA repair through the ability to make knock-in, knock-out, and repair edits.
- Compact size: At 364 amino acids, I-CreI is designed to enable efficient delivery to tissues and cells using viral and non-viral delivery technologies.
ARCUS’ approach to treating DMD calls for restoring dystrophin expression by deleting exons 45–55, using a pair of ARCUS nucleases that target the introns flanking those exons.
According to an investor presentation, ARCUS has shown potential through animal models to enable treating genetic diseases besides DMD—including autosomal dominant Retinitis Pigmentosa (adRP), familial hypercholesterolemia (FH), and hereditary transthyretin amyloidosis (ATTR).
“This collaboration with Precision BioSciences represents another milestone in the realization of our vision to create medicines with transformational potential, using new therapeutic modalities such as gene editing to tackle targets and indications which were previously undruggable,” Andrew Adams, PhD, vice president of new therapeutic modalities at Lilly, said Friday in a statement.
11% stock surge
Investors signaled their approval of the collaboration by sending Precision BioSciences’ shares up nearly 11% on Friday, to $10.72 from Thursday’s close of $9.68. Precision’s stock symbol, “DTIL,” is short for “Dedicated to Improving Life.” Shares of Lilly inched up 1.45%, to $145.49 from $143.41.
Precision agreed to lead preclinical research and IND-enabling activities, with Lilly assuming responsibility for clinical development and commercialization of products. Following the first three candidates developed through their collaboration, Lilly will hold rights to select up to three additional gene targets.
For one product based on those targets, Precision can co-fund clinical development in exchange for an increased royalty rate on co-funded product sales.
Under their research collaboration and exclusive licensing agreement, Lilly agreed to pay Precision $100 million in upfront cash, and invest $35 million in Precision’s common stock. Lilly also agreed to pay Precision up to $420 million in potential development and commercialization milestone payments per product—which at a potential six products could generate up to $2.52 billion for Precision, bringing the total potential value of the partnership to $2.655 billion.
Precision would also be eligible for tiered royalties ranging from the mid-single digits to low-teens on product sales should Lilly successfully commercialize a therapy developed through the collaboration. Precision said the partnership with Lilly will extend its cash runway into 2023.
The collaboration agreement is subject to clearance under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act and other customary closing conditions.
Lilly said the collaboration will be reflected in Lilly’s reported fourth quarter results and 2021 financial guidance according to Generally Accepted Accounting Principles (GAAP). The deal will not affect Lilly’s 2020 non-GAAP earnings per share guidance, which the company reaffirmed October 27 at the range of $7.20 to $7.40.
“Collaborating with Lilly, a global healthcare leader with strong clinical and commercial experience in difficult-to-treat diseases, will help us accelerate our work aimed to solve genetic diseases with unique editing challenges,” added Derek Jantz, PhD, chief scientific officer and co-founder of Precision BioSciences.
