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Prime Medicine (PRME) Gains 16.4% in 3 Months: Buy Now or Wait?
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Prime Medicine, Inc.’s (PRME - Free Report) shares have risen 16.4% in the past three months compared with the industry’s growth of 10.9%. The stock has also outperformed the sector and the S&P 500.
The encouraging pipeline progress of this biotechnology company, focused on developing the next generation of gene editing therapies, is a positive. Innovation is imperative in the dynamic biotech sector and companies with a differentiated pipeline catch the eye of investors.
PRME Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Prime Medicine is deploying its proprietary gene editing technology, Prime Editing platform, to develop a new class of differentiated one-time curative genetic therapies. While the approach is interesting, the company’s ability to have sufficient cash leeway to conduct its R&D programs will hold the key to growth.
IND Clearance of PM359
PRME is currently advancing its diversified portfolio of investigational therapeutic programs with a focus on hematology and immunology, liver, lung, ocular and neuromuscular diseases.
The company got a significant boost in April 2024 when the FDA cleared its first investigational new drug (IND) application for PM359, meant for the treatment of chronic granulomatous disease (CGD). This is Prime Medicine’s first-ever product candidate from its Prime Editor platform to advance to the clinic.
PM359 is aimed at correcting the predominant mutation in NCF1 in CGD patient CD34+ hematopoietic stem cells and restoring NADPH oxidase function. The IND enables the company to initiate its global phase I/II study in the United States. The study will assess the safety, biological activity and preliminary efficacy of PM359 in adult and pediatric study participants.
Assuming that safety and biological activity are demonstrated in this cohort, the study is designed to progress to enroll participants with active infection or severe inflammation as well as adolescent and pediatric participants. Initial clinical data is expected in 2025.
PM359 has received the rare pediatric drug and orphan drug designations from the FDA.
Other Programs in Pipeline
The company continues to advance preclinical studies for three liver programs. It expects to initiate IND-enabling activities for at least one in 2024, leading to an IND and/or clinical trial application in the second half of 2025 or the first half of 2026.
In the ocular space, PRME plans to nominate a development candidate for RHO-RP program and initiate IND-enabling activities in 2024.
Cash Runaway: A Cause of Concern
Prime Medicine is years away from generating product sales. While the IND clearance is a milestone for the company, cash runaway holds the key for PRME. As of Mar 31, 2024, cash, cash equivalents, investments and restricted cash totaled $224.2 million. The company expects its existing cash, cash equivalents and investments to be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of 2025.
PRME raised $161 million through public offering of shares in February 2024. Given the precarious cash position, the company needs to raise additional funds to finance its operations.
Valuation & Estimates
From a valuation perspective, current price levels do look attractive. Going by the price/book ratio, PRME’s shares currently trade at 2.74X, much lower than 4.61 for the industry and the company’s mean of 4.36.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 loss per share has remained unchanged at $1.64 over the past 60 days.
Image Source: Zacks Investment Research
Conclusion
Significant progress has been made in the last decade in the field of genetic therapies. This sphere is witnessing pathbreaking advances in gene therapy, cell therapy, ribonucleic acid, RNA therapy, and, more recently, gene editing. The recent FDA approval of Vertex (VRTX - Free Report) and CRISPR Therapeutics’ (CRSP - Free Report) CRISPR/Cas9 genome-edited cell therapy, Casgevy, for the treatment of sickle cell disease has put the spotlight on the gene editing space.
Prime Editing is the only gene editing technology that, by itself, can edit, correct, insert and delete deoxyribonucleic acid, or DNA, sequences in any target tissue. This technology has transformative potential, and hence, the successful development of PM359 should be a great boost.
Having said that, a small company like PRME is not for chicken-hearted investors, as the successful development of these therapies is a complex affair. Hence, PRME is a risky bet.
While the current valuation levels are attractive and may provide an upside, the uncertain cash trajectory is something that potential investors should look out for. We would advise investors to currently wait and watch how the phase I/II study on PM359 progresses. They should also keep a track of how PRME manages its cash situation.
Image: Bigstock
Prime Medicine (PRME) Gains 16.4% in 3 Months: Buy Now or Wait?
Prime Medicine, Inc.’s (PRME - Free Report) shares have risen 16.4% in the past three months compared with the industry’s growth of 10.9%. The stock has also outperformed the sector and the S&P 500.
The encouraging pipeline progress of this biotechnology company, focused on developing the next generation of gene editing therapies, is a positive. Innovation is imperative in the dynamic biotech sector and companies with a differentiated pipeline catch the eye of investors.
PRME Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Prime Medicine is deploying its proprietary gene editing technology, Prime Editing platform, to develop a new class of differentiated one-time curative genetic therapies. While the approach is interesting, the company’s ability to have sufficient cash leeway to conduct its R&D programs will hold the key to growth.
IND Clearance of PM359
PRME is currently advancing its diversified portfolio of investigational therapeutic programs with a focus on hematology and immunology, liver, lung, ocular and neuromuscular diseases.
The company got a significant boost in April 2024 when the FDA cleared its first investigational new drug (IND) application for PM359, meant for the treatment of chronic granulomatous disease (CGD). This is Prime Medicine’s first-ever product candidate from its Prime Editor platform to advance to the clinic.
PM359 is aimed at correcting the predominant mutation in NCF1 in CGD patient CD34+ hematopoietic stem cells and restoring NADPH oxidase function. The IND enables the company to initiate its global phase I/II study in the United States. The study will assess the safety, biological activity and preliminary efficacy of PM359 in adult and pediatric study participants.
Assuming that safety and biological activity are demonstrated in this cohort, the study is designed to progress to enroll participants with active infection or severe inflammation as well as adolescent and pediatric participants. Initial clinical data is expected in 2025.
PM359 has received the rare pediatric drug and orphan drug designations from the FDA.
Other Programs in Pipeline
The company continues to advance preclinical studies for three liver programs. It expects to initiate IND-enabling activities for at least one in 2024, leading to an IND and/or clinical trial application in the second half of 2025 or the first half of 2026.
In the ocular space, PRME plans to nominate a development candidate for RHO-RP program and initiate IND-enabling activities in 2024.
Cash Runaway: A Cause of Concern
Prime Medicine is years away from generating product sales. While the IND clearance is a milestone for the company, cash runaway holds the key for PRME. As of Mar 31, 2024, cash, cash equivalents, investments and restricted cash totaled $224.2 million. The company expects its existing cash, cash equivalents and investments to be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of 2025.
PRME raised $161 million through public offering of shares in February 2024. Given the precarious cash position, the company needs to raise additional funds to finance its operations.
Valuation & Estimates
From a valuation perspective, current price levels do look attractive. Going by the price/book ratio, PRME’s shares currently trade at 2.74X, much lower than 4.61 for the industry and the company’s mean of 4.36.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 loss per share has remained unchanged at $1.64 over the past 60 days.
Image Source: Zacks Investment Research
Conclusion
Significant progress has been made in the last decade in the field of genetic therapies. This sphere is witnessing pathbreaking advances in gene therapy, cell therapy, ribonucleic acid, RNA therapy, and, more recently, gene editing. The recent FDA approval of Vertex (VRTX - Free Report) and CRISPR Therapeutics’ (CRSP - Free Report) CRISPR/Cas9 genome-edited cell therapy, Casgevy, for the treatment of sickle cell disease has put the spotlight on the gene editing space.
Prime Editing is the only gene editing technology that, by itself, can edit, correct, insert and delete deoxyribonucleic acid, or DNA, sequences in any target tissue. This technology has transformative potential, and hence, the successful development of PM359 should be a great boost.
Having said that, a small company like PRME is not for chicken-hearted investors, as the successful development of these therapies is a complex affair. Hence, PRME is a risky bet.
While the current valuation levels are attractive and may provide an upside, the uncertain cash trajectory is something that potential investors should look out for. We would advise investors to currently wait and watch how the phase I/II study on PM359 progresses. They should also keep a track of how PRME manages its cash situation.
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.