Precision BioSciences, Inc. (DTIL) Bundle
Understanding Precision BioSciences, Inc. (DTIL) Revenue Streams
Understanding Precision BioSciences, Inc. Revenue Streams
Revenue for the three months ended September 30, 2024 was $0.6 million, compared to $13.1 million for the three months ended September 30, 2023. The decrease of $12.5 million in revenue was primarily due to:
- A $7.0 million decrease in revenue recognized under the Novartis Agreement.
- A $5.5 million decrease in revenue recognized under the Prevail Agreement.
For the nine months ended September 30, 2024, revenue was $68.1 million, compared to $41.7 million for the same period in 2023, reflecting an increase of $26.4 million. This increase was attributed to:
- A $29.3 million increase in revenue related to the Prevail Agreement.
- A $9.5 million increase in revenue from the TG License Agreement and the license agreement with Caribou.
- A $12.4 million decrease in revenue recognized under the Novartis Agreement.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate showcases significant variability:
- For the three months ended September 30, 2024, the revenue growth rate decreased by 95.4% compared to the same period in 2023.
- For the nine months ended September 30, 2024, the revenue growth rate increased by 63.3% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the revenue contributions from various agreements:
| Revenue Source | Q3 2024 Revenue | Q3 2023 Revenue | 9M 2024 Revenue | 9M 2023 Revenue |
|---|---|---|---|---|
| Novartis Agreement | $0.6 million | $7.6 million | $5.9 million | $18.2 million |
| Prevail Agreement | $0 million | $5.5 million | $52.7 million | $23.4 million |
| TG License Agreement | $0 million | $0 million | $8.0 million | $0 million |
| Caribou License Agreement | $0 million | $0 million | To be determined | To be determined |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The termination of the Prevail Agreement effective July 10, 2024, which resulted in no revenue for Q3 2024.
- A notable decrease in revenue from the Novartis Agreement as the company nears completion of its pre-clinical workplan.
Deferred revenue as of September 30, 2024, related to the Novartis Agreement amounted to $26.8 million, while there was no deferred revenue related to the Prevail Agreement due to its termination.
A Deep Dive into Precision BioSciences, Inc. (DTIL) Profitability
A Deep Dive into Precision BioSciences, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, total revenue was $68.1 million, while total operating expenses were $69.4 million, leading to a gross profit margin of approximately -1.9%.
Operating Profit Margin: The operating loss for the same period was $1.3 million, resulting in an operating profit margin of -1.9%.
Net Profit Margin: The net income for the nine months ended September 30, 2024, was $24.9 million, giving a net profit margin of approximately 36.6%.
Trends in Profitability Over Time
In comparing the nine months ended September 30, 2024, with the previous year, the net income improved significantly from a net loss of $45.0 million in 2023 to a net income of $24.9 million in 2024. This marks a turnaround of $69.9 million in net income year-over-year.
Comparison of Profitability Ratios with Industry Averages
| Metric | Precision BioSciences | Industry Average |
|---|---|---|
| Gross Profit Margin | -1.9% | 20% |
| Operating Profit Margin | -1.9% | 10% |
| Net Profit Margin | 36.6% | 15% |
Analysis of Operational Efficiency
The total operating expenses were $69.4 million for the nine months ended September 30, 2024, a decrease from $70.5 million in the same period of 2023. This reflects an operational efficiency improvement of approximately 1.6%.
Research and development expenses accounted for $43.7 million in 2024 compared to $40.0 million in 2023, indicating a 9.2% increase as the company continues to invest in its pipeline.
General and administrative expenses decreased from $30.5 million in 2023 to $25.7 million in 2024, a reduction of 15.7%, showcasing effective cost management strategies.
Summary of Profitability Metrics
| Period | Revenue | Operating Expenses | Net Income (Loss) | Gross Profit Margin | Operating Profit Margin | Net Profit Margin |
|---|---|---|---|---|---|---|
| 9M 2024 | $68.1 million | $69.4 million | $24.9 million | -1.9% | -1.9% | 36.6% |
| 9M 2023 | $41.7 million | $70.5 million | ($45.0 million) | -1.3% | -40.8% | -108.3% |
Debt vs. Equity: How Precision BioSciences, Inc. (DTIL) Finances Its Growth
Debt vs. Equity: How Precision BioSciences Finances Its Growth
The financial structure of Precision BioSciences, Inc. is characterized by a mix of debt and equity financing, essential for supporting its growth initiatives. As of September 30, 2024, the company reported the following debt levels:
- Short-term Debt: $22.5 million
- Long-term Debt: None reported as of the latest filings.
In terms of the debt-to-equity ratio, Precision BioSciences has a ratio of approximately 0.34, which is calculated based on total liabilities of $88.4 million and stockholders' equity of $64.9 million as of September 30, 2024. This ratio is below the industry average, which typically ranges from 0.5 to 1.0 for biotechnology firms, indicating a conservative approach to leveraging debt.
Recent activities related to debt include the issuance of a new term loan. On July 31, 2024, the company replaced its revolving line of credit with a new term loan amounting to $22.5 million with an interest rate of 6.5%. This move was part of a strategy to streamline their financing structure and reduce interest expenses. The company is required to maintain a cash security account equal to the principal amount of the loan, ensuring liquidity for debt servicing.
As for credit ratings, while specific ratings were not disclosed, the company has historically relied on equity financing and strategic partnerships to fund operations, reflecting a low reliance on external debt. The company’s creditworthiness remains a critical factor in determining future financing options.
Precision BioSciences balances its financing through a combination of equity funding and debt. As of September 30, 2024, the total stockholders’ equity stood at $64.9 million, with a significant increase attributed to recent equity offerings. The company has utilized at-the-market (ATM) offerings and private placements to raise capital, contributing to its financial strength without over-leveraging.
| Financial Metric | Amount |
|---|---|
| Short-term Debt | $22.5 million |
| Long-term Debt | $0 million |
| Debt-to-Equity Ratio | 0.34 |
| Total Liabilities | $88.4 million |
| Total Stockholders' Equity | $64.9 million |
| Interest Rate on Term Loan | 6.5% |
This balanced approach demonstrates the company's strategy to manage financial risk while pursuing growth opportunities in its research and development efforts. The focus on equity financing, coupled with a manageable level of debt, positions the company well against industry volatility.
Assessing Precision BioSciences, Inc. (DTIL) Liquidity
Assessing Precision BioSciences, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 3.08, indicating a strong liquidity position.
Quick Ratio: The quick ratio stands at 2.87, suggesting that the company can cover its short-term liabilities without relying on inventory.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is calculated as:
| Current Assets ($ thousands) | Current Liabilities ($ thousands) | Working Capital ($ thousands) |
|---|---|---|
| 121,328 | 39,305 | 82,023 |
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, shows the following:
| Cash Flow Component | 2024 ($ thousands) | 2023 ($ thousands) |
|---|---|---|
| Net Cash Used in Operating Activities | (39,762) | (75,691) |
| Net Cash Provided by Investing Activities | (118) | 5,787 |
| Net Cash Provided by Financing Activities | 44,530 | 2,559 |
| Increase (Decrease) in Cash | 4,650 | (67,345) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has cash and cash equivalents totaling $98.8 million and restricted cash of $22.6 million. The accumulated deficit is $464.7 million, indicating ongoing financial challenges. However, the recent net cash provided by financing activities of $44.5 million provides a buffer for operational needs.
The company has faced significant operating losses, yet recent trends in cash flow suggest improvements, particularly in financing activities. The substantial cash position may help mitigate liquidity concerns in the short term but will require careful management as operational demands continue to grow.
Is Precision BioSciences, Inc. (DTIL) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we will look into key valuation ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The company's current price-to-earnings (P/E) ratio is not applicable due to the negative earnings reported. The latest net loss per share is $(2.25) for the three months ended September 30, 2024 .
Price-to-Book (P/B) Ratio
The book value per share is calculated as follows: total stockholders' equity of $64.9 million divided by the total shares outstanding of 7,507,536 shares, yielding a book value per share of approximately $8.66. The current stock price is around $2.25, resulting in a P/B ratio of approximately 0.26 .
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value (EV) is calculated by adding the market capitalization to total debt and subtracting cash equivalents. The total debt is approximately $88.4 million while cash and cash equivalents stand at $98.8 million. The EBITDA for the last reported period is negative, thus rendering the EV/EBITDA ratio not applicable .
Stock Price Trends
Over the last 12 months, the stock price has experienced significant volatility. The stock was trading at approximately $4.50 a year ago and has since dropped to around $2.25, reflecting a decrease of about 50% .
Dividend Yield and Payout Ratios
The company currently does not pay dividends, and therefore, the dividend yield is 0%. The payout ratio is also 0% due to the absence of dividend payments .
Analyst Consensus on Stock Valuation
The consensus among analysts is a Hold rating, indicating that the stock is neither a strong buy nor a strong sell at its current valuation. Analysts are cautious due to the company’s significant losses and uncertain future earnings .
| Valuation Metric | Current Value | Comments |
|---|---|---|
| P/E Ratio | N/A | Negative earnings |
| P/B Ratio | 0.26 | Stock undervalued compared to book value |
| EV/EBITDA Ratio | N/A | Negative EBITDA |
| Stock Price (1 Year Ago) | $4.50 | Current stock price is $2.25 |
| Dividend Yield | 0% | No dividends paid |
| Analyst Consensus | Hold | Cautious outlook |
Key Risks Facing Precision BioSciences, Inc. (DTIL)
Key Risks Facing Precision BioSciences, Inc.
The financial health of Precision BioSciences, Inc. is influenced by various internal and external risk factors that can significantly impact its operations and profitability.
Industry Competition
Precision BioSciences operates in a highly competitive biotechnology sector. As of September 30, 2024, the company reported an accumulated deficit of $464.7 million and has not yet commercialized any products. The competitive landscape includes established pharmaceutical companies with greater resources and market presence, which may hinder the company's ability to gain market share.
Regulatory Challenges
Regulatory approval for new therapies is a lengthy and uncertain process. The company has not yet achieved profitability and requires substantial additional development time and resources before realizing revenue from product sales. The anticipated expenses for regulatory compliance are expected to escalate as research progresses.
Financial Condition and Need for Additional Capital
Precision BioSciences has incurred significant operating losses since its inception, reporting a net loss of $24.9 million for the nine months ended September 30, 2024, compared to a net loss of $45.0 million for the same period in 2023. The reliance on external financing for ongoing operations poses a risk, particularly in the current economic climate.
Operational Risks
Operational risks include the potential for delays in research and development, which can affect timelines for clinical trials and subsequent product launches. The company reported total operating expenses of $69.4 million for the nine months ended September 30, 2024, a slight decrease from $70.5 million in 2023. However, ongoing operational efficiency improvements are crucial for sustainability.
Market Conditions
Market volatility can adversely affect funding opportunities and investor sentiment. The company’s cash and cash equivalents were reported at $98.8 million as of September 30, 2024, indicating the need to manage resources carefully to navigate market fluctuations.
Mitigation Strategies
To address these risks, Precision BioSciences has implemented several strategies:
- Seeking partnerships and collaborations to share the financial burden of research and development.
- Maintaining a robust pipeline of product candidates to diversify revenue potential.
- Continuing to engage with regulatory authorities to ensure compliance and expedite approval processes.
| Risk Factor | Details | Current Financial Impact |
|---|---|---|
| Industry Competition | High competition from established companies | Accumulated deficit of $464.7 million |
| Regulatory Challenges | Lengthy approval processes | Increased costs associated with compliance |
| Financial Condition | Significant operating losses | Net loss of $24.9 million (2024) |
| Operational Risks | Delays in R&D | Total operating expenses of $69.4 million |
| Market Conditions | Volatility affecting funding | Cash and cash equivalents of $98.8 million |
Future Growth Prospects for Precision BioSciences, Inc. (DTIL)
Future Growth Prospects for Precision BioSciences, Inc.
Analysis of Key Growth Drivers
Precision BioSciences is positioned for growth through several key drivers:
- Product Innovations: The company is advancing its PBGENE gene editing programs, particularly PBGENE-HBV and PBGENE-3243, which are expected to enter clinical trials by 2025.
- Market Expansions: The company has entered into agreements with TG Therapeutics and Caribou, contributing an increase of $9.5 million in revenue for the nine months ended September 30, 2024.
- Acquisitions: The sale of the CAR T platform to Imugene allowed for a focus on its core gene editing technologies.
Future Revenue Growth Projections and Earnings Estimates
Revenue for the nine months ended September 30, 2024, was $68.1 million, up from $41.7 million in the previous year, marking a growth of 63.3%. The operating loss significantly decreased to $1.3 million from $28.8 million in the nine months ended September 30, 2023.
| Period | Revenue (in thousands) | Operating Loss (in thousands) |
|---|---|---|
| 9 Months Ended September 30, 2024 | $68,058 | ($1,316) |
| 9 Months Ended September 30, 2023 | $41,689 | ($28,846) |
Strategic Initiatives or Partnerships
The company’s collaboration with Eli Lilly and the subsequent partnership with Prevail Therapeutics are pivotal for its growth trajectory. The Prevail Agreement, which was amended in June 2023, aims to develop therapies for genetic disorders. However, the agreement was terminated in April 2024, which may shift focus towards alternative partnerships.
Competitive Advantages
Precision BioSciences maintains several competitive advantages:
- Unique Technology Platform: The ARCUS gene editing technology provides a distinct edge over competitors in precision medicine.
- Strong Intellectual Property Portfolio: The company has established a robust IP portfolio that supports its R&D initiatives.
- Experienced Management Team: The leadership team has extensive experience in biotechnology and pharmaceuticals, enhancing strategic decision-making.
Financial Overview
As of September 30, 2024, the company reported cash and cash equivalents of $98.8 million, bolstering its capacity to fund ongoing R&D efforts. The total stockholders’ equity increased to $64.9 million from $18.9 million in the previous year.
| Metric | As of September 30, 2024 | As of September 30, 2023 |
|---|---|---|
| Cash and Cash Equivalents (in thousands) | $98,800 | $116,700 |
| Total Stockholders’ Equity (in thousands) | $64,866 | $18,861 |
Conclusion
The financial health and strategic initiatives of Precision BioSciences indicate promising growth opportunities driven by innovative products, collaborative partnerships, and a solid financial foundation.
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Resources:
- Precision BioSciences, Inc. (DTIL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Precision BioSciences, Inc. (DTIL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Precision BioSciences, Inc. (DTIL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.