Welcome to Blue Room's Weekend Update. Each week, we're sharing what companies we're researching and the what, the who and the how that we think makes the companies interesting and unique. This roundup is brought to you weekly by a group of interns, creative minds, artists and investors who believe that through best in class investing along with the democratization of financial education we can do great things together. Enjoy, Explore and Share.

As the calendar rolled over into the final quarter of 2023, the American populus was met with a tumultuous week underscored by unprecedented political operations, eye-catching economic readouts, and a continued sense of fragility in the equities and securities markets, as investors were left waiting for decisive clarity on the Federal Reserve's future moves.

Over the previous weekend, Congressional leadership successfully averted an impending government shutdown as then-House Speaker Kevin McCarthy broke rank from his conservative coalition to pass a bipartisan continuing resolution that would see Federal agencies funded for 45 days through November 17. However, far-right critics of McCarthy's compromise, led by Florida Representative Matt Gaetz, vowed to make a move against McCarthy's leadership and motioned to vacate the chair of the Speaker of the House - an ability afforded to them under the compromise that enabled McCarthy's speakership nine months prior. In a historic 216-210 vote, Representative Kevin McCarthy became the first speaker removed from office, leaving GOP leadership in an already divided Congress uncertain of upcoming steps.

Economic data, through its inherent influence on expectations of upcoming policy from the Federal Reserve, remained at the forefront of the market's eye this week, with the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey report, the ADP's National Employment data, the Department of Labor's Initial Jobless Claims readout, and the BLS's Non-farm Payroll report all being released throughout the week.

Much of the data signaled at the heat prevailing in the U.S. economy and jobs market, even as the Federal Funds Rate sits at 5.33%. The JOLTS report, published on Tuesday, October 3, highlighted 9.61 million job openings in the market, surpassing consensus estimates by 800,000 openings. Likewise, the Non-farm Payroll data, published on Friday, October 6, showed 336,000 jobs added in September, nearly doubling estimates of 170,000 job additions for the period, while also noting positive revisions for the July and August periods.

However, the week's reports did not produce a universal consensus regarding the future trajectory of the Federal Reserve's policy. The ADP report showed the increase in private employment during the September period was far below expectations and initial jobless claims, published on Thursday, October 5, exceeded analyst predictions. Finally, the details of the BLS's final publication pared the clarity seemingly provided by the headline readouts. Average hours worked and the labor force participation rate remained unchanged even while added payrolls surged past expectations, leading to questions of how the Federal Reserve will interpret and react to the data.

This coupling of a monumental political moment - that further shadowed the already stormy skies of future bipartisan cooperation - with the lingering indeterminacy of Federal Reserve policy served as the backdrop for a historic bond selloff. 10-Year Treasury yields reached over 15-year highs this week, peaking at nearly 4.9% following the Non-farm Payroll report. Such expansions in the term premium present dramatic effects on the United States' debt servicing, amplifying even more the stakes over upcoming debates centered on fiscal responsibility and continued governance.

Weekly Performance

S&P 500 4,308.50 +0.48%

Nasdaq 13,431.34 +1.60%

Dow Jones 33,407.58 -0.30%

Thank you Blue Room Analyst AIDAN FETTERLY

Maury Raycroft — Jefferies

Michael, could you provide a 2-minute introduction to Precision’s go-forward focus on in vivo gene editing?

Michael Amoroso — President & Chief Executive Officer

Precision BioSciences just completed its final transformation with the management team

A couple of years ago, they had an agricultural platform they divested at the end of 2021
They were working with ex vivo CAR T programs, and they took that to data this year, an FDA meeting, and just partnered their lead asset there

ARCUS is a proprietary platform with over 20 patents worldwide
It comes from the homing endonuclease, unlike most editors that come from bacterial restriction enzymes
They are solely focused on in vivo editing now
Lead programs include HBV, where they’re excited for a CTA/IND filing next year
Their next program is the wholly-owned primary mitochondrial myopathy, with a CTA/IND in the 2025 timeframe
They have some really important partnerships, the first of which could bear in vivo ARCUS gene editing data through iECURE
They’re filing a CTA this year in OTC and they could see data next year
They also have partnerships with Novartis and Eli Lilly beyond the liver

Maury Raycroft — Jefferies

Let’s talk about the mechanics of the ARCUS platform. What are the key differentiating aspects?

Michael Amoroso — President & Chief Executive Officer

There isn’t one editor that wins the day
There are needs for editors for certain therapeutic indexes
ARCUS is focused where other editors can’t go — beyond the liver and beyond gene knock-outs
Precision is focused on sophisticated edits like gene insertion and gene excision
3 unique advantages:
1. Cut — leaving a 3’ overhang, with the DNA replication sequence in the right order

Unlike any other editor, ARCUS can take advantage of homology directed repair
That allows much higher efficiencies and better therapeutic indices

2. Size — ARCUS is by far the smallest editor, so it can go in a viral or non-viral vector
3. Simplicity — ARCUS is the only gene editor that’s a single component

Many other editors have to deliver many components with multiple delivery vehicles
Other editors can’t cross the mitochondria because the guide RNA can’t get in

Maury Raycroft — Jefferies

One of the other key differentiating aspects is that it’s self-inactivating too. You have longer-term data, 5 years of data in non-human primates. Can you talk about how that leads to a better safety profile?

Michael Amoroso — President & Chief Executive Officer

6 years and up to 80 years of animal life

Cassie Gorsuch — Vice President, Gene Therapy Discovery

One of the things that’s unique to ARCUS is, based on the simplicity of the enzyme
The DNA has a recognition motif embedded in the same protein that has catalytic domain

So it can both recognize and cut the DNA

Thinking about specificity, Precision can use iterative rounds of protein engineering to ensure the protein itself interacts only with the target site
Self-inactivation is the ability for the enzyme to only cut at the intended target site
Once that target site is no longer present, the enzyme isn’t going to go off and cut in other places
Even delivering a nuclease with AAV and there is sustained expression, the data is very clear that they don’t accumulate off-target edits
If anything, they’re seeing off-target editing decreases over time
It comes back to the ability to recognize the target site

IN

Geulah Livshits — Chardan

Could you start by giving us a brief overview of Rocket?

Gaurav Shah — Chief Executive Officer

Thanks for having us. Great to be here. Great to see everybody. Rocket Pharma is a gene therapy company. We start with the end goal in mind in the sense that there are a lot of diseases out there, the universe that are monogenic, devastating at times fatal diseases where restoring a single protein, a single cell type can affect the whole spectrum of disease and where there are sizable market opportunities. That universe is whittled down to more targeted communications and Rocket starts with those in mind. That's what I mean by starting with the end in mind — clinical first. And then find and adapt and enable technology to meet those needs.

So far we have used ex vivo lenti for bone marrow-derived disorders. And we use AAV for in vivo cardiomyopathies. Those are the two platforms you have right now. Over time we may expand further. We're also an integrated company in the sense that we do everything from early discovery in the preclinical and research into clinical, regulatory, commercialization, manufacturing, straddling the whole spectrum. So we are a fully integrated company at this point. And then I guess I should just make the last point that the way we selected our assets is not throwing darts at the walls. It's really thoughtful asset selection upfront so that every single clinical program now has reached proof of concept 100%. POC in the clinic as well.

Geulah Livshits — Chardan

Great. So let's take your two programs one by one. I know you had a BLA acceptance recently, for one of your ex vivo programs. I do want to talk about that. That's where you've recently used to line up with the FDA on pivotal trials design. Can you walk us through that design and talk about what would be a good result there?

Gaurav Shah — Chief Executive Officer

Yeah, it was an interesting FDA meeting. Probably 25 people from FDA all the way from junior clinical and CMC reviewers up in the room versus four or five of us, which could be daunting. But I think that was a moment in the field, where we came to an agreement with the full panel for the FDA, so there's no discrepancies or disagreements later, on the relevance of protein expression and LV mass as reasonably likely endpoints to predict clinical outcomes. So that's almost that's the exact revolution. And to come to that point was a journey, it was an iterative dialogue that gave over a year light, and I think that final resting point was good for again the program and patients because it allows us to get the potential approval, accelerated approval with only 12 patients on single arm trial with very define objective endpoints. But it was also opening the door for other cardiomyopathies like PKP2, which is the following factory, just to follow Rocket, but others in the field as well. And I think even more importantly, it shows that CBER is really open to working with just as collaborators using a common sense approach to drug development rather than a sort of a defensive reactive approach. So this was a huge win for us and the field.

Geulah Livshits — Chardan

Absolutely. I think that's something that we can hear a lot from companies at this conference and folks in the field that we speak to in general. So in terms of the data itself and the Danon program, can you just give us the quick highlights of what from the Phase 1 gives you confidence in the pivotal study?

Gaurav Shah — Chief Executive Officer

So, there's a green chart on one of our slides on our slide deck. Green — Bright green denotes improvement, light green stabilization, and red denotes worsening. There's no red on slide at all. Every parameter that we measured from the Phase 1 basically improved from the patient's baseline. These are patients who are between 11 and 20 years old who were enrolled. The older patients are now from age 20 to 23. First of all after gene therapy, they're all alive and doing well. Anecdotally, they're going to school, going to college at a time when they should have unfortunately passed away or be on a transplant. But instead, there’s a family where there are two brothers and one got transplanted with a heart transplant, one got the gene therapy, and there's a vast difference between how they're looking and feeling and functioning. So that's the ultimate outcome, survival and wellness. But moving backward from there, quality of life has vastly improved in every patient in the Phase 1 trial based on KCCQ scores. Usually five points of KCCQ scores denotes some improvement. In some cases here we're seeing 20 or 30-point improvements which is unprecedented.

Moving back from there, looking at LV mass and other imaging endpoints. LV mass has improved in every single patient. In fact in the pediatric patients, it drops by 30% within six months and certainly, that's sustained at one year. And then moving back from there, you see improvements in BNP troponin, vacuoles, and then protein expression. So protein expression and LV mass, which were definitely bright green columns, are the Phase 1 endpoints that we need to replicate in Phase 2? If the Phase 1 were the trial, it should be an approval now, right? But, we'll see what happens with the Phase 2, we don't know for sure obviously. There's always some risk there. But based on Phase 1, we think that protein expression and LV mass as co - primaries are reasonably de-risked.

IN

Question & Answer Session

Catherine Schulte — Baird

Maybe just starting off on Cologuard. It seems like the most important part of your story right now. In this last quarter, you had yet another beat and raise on the Cologuard side of the business. So what are kind of the key 2 or 3 things that have been driving that outperformance for Cologuard?

Jeff Elliott — Executive Vice President, Chief Financial Officer

It's certainly been an exciting time at Exact, especially for our Cologuard business. For those of you who don't know, Cologuard is a colon cancer screening test, approved in the U.S. and the target market here is approaching 120 million people.

So this serves a huge market. What we've seen over the last several quarters that we've seen a big shift in the market. There's a lot of drivers here that we can spend time talking about. But the market has changed and changed in a way that really benefited our business.

One of the big things that happened in the past couple of years is the key clinical guidelines, lower the screening age to 45. Previously, it had been 50. And what that did is that in 20 million more Americans to the screening pool. That helped grow the market in a major way. It really helped our business.

So today, the younger population, ages 45 to 49 is almost 20% of our business.

So that really helped accelerate Cologuard. Other changes happened too. The pandemic is one of the big ones. So that's 1 of the things that happened. Again, the pandemic really changed the market and external factors like the guideline changed. And others that are our internal efforts have really improved over the past couple of years. One of the examples, one of these is our sales force, the teams out in the field continue to get more productive. The team in primary care is about 700 people out there calling on physicians, and we see their productivity growing very nicely.

Lastly, what I'd add is that our relationships with health systems and payers in this space has really improved to the point where they are now often coming to us asking for help, help them getting more people screened. So there's a growing part of our business that we call care gap initiatives that this year could do $25 million of revenue, where this is an example of where a payer or health system comes to us and says, we've got a big group of patients that are historically unscreened, can you help us get more of these patients screened.

So a lot has happened to have Cologuard growth. And the exciting part here again is I'd point back to the market with 100 — almost 120 million Americans in the screening market, there's a long ways for us to grow in this market.

Catherine Schulte — Baird

I think you've talked about 75% of all U.S. primary care physicians have ordered Cologuard now, but still pretty consistently, we've been adding 9,000 to 10,000 physicians per quarter for the last couple of years. So it doesn't seem like there's a slowdown there at all. Do you think that eventually gets above 90% and what's been driving some of the adoption in these later adopters?

Jeff Elliott — Executive Vice President, Chief Financial Officer

It's years ago, back with us on the sell side, I thought, okay, someday way down the road, maybe 100,000 providers would order Cologuard at peak. I was way off on that. Today, we're over 300,000.

So the number continues to blow through expectations that I had that many people have had. I think it really speaks to the size of this market and the universal appeal that Cologuard has. What's driving it? I think things like the high levels of awareness. I mean, you're talking about 90%, awareness levels are very high. Cologuard has become synonymous with colon cancer screening.

So that really helps today increasingly people are going into the physician and saying, "I want Cologuard." It's not, I want to get screened. “I want a Cologuard.” Maybe I saw the ad or I had a friend or family member who had Cologuard. They're asking for it by name, which really helps us. After years of out there educating patients and physicians on the name and the importance of screening, I think we're at the tipping point, a tipping point where Cologuard, again, things have become more automatic, not that we don't have to go out there and promote Cologuard. I don't mean that, but I think growth has become easier over time now that, that brand awareness is high.

I would caution you, though, at some point, while we've continued to add close to 10,000 new ordered providers every quarter. At some point, that number will decline. I've been saying that for years, and at some point, I'll be right. It will go down because there's only so many physicians out there. The bigger opportunity for us is not to get more physicians to order. We'll — we still try to get more, the bigger opportunity is in the share of opportunity within the existing doctors.

So those doctors that have already ordered, if you look within their practices, we could grow our business 5x to 10x over again, just by getting them to order more. So that's the bigger area of focus for our commercial teams.

IN

— TREK TO LONDON —
BY MIN & KELLY

As as a Michelin Star celebratory tour, Min and Kelly flew to London to be part of Eduardo’s Gallery Show and sample Kelly’s local picks.

1

GALLERY: MAUREEN PALEY / PRIVATE VIEW
60 Three Colts Lane
London E2 6C

EDUARDO SARABIA

Saturday, September 16
Oysters at the Borough Market

3

Saturday, September 16
Silo

4

September 16, 2023
Smoking Goat

Dinner by Heston Blumenthal (2 Michelin Stars)
at Mandarin Oriental hotel

6

Sunday
September 17, 2023
Brat

7

Sunday
September 17, 2023
St. John Bread and Wine

VISIT TOGETHERISM

10% OF ALL BLUE ROOM REVENUES GO DIRECTLY TO FUND OUR NON PROFIT TOGETHERISM.
WE CAN ACCOMPLISH ANYTHING TOGETHER.

These materials do not purport to be all-inclusive or to contain all the information that a prospective investor may desire in considering an investment. These materials are intended merely for preliminary discussion only and may not be relied upon for making any investment decision. Any discussion or information contained in this presentation does not serve as a receipt of, or as a substitute for, personalized investment advice from Blueroom or your advisor.

This publication does not constitute an offer to sell or a solicitation to buy any securities in any fund, market sector, strategy or any other product. Investing is speculative and involves substantial risks (including, the risk of loss of the investor’s entire investment). Past performance is not indicative of future results, and there can be no assurance that the future performance of any specific investment, investment strategy, or product will be profitable.

For more information about us and our general disclosures contact us directly.

Weekend Update #147

— TREK TO LONDON —BY MIN & KELLY

1

EDUARDO SARABIA

2

3

4

5

6

7

Weekend Update #148

Weekend Update #146

— TREK TO LONDON —
BY MIN & KELLY