year 10
What is primary medicine?
Headquartered in Cambridge, Massachusetts, Prime (PRME) was formed to develop its Broad Institute in-licensed prime editing technologies, some of which have received patents, that could enable the development of genetic editing treatments for diseases such as sickle cell anemia, Wilson’s disease and various neuromuscular disorders.
Management is led by President and CEO Keith Gottesdiener, MD, who has been with the company since July 2020 and was previously CEO of Rhythm Pharmaceuticals after leading Merck’s late-stage clinical development organization.
The company’s lead program, still in research, is aimed at treating sickle cell anemia.
It is one of 18 programs currently being developed, 17 of which are being developed exclusively in-house and the 18th, sickle cell disease, is being developed in partnership with Beam Therapeutics.
Below is the current status of the Company’s drug development pipeline:
Corporate Pipeline (SEC EDGAR)
Prime has booked $425.5 million in market value investments as of June 30, 2022 from investors including GV (formerly Google Ventures), ARCH Venture Partners, F-Prime Capital Partners and Newpath Partners.
Prime’s Market & Competition
According to a 2018 market research report by Grand View Research, the sickle cell disease treatment market is expected to reach $5.5 billion by 2023.
This equates to a projected compound annual growth rate (CAGR) of 14.3% from 2019 to 2023.
Key elements driving this anticipated growth are an expanding patient pool leading to increased demand and development of potential new late-stage drugs including voxelotor, crizanlizumab, altemia and rivipansel.
Additionally, currently available treatments for sickle cell disease typically only provide symptomatic relief and palliative care, such as blood transfusions, pharmacotherapy, and bone marrow transplants.
Key competing vendors offering or developing related treatments include:
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bluebird organic
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CRISPR therapeutics
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Published by medicine
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Intellia therapeutics
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Sangamo therapeutics
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AVROBio
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Freeline Therapeutics
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Other
IPO date and details from Prime
Prime Medicine’s initial public offering or initial public offering is expected to be October 19, 2022 and will be available for investors to trade on the open market beginning October 20, 2022.
(Warning: Compared to stocks with more history, IPOs typically have less information for investors to review and analyze. For this reason, investors should exercise caution when considering investing in an IPO or immediately after an IPO. Also Investors should stick with it, however, remember that many IPOs are heavily marketed, past company performance is no guarantee of future results, and potential risks may be underestimated.)
PRME intends to sell 8.9 million common shares at a proposed mid-price of $17.00 per share for gross proceeds of approximately $151.3 million, excluding the sale of customary underwriter options.
No existing or potential new shareholders have expressed an interest in purchasing shares at the IPO price.
Assuming a successful IPO in the middle of the proposed price range, the Company’s enterprise value at IPO (excluding underwriter options) would be approximately $1.4 billion.
The free float to outstanding share ratio (excluding underwriter options) will be approximately 9.43%. A number below 10% is generally considered a “low float” stock, which can experience significant price volatility.
According to the Company’s most recent regulatory filing, it plans to use the net proceeds as follows:
approximately $90.0 million for continued research and development of our prime editing portfolio, including pre-clinical studies and advancement through potential pre-clinical proof-of-concept;
approximately $65.0 million for IND-enabling studies and the potential initiation of clinical trials for certain of our current therapeutic programs;
approximately $65.0 million for continued development of our Prime Editing platform and discovery-stage research for other potential programs;
approximately $50.0 million for the development of our early manufacturing processes and expansion of our dedicated chemistry facility; and
the rest for general corporate purposes.
Based on our current plans, we believe that our existing cash and cash equivalents and short-term investments, combined with the net proceeds from this offering, will be sufficient to fund our operating expenses and capital expenditure requirements through 2025.
(Source – SEC)
Management’s presentation of the company’s roadshow is available here until the IPO is completed.
Management says the company is not facing any legal proceedings that it believes would have a material adverse effect on its business.
Listed underwriters for the IPO are JP Morgan, Goldman Sachs, Morgan Stanley and Jefferies.
How to invest in the company’s stock: 7 steps
Investors can purchase shares of the stock in the same manner as shares of other publicly traded companies or as part of the pre-IPO allotment.
Note: This report is not a recommendation to buy stocks or other securities. For investors interested in making a potential investment after the IPO closes, the following steps to buying shares will be helpful.
Step 1: Understand the financial history of the company
Although not much public financial information is available about the company, investors can view the company’s financial history on its Form S-1 or F-1 with the SEC (source).
Step 2: Evaluate the company’s financial statements
The primary financial statements available for publicly traded companies include the income statement, balance sheet, and cash flow statement. These financial statements can help investors understand a company’s cash capitalization structure, cash flow trends, and financial condition.
My summary of the company’s recent financial results is below:
The company’s recent financial results are typical of a development-stage biopharmaceutical company in that it has not generated any revenue (except for some collaboration revenue in 2020) and has had significant R&D and G&A expenses related to its discovery efforts.
Below are the company’s financial results for the last two and a half years:
Company Income Statement (SEC EDGAR)
As of June 30, 2022, the Company had $92.2 million in cash and $46.9 million in total debt.
Step 3: Evaluate the company’s potential against your investment horizon
When investors evaluate potential stocks to buy, it’s important to consider their time horizon and risk tolerance before buying stocks. For example, a swing trader might be interested in short-term growth potential, while a long-term investor might prioritize strong financials over short-term price moves.
Step 4: Choose a brokerage
Investors who do not already have a trading account start by choosing a brokerage firm. Account types commonly used for trading stocks include a standard brokerage account or a retirement account like an IRA.
Investors who prefer fee-based advice can open a trading account with a full-service broker or independent investment advisor, and those looking to manage their portfolio at a reduced cost can opt for a discount brokerage firm.
Step 5: Choose an investment size and strategy
Investors who have decided to buy shares in the company should consider how many shares they want to buy and what investment strategy they want to adopt for their new position. The investment strategy determines an investor’s holding period and exit strategy.
Many investors choose to buy stocks and hold them for an extended period of time. Examples of basic investment strategies are swing trading, short-term trading, or investing over a long-term holding period.
Investors wishing to receive an allocation of shares at the IPO price prior to the IPO would “express interest” to their broker prior to the IPO. Declaring an interest is not a guarantee that the investor will receive an allotment of shares prior to the IPO.
Step 6: Choose an order type
Investors have many ways of placing orders to buy stocks, including market orders, limit orders, and stop orders.
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Market Order: This is the most common type of order filled by retail traders. A market order executes a trade immediately at the best available transaction price.
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Limit Order: When an investor places a buy limit order, they set a maximum price to be paid for the shares.
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Stop Order: A buy stop order is an order to buy at a specific price, known as the stop price, which will be higher than the current market price. In the case of buy stop, the stop price is lower than the current market price.
Step 7: Submit the trade
After investors fund their account with cash, they can decide on an investment size and order type, and then submit the trade to place an order. If the trade is a market order, it will be executed immediately at the best available market price.
However, when investors place a limit order or stop order, the investor may have to wait for the stock to reach its target price or stop-loss price for the trade to complete.
The final result
Prime is seeking public capital market funding to advance its large pipeline beyond discovery and eventually into Phase 1 studies.
Its lead candidate, a genetic treatment for sickle cell disease, is still in the discovery phase.
The market opportunities for the different diseases that the company wants to treat are large and varied.
The Company is collaborating with Beam Therapeutics to develop its lead genetic treatment candidate for sickle cell disease.
The company’s investor syndicate includes well-known life science venture capital firm ARCH Venture Partners.
JP Morgan is the leading underwriter and the IPOs the firm has managed over the past 12 months have generated an average negative return (35.5%) since going public. This is a lower performance for all major underwriters over the period.
As for the valuation, management is asking investors to pay an enterprise value of $1.4 billion at the IPO, which is well above the normal range for a biopharmaceutical company to go public.
Prime has a large pipeline of potential genetic treatment candidates.
However, since the company’s pipeline is all pre-phase 1 trials, the IPO is extremely risky, very expensive, and the company has a very long way to go before its first candidate is approved.
As a result, my outlook on Prime Medicine’s IPO is on hold.
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