DTIL Revenue Drops 99%

Precision BioSciences (DTIL -4.37%), a clinical-stage biotechnology firm focused on gene editing, released its Q2 FY2025 earnings results on August 7, 2025. The main headline: GAAP revenue dropped to $18 thousand, considerably underperforming the consensus GAAP estimate of $4.98 million, and falling well short of the prior year's $49.9 million in GAAP revenue. The revenue decline primarily reflected the wind-down of past collaboration revenue, and while significant progress was made on the company’s clinical pipeline, the company remains heavily reliant on new collaborations or milestone payments going forward.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Focus Areas

Precision BioSciences (DTIL -4.37%) develops therapies using a proprietary gene editing platform, ARCUS. ARCUS is designed to edit genes in living organisms, tapping into homing endonuclease proteins that can be engineered for genetic precision and efficiency. This platform aims to tackle diseases with high unmet medical needs, such as chronic hepatitis B and Duchenne muscular dystrophy.

The company’s current focus is advancing two in vivo gene-editing therapies: PBGENE-HBV for chronic hepatitis B virus infection and PBGENE-DMD for Duchenne muscular dystrophy. Both programs highlight ARCUS’s unique features, including its compact size and single-component design—qualities that can aid in safe and precise genetic edits. Success is linked to achieving clinical milestones, maintaining patent protections, building strategic partnerships, and navigating regulatory requirements efficiently.

Quarter in Review: Revenue, Pipeline Progress, and Financial Management

GAAP revenue for Q2 2025 was notably lower than both expectations and the same period last year. Management attributed this drop to the full recognition of deferred revenue from the Prevail Therapeutics agreement in the prior year, specifically $48.2 million in non-cash revenue recognized under GAAP in Q2 2024. This contributed $48.2 million in GAAP revenue to Q2 2024, with little replacement revenue materializing in this period, leaving the company heavily reliant on new collaborations or milestone payments going forward.

On the clinical front, meaningful updates came from both core programs. The PBGENE-HBV program, an in vivo gene-editing therapy targeting hepatitis B, reported data from its first patient cohort in the Phase 1 ELIMINATE-B trial. Early efficacy stood out, with all three patients experiencing a 47% to 69% decrease in hepatitis B surface antigen (HBsAg) levels—a measure of antiviral activity—as reported for Cohort 1 of the PBGENE-HBV Phase 1 ELIMINATE-B trial, with data cutoff as of July 28, 2025. The company reported that one patient maintained a durable 50% reduction in hepatitis B surface antigen (HBsAg) seven months after initial dosing, as of July 28, 2025. No serious or severe treatment-related side effects appeared, supporting ARCUS’s safety profile so far. Results from higher dosing levels are expected later in 2025 as the study progresses into new cohorts.

The PBGENE-DMD program, designed for Duchenne muscular dystrophy, made progress through both regulatory and preclinical milestones. The therapy received Rare Pediatric Disease and Orphan Drug designations from the U.S. Food and Drug Administration (FDA), speeding its development and potentially qualifying for future incentives. In preclinical mouse models, the gene-editing therapy showed a threefold increase in dystrophin-positive muscle cells and up to 85% positive cells in targeted leg muscles—a sign of potent gene correction, according to data released in July 2025. The company is targeting an Investigational New Drug (IND) application by the end of 2025, which would allow human trials to begin in 2026.

The business also tightened its focus, suspending work on its PBGENE-3243 program for mitochondrial disease to conserve resources and accelerate progress on its two lead therapies. Meanwhile, collaborations continued, with a partner-led OTC deficiency trial with iECURE achieving early patient dosing in the first half of 2025, and a development effort with Novartis is ongoing in the area of blood disorders.

From a financial standpoint, the company implemented tight cost controls and a program prioritization strategy. Research and development spending was reduced—mainly due to halts in non-core work and reduced manufacturing costs for some programs. Cash, cash equivalents, and restricted cash (GAAP) declined to $84.8 million as of Q2 2025. Management stated these funds, combined with planned expense reductions, should last through the second half of 2027.

Looking Forward: Guidance and Investor Watch Points

The company did not issue formal revenue or earnings guidance for future periods. Management emphasized that its cash runway now extends through the second half of 2027 following cost reductions and focus on its highest-priority programs. This should support key milestones, such as further clinical data from PBGENE-HBV and regulatory progress for PBGENE-DMD over the next two years.

Looking forward, investors should monitor the company’s ability to secure new partnership or milestone revenue, as near-term commercial sales appear unlikely given the early stage of its core programs. Any material updates from the ongoing PBGENE-HBV clinical study and progress toward the planned IND submission for PBGENE-DMD will be critical. Given the company’s dependence on external funding and prospective equity or collaboration deals, any developments in business development or capital-raising will also remain in focus.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.