Allogene Therapeutics, Inc. (ALLO) Earnings Call Transcript & Summary

Good morning, everyone. Thanks for joining us. We're really pleased to have the Allogene team with us. We have David Chang, President and CEO; and Eric Schmidt; CFO. I'm Salveen Richter, biotechnology analyst at Goldman Sachs.

To start, David, you've had a broadening set of data from your allogeneic CAR T portfolio over the last year. How is your understanding of the approach been refined as you -- as yourselves and others have worked here to move candidates forward? And help us understand what's still left to be uncovered or understood about the implementation of allogeneic CAR Ts?

Yes, Salveen, first of all, thanks for hosting Allogene in your conference on your first day, and we are delighted to be here. And today with me is Eric Schmidt, our CFO, who will also be participating in the Q&A. So I mean, I think your question is a very important one. I mean, over the last 18 months or so, we have had 3 data sets that we have released, starting with ASCO in 2020, followed by ASH. And then this year in the CD19 forum as well as ASCO, we provided updated information on our lead program ALLO-501 and 501A. I think what we are gradually learning, and over a period of time, I think we are really pleased to find that the science really living out as it had predicted about how the allogeneic cell therapy may work. So if we go back in 2020, when we first presented our ALLO-501 data in non-Hodgkin's lymphoma, we provided pretty convincing data set showing that overall response rate, including the complete remission rate is on par with autologous CAR T therapy. And following that, we provided additional information, including very robust cell expansion that we are seeing in our BCMA program at ASH 2020. And what we did this year is answering 1 question around the durability, which only the time could tell. So it took a little while to follow the patient and see the outcome of those patients who are in response. And we were extremely pleased to find that in the DLBCL cohort, in the CAR-T naïve patient population, which is our target patients that we are thinking about for the pivotal study, the 6-month durability was up 36%, which is on the upper range of 28% to 40% that came from the pivotal programs of 3 approved CD19 CAR T. So I think that the key message is allogeneic CAR T can be as good as our autologous CAR T. So I think that is the starting place. A couple of other things that I think worth mentioning is that we saw it in the beginning that as we had predicted, we are able to move away from mITT into ITT, meaning that rather than sort of looking at people who get the cells in part because in -- the time it takes to manufacturing the cells, in the autologous setting, 10% to 30% of the patients who are enrolled in the clinical studies cannot receive the cells. And we are seeing something that was definitely different. We were able to treat almost all patients who are enrolled in the study within a very short period of time. The median time from the enrollment to start of the therapy was 5 days. So it was really living out the expectation of the allogeneic cell therapy. And another thing that we were quite intrigued, and certainly, we are pursuing this further is the possibility of redosing, which now has evolved into a concept of consolidation. And we are seeing very fascinating and interesting data where we can deepen the initial response by giving the second infusion of cells within a short time after the first cells. And safely and also effectively. So I think this is really beginning to show the potential of allogeneic as we are preparing for the pivotal study that we intend to start at the year-end.

Perfect. And Eric, how well prepared are you in terms of -- or where do you stand in terms of cash runway and capital allocation plans as you basically -- as you kind of unlock all these levers and the approach for allogeneic CAR Ts to kind of then leverage it to the rest of the portfolio?

Yes. Thanks, Salveen. I appreciate the CFO question. We ended the quarter June -- sorry, March 31, in very good financial shape. We had $964 million on the balance sheet, no debt. And we recently reiterated our OpEx guidance for this year between $300 million and $330 million. Not all of that is cash burn. We do obviously have some stock-based compensation expense. So we feel like we're in great shape to continue to invest in this platform for the next several years. And it's really the platform that has been validated through this most recent CD19 data set. As you know, Salveen, there are a number of different approaches to overcoming self, nonself immunity. And making an allogeneic product accessible to more and more patients, making it efficacious, making it safe. And where I think we really take a lot of confidence from this existing data set is that we have an approach based on ALLO-647 lymphodepletion. That seems proprietary, unique and reduced to practice now. So we are keen to invest behind that platform more broadly, not just in CD19, but as you're aware of BCMA and CD70 and many of the other targets that we're interested in pursuing.

All right. So maybe jumping into the CD19 program here. You recently presented updated data from ALLO-501 and a first look at 501A at ASCO. To level set, can you just briefly recap the findings and put into context for us? How you're faring versus autologous?

Yes. So let me take that question. So we have 2 ongoing programs, ALLO-501, which is a proof-of-concept construct where much of the data have been generated and ALLO-501A, which is the construct that we intend to take into the pivotal program later this year. So combined, these 2 programs have treated more than of 50 patients. So this data set is -- not only has the length of follow-up that we are all seeking, but also had a number of patients where we could draw a lot of conclusions, including, as we talked about, being able to treat all patients. And certainly, the safety profile is living up to what we saw earlier, no evidence of GvHD, neurotoxicity and CRS, if anything, on the lower end of what was expected from the 4-1BB container construct, which is what we are using. And the infection rate, which is also on par somewhere around 20% in terms of Grade 3 infection rates. So in all aspects, the safety was really playing out nicely. In terms of efficacy, I mean, previously, we saw that overall response rate in the range of 75% with 50% complete remission rate. And that's the initial response rate that got us really excited in. And then the durability now at 6 months. And the 6 months is a very important time point because when you look at what happens to patients, who initially respond to the CAR T therapy, first 3 to 6 months, there is a lot of attrition, meaning patients who progress even after achieving complete remission. So 6 months is sort of the beginning of time point where you start seeing the plateau. And here, we saw the response -- 6-month response rate, as I talked about, 36%, which is smack in the middle of the range that has been seen in total autologous CAR T therapy. So all these were really looking into giving us a clear path. I mean, frankly, obviously, this is an aggregate data set that we had a chance to look at it before the data presentation. And when we look at the data, I mean, many of us were looking at each other and say, there is a clear path forward. We have a drug here. So now it's really executing on this plan of moving the study into the pivotal stage by the year-end.

And you made a point during your presentation to talk about the mITT versus the ITT analysis. And historically, we've seen autologous CAR Ts present their data for mITT. Just help us understand the more relevant comp for you or why it's important to look at the differences here?

I mean the way that the data set should be looked at is in principal ITT, meaning that everybody who is enrolled in the study they are now the denominator from which you drive the response rate as well as the safety information. Because of the manufacturing time period that it takes for the autologous, which can be up to a month, sometimes even longer. What has happened in the chimeric antigen receptor therapy is moving away from the ITT and just focusing on patients who get the cells about a month later. So what that does create is one, it's not the right way to look at the data. And then two, it creates what's called a selection bias. Patients who get enrolled in the beginning, who may have a rapid progression of disease, they are more likely to have complications while they are waiting, and they come off the denominator. Because they cannot wait to receive the cells, they get into complication. So I don't think that's the right way to look at the data set. And from the a physician, clinician perspective, it comes down to, you make a decision and UX expect the therapy to be administered, and then you find out either sales are not there because I mean a manufacturing failure or you get into a complication that you simply are not able. To receipts and other therapy. So this is a very important distinction, and this is I something that the field has to correct. And now that we have a cell therapy where the ITT and mITT, essentially is the same, more or less the standard way that any drug delivery has been done in the clinical trials. We do have a chance to really change the way we look at the data more correctly by focusing on ITT not mITT.

And on durability, do you think that question has been effectively addressed on your data set to date?

Well, first of all, when I look at the amount of data as well as data set that we have at this stage before we launched in a pivotal study. And think back 5, 6 years when we were launching what became YESCARTA, transitioning from Phase I to Phase II. At the time, we're dealing with a 7-patient data set. A lot of responses have not even gone to 6 months. So that was more or less the baseline comparison of where we are compared to autologous cell therapy 6 years ago. So from the amount of data that we have, I mean as a clinical researcher, I mean, obviously, we have to make decision based on the data we have. And we don't know what it will be like at 12 months from the treatment since we don't have the data point. But what we have at 6 months, this surpasses what was available in the autologous cell settings. And certainly, it looks as good, if not better. And we're also seeing a possibility that we can even make the cell -- allogeneic CAR T therapy better. By using the consolidation approach, which is much of the focus internally is right now.

And then on the safety side, there were 5 treatment emergent deaths, of which, only 1 was believed to be treatment related. Can you walk these -- walk us through this again and how this compares in the context of what we see as the mortality rate with autologous CAR T therapies? And is there anything that can be done around patient selection or anything to kind of lower the rate?

Yes. I mean, first of all, the selection bias that we talked about people who are rapidly progressing, we end up treating them because the time period from making a decision to treat the patient and start-up the therapy is only 5 days. And most patients -- in fact, 41 out of 42 patients were enrolled in our study, ALLO-501 received the cells. So from that perspective, we already had concerns about, yes, we could be getting people with a rapidly progressing disease, who are more likely to have complications. But at the end, when we look at the Grade 5 events, people who die from the study, we were pleasantly surprised that the Grade 5 event rate didn't look much different. I mean many people have forgotten in the early days of CD19 CAR T., biggest concerns for cytokine release syndromes uncontrolled that's leading to Grade 5 events. And certainly, because of the patient population, refractory patients that we're dealing with, we were expecting some Grade 5 events. And we did have some -- I mean, somewhat unrelated to the treatment as far as we can make up in patients who get after recovering their cells and while getting in response getting COVID-19 in the community setting during the second upgrade and dying from it. I mean there's nothing that we can do, we try to sort of warn the patients about the risks and others. But this is more or less what's happening in the transplant setting, people are susceptible to infections like COVID-19. So that is -- I don't think it's something that could have been better, but I don't think it's really telling anything about the safety profile of the treatment itself. And then there are 2 other events that were cardiovascular became unrelated to the treatment as both the internal safety team as well as the investigator have assessed those events. And then we had 1 events of infection. So I'm giving more details, but when you take a step back and look at the overall safety profile, including the Grade 5 event rate in our study, this doesn't surprise me or anybody in our clinical team, and frankly, none of our investigators are overly concerned about the Grade 5 events. I mean this, I would say, is very much on par with patient population in the chimeric antigen receptor cell therapy setting.

And what is -- I guess, putting this all together, what is left to really understand on the overall profile and what's left to be done ahead of starting the pivotal study.

Not much. I mean, I think consolidation, which is an important way to think about how to maximize the benefits of the allogeneic off-the-shelf therapy. So just taking a step back, what we are doing with the consolidation is leveraging the allogeneic off-the-shelf and also leveraging the ALLO-647, our proprietary lymphodepletion that we have just talked about. So we give the standard lymphodepletion that contains chemotherapy plus ALLO-647, followed by first cell infusion. And a month later, we give the second cell infusion, but only giving ALLO-647, a small dose of ALLO-647 as a lymphodepletion. And what we saw there is pretty good cell expansion and also deepening the response. Not only that, the second infusion was extremely well tolerated. So we are definitely moving towards incorporating that into the trial design. And now some of the questions being a scientist ourselves, we want to get a little more assurance of the data from some additional follow up, which for some of the data we already have. But that's essentially it. And then the next thing is preparing for the FDA discussion. So essentially preparing and then agreeing with the FDA on the clinical study design. And then after that, initiating the clinical study.

And should we expect updated data to be presented at ASH or sometime in 4Q this year?

Yes. With a -- I think that's a question, a very important question, and we have asked about that. We are not going to say ASH or anything, but definitely, we intend to update the CD19 data by the year-end. So year-end, essentially, we're looking at 2 major updates, 1 is update on our BCMA CAR T program, which we have committed to for some time. And then adding updates on CD19 program beyond what we have presented. Only about 2 weeks ago in our CD19 Forum and ASCO meeting.

And on the ability to redose patients here and achieve a deeper response and including consolidation therapies, you mentioned, can you remind us on, I guess, just the path forward here because, correct me if I'm wrong, but I think there's 2 different aspects you could be playing with is how you time it? And what type of an improved response you may be looking to see here?

Yes. So the one thing that we are looking for is initial deeper response, the single infusion in the 501 study. Has shown response rate of 75% overall and 50% CR. So if we can see some indication that the complete remission rate can be pushed up higher, we would consider that as a success. And then another assumption that we are working with is that the durability of the response with the consolidation when we have to give in 2 infusions of cells would be at a minimum, same and more likely slightly better than a single cell fusion. So that's a pretty safe assumption that I think we can make. And certainly, we will have to follow-up on that. So I think those are sort of fine nuance, somewhat technical, but I mean at this point, we have a lot of information already and essentially, that's becoming a foundation of how we are thinking about the pivotal program. And then another concept that we get asked about is how many times can you give the cells? I mean, that is something that I personally haven't really thought about, but now we're beginning to think about -- more about not just a consolidation but redosing, and also not in the time frame of a few months. What we have shown is that we can give 2 cell fusions within 4 to 6 weeks time period, which is a pretty important differentiation. Not many -- autologous cell therapy setting that's almost very challenging to do that. And also in the with other allogeneic programs, if you have to re lymphodeplete using the chemotherapy, that becomes a very challenging issue. But with ALLO-647, we can do it quite safely as our data shows and also very effectively. But the second concept is can you redose patients if they recur 1 year, 18 months, 2 years after initial therapy. That's something that we haven't really thought through. But certainly, as we expand the development program of ALLO-501A as well as allogeneic -- other allogeneic programs, we'll be thinking about how to optimize that way of providing benefits to the patients. Not just with a short period of time. But for the sort of management of the disease from the start of a cell therapy.

Salveen, I think you're on mute.

Yes. Sorry about that. Assuming that the profile of the allogeneic -- or sorry, the allogeneic CAR Ts are in line or similar to the autologous. I guess when we think of the disruptive nature of this platform, how are KOLs describing their willingness to switch over or expand the opportunity?

Let me start. David, chime in, please. I mean, I think, first, just to frame the existing commercial opportunity for CD19-directed autologous products. As of the last quarter, the run rate for these products was between $1 billion, $1.5 billion per year. So it's become a pretty substantial marketplace. And obviously, we're expecting that market to continue to grow at a healthy pace with some of the label expansions that you're very familiar with, Salveen. So we think just CD19-directed cell therapy alone is going to be a multibillion-dollar opportunity. And you used the word disruption that I like. I think it's absolutely our intention to try and disrupt this market if we can match the safety and efficacy profile of the autologous products, and we're shooting for that or better, I think, based on the convenience attribute. And specifically, as David said earlier, the ability to treat all patients within days of need, that's a disruptive product. So we think there will be disruption. But honestly, we're also not just stopping at disruption. We think there's an expansion opportunity for our product as well as many patients who today could potentially benefit from cell therapies are not being offered cell therapies because they're too progressive in their disease nature or they're too remote from a treatment site. So we definitely look towards trying to expand this marketplace with an off-the-shelf product above and beyond any of the reach that an autologous product might have today.

Yes. And if I can just add on to that, I mean, much of the internal thinking as well as effort is can we make the allogeneic cell therapy not just convenient, but our patient type of treatment. I mean, that's an ongoing discussion. And certainly, we will have to generate data to support such an approach. And also potentially in the community setting, broadening the reach of the centers where they can administer the CAR T. And I think these are important things as we think about the earlier lines which is on -- which a lot of people believe is where the CAR T therapy really belongs, being able to provide a therapy and then take care of problem at that point rather than subjecting population of patients to multiple rounds of the therapy. And then I would also say another area that is beginning to get a lot of traction as we demonstrate the proof-of-concept in the heme malignancy setting is a solid tumor, where the unmet need is much greater in terms of the patient numbers. And and now there is a lot more sort of attention, not just from Allogene, but other companies in the setting, shifting the focus to solid tumor.

You conducted a survey of hematologists and oncologists. Was there anything surprising in their responses to you?

I think you're referencing a 200-patient survey that we reported on at our CD19 Forum back on May 19. And the slides from that forum are certainly available on our website for those of your listeners who might have missed the sessions. What was not surprising was that efficacy rated the most important consideration for physicians when they were thinking about a choice of therapy for the patients with NHL, non-Hodgkin's lymphoma. So that's not surprising to us and certainly speaks to our desire to make sure that we have the efficacy side of our product and the equation there correct and why we're spending time to explore things like consolidation therapy that might be able to take us up a notch further in efficacy. What was surprising to me was how highly some of the delivery aspects of therapy rated, specifically, the likelihood that a patient could get the therapy prior to progression. That was the number 2, most important factor in determining physician prescribing habits, more important than, say, safety considerations. And when you think about it, maybe it shouldn't have been surprising because patients who who sign up for an autologous product and are unable to get therapy. Those 10% to 30% of patients who, as David mentioned earlier, kind of left behind. That amounts to a treatment failure. This is, in essence, an efficacy consideration, if you are one of those patients who is an individual is putting its hope and trust in this curative therapy and don't get the treatment. That is a huge failure for the health care system and the patient individually. So we really aim to improve upon that dynamic. And as David mentioned, 98% of the patients in our study were able to get treated within days of enrollment. And we think, in particular, that ability to deliver medicine to the great majority, if not all of the patients who sign up for a therapy is going to be a very differentiating attribute.

So moving on to the BCMA program. If you could just start by recapping the highlights from the ASH data that you presented, what released stood out to you? And I guess, as you assess multiple myeloma and NHL with the work that you've done, if there's variations in how amenable the respective tumor cells are to CAR T therapy here?

Yes. So let me take on that question. We presented our initial data on ALLO-715, which is our BCMA CAR T program at ASH. So this was about more than 20 patients treated at the dose escalating phase of ALLO-715. So probably for us, the most important sort of elements is the kind of cell expansion as well as the persistence of the cells going up to more than 3 months that we saw at the high cell dose. And also the emerging evidence of the response rate. I mean, we are getting 40% or more in a very good partial response or better, which is a kind of responses that we are seeking. So from that perspective, I think the 715 is beginning to show as the first allogeneic BCMA CAR data, very robust data. I mean, certainly, there is other things that we are doing with the BCMA program, including testing different lymphodepletion regimen as well as moving towards consolidation, as we have done in our 501 and 501A program. And also, we are testing 715 in combination with gamma secretase inhibitor, which the study is actively enrolling, as well as moving into the next-generation BCMA program, ALLO-605, which has cleared IND and study is activated, and we expect doing well patient very shortly.

Where do you -- when you talk about all these different aspects you're looking at on the floor, right, whether it's the combination approach with SpringWorks asset or or the TurboCAR or just other basic levers, I guess, where do you think you'll see the most impact in order to bring you to the level of the autologous CAR Ts or better?

Great question. I think you're probably referring to data coming from cell to cell. We're getting 90-plus response rate with a pretty good CR rate. I mean, certainly, for the patients, I mean, the data set from autologous CAR T looks outstanding. That raises the bar. But when we look at what we have and what we are testing, especially with the next-generation technology such as TurboCAR, I think there's a lot of opportunities for us to be able to advance allogenic. So one thing that we cannot forget is a manufacturing delay is a real issue. I think one of the things that came up was we didn't really pay much attention, but it came to our attention that in the autologous setting, most patients received bridging therapy, an they're waiting for the manufacturing of the cells. And those are the things that we -- because from the enrollment to being able to treat the patient is relatively short, we can sort of offer the patients without having the patient under bridging therapy in the refractory setting.

And this update -- I guess, the updated data from ASH last year is coming in the second half of this year, could you help frame for us what we should expect to see here? And similar to what we saw in NHL is a CR at 3 months, kind of a positive signal for longer-term durability here?

Yes. I think it's -- I would -- ASH is still several months away. I mean, I think it's a little bit too early to detail exactly what will be presented. But what we have strived to do, and we have done a pretty good job is waiting for data to mature with a sufficient number of patients to be able to to meaningfully get a meaningful sense of what's going with the 715 program. So certainly, treating more patients at higher cell dose, I think that's an important component because we saw those response relationship in between in the dose escalation phase. And what we have learned over doing 501 and 715 program is the importance of lymphodepletion and how to optimize that for the maximum benefit, I think that's another elements that we have been investigating. So those 2, together with what -- only the time will tell, which is how these -- do these patients to over a period of time. I mean, I think those will be 3 questions that we get asked a lot. And frankly, I mean, those are important questions. And we feel that it's -- those are the key questions that we have to address.

And I mean, I guess, based on what we see with the TurboCAR platform, this would dictate the answer I'm going to ask. But if the data does look good, do you think this is going to be -- or currently based on your perception, is this going to probably be the basis of your CAR T portfolio moving forward?

One thing that we are looking -- really looking into is the next-generation technologies that we can add on to the chimeric antigen receptor engineering to really enable the AlloCAR T cells to work optimally and possibly surpass what autologous therapies can do. One difference between the allogeneic and the autologous is the ability to do multiplex gene engineering or editing, which is extremely hard to do with a -- in autologous setting. So this is where differentiation, the real meaningful differentiation potential exists about how to take AlloCAR T in way beyond what the tower to cell therapy can do. So 605 is the first one that we are moving forward. What we saw in the preclinical data set was simply amazing. The difference between without or with TurboCAR is a pretty major difference that we saw. And this is something that we are very excited about. And if 605 lives up to what the preclinical data have shown, this is going to have a platform changes to what we are doing with our future programs and potentially even changing some of the ongoing programs, thinking about the next-generation because the life cycle management in this space will become important as more and more competitions are emerging in the CAR T as well as bispecific areas.

And then the CD70 program that's going to take you into solid tumors, and you've started dosing in your first trial in renal cell carcinoma. I guess when you look across the landscape of -- and I believe CRISPR has a drug as well. Anything different between your constructs? And what are the challenges overall with this indication and target that you have to overcome?

So in terms of construct differences, I mean, it's hard to tell unless you do a side-by-side comparison. But let me take the question to a different level. I mean, solid tumor. There are a number of questions that we simply do not know. And some of the questions that the field has been talking about is potential that T cell exhaustion can be much quicker in solid tumor. Questions about solid tumor, the cells has to migrate into the tumor, unlike in the liquid tumor or lymphoma setting, can the cells do that effectively? And the another question is, a lot of times, the targets that you're talking about in solid tumor they are also expressed in other normal tissues. Can it be safely administered? So there are a number of different questions. I mean, I like to think about this or we like to think about this more in terms of, one, is the target good enough to test all the right -- all the important questions. And we believe CD70 is one of those targets that gives a lot of safety assurance as we start investigating. And the second and third question is on does solid exhaustion -- does it behave differently? I think those are the questions that we can examine by looking at the cell expansion, persistence as well as some of the activities that we can do. So solid tumor, I think important thing is tried to build a lot of translation and research component into the ongoing studies, and we intend to interrogate this step by step. And if the CD70 shows -- answer some of the questions, we have different technology to address any shortcomings that we may encounter. And certainly, from a target perspective, we have a number of different targets that we can quickly expand by translating that into the AlloCAR T and introducing into the clinics.

What is the bar for clinical success in RCC? That you want to see?

I mean, safety is -- with any new therapy, safety is an important thing. And then second one is how far can you push the response, especially complete response is sort of the goal that we are looking for and also looking for durability. I don't know whether there is an exact number that we can come up with. I mean, we go for the maximum that we can get, certainly in solid tumors, if you sort of survey the field in the refractory setting. Anything that gives around 20%, 30% complete remission or response or even the response that goes on for a period of time, that will be viewed as very -- would be a very attractive profile. I mean, look at what KRAS inhibitors are showing, look at some of the emerging data with bispecific targeting DLL3. I think when you look at these, that sort of gives a rough bar. But from our perspective, we're not setting any bar. We're just going for the maximum that we can get up.

Great. And just a final question here. You talked about other technologies you're looking at and partnerships to really grow the portfolio and kind of deal with -- I guess, optimization is needed. You have a Notch collaboration, maybe you could -- or collaboration with Notch. Maybe you could talk about the pros, cons of moving to an iPSC cell source and where you stand with the work they are needed to bring it into trials?

Yes. Yes, we considered the iPSC as sort of progression of the how the field can evolve over a period of time. In the days of autologous -- I mean we are talking about the allogenic. And when we were asking similar questions in 2015, 2016, we're saying, allogeneic probably has still many years to go, probably more than 5 years. And we are in 2021 and still nobody has really started pivotal program in the allogeneic. iPSC, we will, at the time, thinking that this is a technology that can come in play in probably in 10 years' time frame. So that's more or less -- I mean, certainly, things are accelerating. I mean, the attractiveness of the iPSC is the consistency in manufacturing one can achieve with a ponal-based gene engineering engine editing, which is something that the iPSC technologies will do. We are also trying to differentiate iPSC into the T cells. Because T cells when they encounter antigen, they undergo expansion, and that's where much of the benefits of the cell therapy is coming. So we view the T cells to be important components of how we can optimize innovative technology as iPSC. And that underlies our collaboration with the Notch Therapeutics, where much of the focus is refining and improving the efficiency of differentiating iPSC into the functioning T cells.

Great. Well, with that, thank you so much. Really appreciate the time today, David and Eric.

Thank you, Salveen. Always a pleasure.

Thank you, Salveen.

Thank you.