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PI

PepGen Inc. (PEPG)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 highlighted clinical progress: PGN-EDO51 5 mg/kg cohort achieved mean exon skipping of 2.15% and increased dystrophin production with favorable tolerability; regulators cleared FREEDOM2-DM1 in Canada and the U.K., with dosing expected 2H 2024 .
  • Operating spend increased as programs advanced: R&D rose to $25.1M and G&A to $5.4M; net loss widened to $28.3M (EPS $(0.87)), reflecting accelerated clinical activity .
  • Cash, cash equivalents, and marketable securities were $161.3M at quarter-end, with runway into 2026 per management .
  • Near-term catalysts: FREEDOM-DM1 Phase 1 results (Q4 2024), CONNECT2-EDO51 U.S. opening by year-end (subject to clearance), and initial 10 mg/kg CONNECT1-EDO51 cohort data in early 2025 .
  • Wall Street consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable to retrieve in this session; estimate comparisons are therefore not included (see “Estimates Context”) [GetEstimates error].

What Went Well and What Went Wrong

What Went Well

  • EDO51 delivered positive biological activity at low dose: 5 mg/kg achieved 2.15% mean exon skipping and increases in dystrophin production, with no discontinuations or dose reductions; CEO emphasized higher exon-skipped transcript levels versus other exon 51 therapies at lower doses and shorter periods .
  • Regulatory momentum in DM1: FREEDOM2-DM1 cleared by Health Canada and the U.K. MHRA; initial dosing expected 2H 2024, supporting the transition from Phase 1 to Phase 2 .
  • Strengthened balance sheet and runway: $161.3M cash & securities as of June 30 supports operations into 2026, underpinning execution of multiple trials .

What Went Wrong

  • Losses widened alongside higher clinical spend: net loss increased to $28.3M and EPS to $(0.87), driven by higher R&D as studies progressed .
  • Estimates comparison unavailable: S&P Global consensus retrieval failed this session, limiting formal beat/miss analysis versus Street expectations [GetEstimates error].
  • Limited visibility on revenue/margins: as a pre-commercial biotech, no revenue or margin metrics were presented; financial performance is primarily OpEx and net loss driven .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Research & Development ($USD Millions)$13.17 $14.73 $25.06
General & Administrative ($USD Millions)$4.51 $5.07 $5.36
Total Operating Expenses ($USD Millions)$17.21 $19.80 $30.43
Net Loss ($USD Millions)$14.94 $18.02 $28.34
Diluted EPS ($USD)N/AN/A$(0.87)
Cash, Cash Equivalents & Marketable Securities ($USD Millions, quarter-end)$110.41 $175.22 $161.31

Notes:

  • Revenue not disclosed; margins not applicable for a pre-commercial biotech .
  • EPS for Q1 2024 and Q4 2023 was not provided in the referenced tables; Q2 2024 EPS $(0.87) was disclosed .

Program KPIs (Clinical)

KPI (CONNECT1-EDO51, 5 mg/kg)ValuePeriod/Timing
Mean Exon 51 Skipping (biceps)2.15%Week 13 after four doses
Mean Muscle-Adjusted Dystrophin1.49% of normal; +0.70% from baselineWeek 13 after four doses
Mean Absolute Dystrophin0.61% of normal; +0.26% from baselineWeek 13 after four doses
Tolerability (5 mg/kg cohort)No discontinuations, interruptions, or reductions; one mild TEAE resolvedThrough Week 13; LTE dosing ongoing
10 mg/kg Cohort StatusInitial dosing underway; initial results expected early 2025As of July 29, 2024

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
CONNECT1-EDO51 5 mg/kg preliminary data (safety, exon skipping, dystrophin)Mid-2024Expected mid-2024 Reported July 30, 2024 Achieved
CONNECT1-EDO51 10 mg/kg initial dataEarly 2025Dose escalation planned; timelines TBD Initial results early 2025 Set timeline
CONNECT2-EDO51 trial opening (U.K., U.S.)2024U.K. authorized in Mar-2024; plan to extend to U.S. and others U.K. open; expects U.S. opening by year-end, subject to clearance Maintained with added specificity
FREEDOM-DM1 Phase 1 data2H 2024Preliminary data from ≥5 mg/kg cohort in 2H 2024 Clinical results update expected Q4 2024 Narrowed timing
FREEDOM2-DM1 Phase 2 initiation2H 2024Plan to open in 2H 2024 Cleared by Health Canada & U.K. MHRA; dosing expected 2H 2024 Progressed
Cash RunwayInto 2026Into 2026 (post financing) Into 2026 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2023, Q1 2024)Current Period (Q2 2024)Trend
EDO51 clinical executionCONNECT1 enrollment completed; mid-2024 5 mg/kg readout targeted; CONNECT2 authorized in U.K. 5 mg/kg data reported (exon skipping, dystrophin, favorable tolerability); CONNECT2 open in U.K.; U.S. opening expected by year-end Accelerating execution
DM1 program progressionFREEDOM Phase 1 enrolling; preliminary ≥5 mg/kg data in 2H 2024; Fast Track granted FREEDOM update expected Q4 2024; FREEDOM2 cleared in Canada & U.K., dosing 2H 2024 Advancing to Phase 2
Regulatory interactionsMHRA authorization for CONNECT2; FDA designations (Orphan/Rare Pediatric for EDO51; Fast Track for EDODM1) FREEDOM2 CTA clearances in Canada & U.K.; continued engagement with EU/US regulators Continued momentum
R&D investment & OpExElevated R&D and G&A with pipeline progression Further R&D increase to $25.1M; higher total OpEx; widened net loss Upward spend trend
Safety profilePreclinical data supportive; early human data referenced 5 mg/kg generally well tolerated; ongoing LTE; no dose reductions Positive safety signals

Management Commentary

  • “In three months, PGN-EDO51 produced higher mean levels of exon skipped transcript at lower doses and in a shorter period than other exon 51 therapies… We are also very pleased PGN-EDO51 was well tolerated and that all patients experienced increases in dystrophin production.” — James McArthur, Ph.D., President & CEO .
  • “Based on these initial results, we are optimistic about the possibility that higher levels of dystrophin production will be observed in the 10 mg/kg cohort of CONNECT1. We also look forward to reporting data from the first cohort of our placebo-controlled multinational study CONNECT2.” — James McArthur, Ph.D. .

Q&A Highlights

  • No standalone Q2 2024 earnings call transcript was available in the document set; management commentary is drawn from the earnings press release and the July 30 data announcement. Guidance clarifications centered on CONNECT2 U.S. timing (year-end subject to clearance), FREEDOM-DM1 update timing (Q4 2024), and CONNECT1 10 mg/kg data (early 2025) .

Estimates Context

  • S&P Global consensus estimates for Q2 2024 EPS and revenue were unavailable to retrieve due to a request limit error in this session. As a result, beat/miss analysis versus Wall Street consensus is not provided. Values would normally be retrieved from S&P Global; unavailable in this session [GetEstimates error].

Key Takeaways for Investors

  • Biological proof-of-mechanism strengthened: PGN-EDO51 showed exon skipping and dystrophin increases at 5 mg/kg with favorable safety, de-risking the program ahead of higher-dose data .
  • Multiple near-term catalysts: FREEDOM-DM1 Phase 1 results in Q4 2024 and initial CONNECT1 10 mg/kg cohort data in early 2025; CONNECT2 expanding geographies including anticipated U.S. opening by year-end (subject to clearance) .
  • Increased OpEx reflects accelerated execution: R&D spending step-up to $25.1M and total OpEx to $30.4M; expect continued investment as trials progress .
  • Solid cash runway into 2026 underpins clinical timelines without immediate financing needs, barring unforeseen changes to the plan .
  • DM1 program advancing to Phase 2 with CTA clearances, positioning the asset for randomized data readouts and potential differentiation via splicing correction and functional measures .
  • Regulatory engagement remains constructive across U.K., Canada, EU, and expected U.S. openings, supporting trial scale-up and potential future regulatory pathways .
  • Estimate comparisons unavailable this session; watch for Street revisions following Q4 2024 FREEDOM-DM1 readout and CONNECT2 updates (could be stock-moving catalysts) [GetEstimates error].

Appendix: Additional Relevant Press Releases (Q2 2024)

  • Positive CONNECT1-EDO51 low-dose (5 mg/kg) cohort data; safety and biomarker outcomes; 10 mg/kg cohort dosing ongoing .
  • Executive team promotions (CMO and SVP Regulatory), indicating organizational readiness for clinical and regulatory scale-up .