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

All right. Good morning. I'm Sam Semenkow, one of the senior biotech analysts here at Citi, and it's my pleasure to be hosting Allogene Therapeutics at Citi's 2026 Biopharma Back to School Summit. I'm joined this morning by -- with Zach Roberts, President and CEO of Allogene. Zach, welcome, and thank you so much for being here.

Thank you very much, Sam. Great to be here.

So, why don't we just start a little bit high level on the business. You've made a ton of progress this year on the pipeline. Could you just level set for the audience where the company stands today and what we can expect throughout the rest of the year?

Yes. So, it's been a very productive year in 2026 so far. Beginning with our leading program, we released some data in April from an interim futility analysis. We also are moving very briskly through enrollment in our Phase I program, which is a novel therapeutic CAR T cell product in autoimmune disease indications. And we'll have some data from that program later this year at an upcoming conference. And that's setting us up for a very exciting busy year of catalysts in 2027.

Yes, absolutely. And so you recently stepped into that CEO role. Congratulations. I'm wondering how you're thinking about the business from that perspective? What do you bring from the company in this new seat? And how should we think about how you're going to drive the business going forward, particularly through busy 2027 and also '28?

Yes. So, I took over as CEO on July 1 of this year. Before that, I spent 3.5 years as the Head of R&D and Chief Medical Officer. So, the programs that we'll discuss today are programs that I launched, designed and launched as the Head of R&D. So, it's quite a natural transition for me to step into the CEO role. So I have a very clear mandate from our Board and shareholders. And internally, the plan is to continue to execute on our main programs, the pivotal cema-cel program in ALPHA3 and then the RESOLUTION study with ALLO-329. And really, those are going to be the focus for the coming months and years. We also have a very exciting preclinical pipeline. We've shared a little bit of data here and there at medical conferences this year. We've got some more coming up. So really, it's a focus on delivering on the lead programs and then continuing to build out the pipeline.

Perfect. Well, so then let's just dive right in on cema-cel and ALPHA3. You had impressive MRD clearance data earlier this year, where you demonstrated cema-cel is having that measurable effect on residual disease. And we know that MRD clearance is heavily predictive of EFS benefit. So how should that inform our thinking as we near the EFS analysis next year, as you mentioned, and then the final EFS analysis the year thereafter?

Yes. So the study itself is a randomized trial of cema-cel, which is an off-the-shelf anti-CD19 CAR T cell. And it's -- the study is designed in a novel way where we are looking to see whether patients who have completed first-line treatment for their non-Hodgkin's lymphoma, B-cell-related non-Hodgkin's lymphoma, but remain positive for minimal residual disease using an ultrasensitive MRD test at the end of first-line therapy. Those patients who are MRD-positive come into the study and then they are randomized either to a dose of cema-cel, which is an off-the-shelf CAR T cell or the standard of care, which is just observation, surveillance program. And so the analysis that you just alluded to occurred in April. It was a preplanned safety and futility analysis where we looked at 12 patients in each of these 2 arms. And rather than looking at the primary endpoint of the study, which is EFS, we looked at the ability for cema-cel to eradicate the residual disease. So patients -- everyone who comes into the study is MRD-positive and who went from MRD-positive to MRD-negative. So as you mentioned, we did have a positive outcome there. We saw about a 42% differential between the 2 arms, 7 out of 12 patients in the MRD arm -- sorry, in the cema-cel arm cleared their MRD and 2 out of 12 in the observation arm cleared. So when we revealed these data and we were internally examining them, we asked ourselves the same question that you just asked, what does this mean for the potential EFS analyses that are upcoming? So in 2027, we have a planned interim event-free survival analysis and then in 2028 is the primary. Overall, the study is designed to detect a 50% reduction in risk of EFS events. And so we have to allocate the alpha spend between the '27 and the '28 analysis. So we actually have a very small amount of alpha allocated to the interim analysis in mid-'27 and the majority of the alpha is reserved for the primary. So when we saw this MRD differential back in April, first of all, we were overjoyed with the amount of signal that seemed to be coming from the cema-cel arm. And it gave us a great deal of confidence that this study was going to be positive when it was completed. As it pertains to the interim EFS analysis next year, that is a TBD, right? Because it is a small amount of alpha, which means the effect size would need to be overwhelmingly positive, probably to a degree that's maybe even a little bit greater than what we saw at the interim futility. And honestly, that is an Independent Data Monitoring Committee review of that data. So they have a decision to make whether stop the study for efficacy or continue the study. So we are focused solely on enrolling the trial, ensuring that we have an overall positive outcome because we believe that, that outcome would transform the way medicine is conducted for these patients.

So it's -- what is the disclosure plan for the interim EFS analysis? Is that something that you'll be sharing like that the study will continue or the study will stop? Is that the extent of what we'll probably hear from you?

Again, so we -- there are a few stakeholders here. Of course, it's -- the IDMC is going to perform the analysis and then also the FDA is going to be watching carefully here. And one of the things that we are committed to doing is ensuring that the data integrity remains fully intact so that we don't get to the end of the trial and there's a problem with bias that could have crept in from early disclosures. So while the interim EFS analysis will occur, it's really up to the IDMC to make a recommendation on what to do with the study, either continue on as planned or potentially stop the study for efficacy if it turns out that enrolling additional patients would be considered unethical because of such an imbalance in outcomes.

And so it seems like a really high bar given the minimal alpha spend, but it's not a nonzero chance theoretically. So I'm wondering if there's any pre-commercial steps, if any, you're considering as we near that interim analysis in the event that you do have something that is overwhelming success, sufficient to stop the study? Or just maybe we could just talk more broadly as well just about any commercial preparations you're already starting to make now.

Yes. So we absolutely are beginning to sort of start thinking about what our commercial launch plan is going to look like. Again, we assume that this study will be positive. We are building it for success. It's a little bit of a different launch than really any other CAR T cell that's come before because of this being intertwined with the MRD test itself. And that's a very interesting sort of side story to the ALPHA3 program, just how rapidly MRD is becoming part of the standard of care in oncology. So some of that work is being done outside of Allogene just by the natural evolution and really high degree of interest in MRD. So the concrete steps that we have taken already is we have hired our first commercial hire. It's someone who is going to be focused on market access and reimbursement because we think that this is going to be the area that requires the longest prep time. So that person will be on board very shortly. And that person will then begin to kind of figure out exactly what this launch plan would look like. The bulk of the commercial team would come later and really probably over the course of 2027.

Okay. And I guess if that interim is positive, you have the ability to step up and accelerate any pre-commercial activities at that time?

Yes. So I mean if that interim is positive, of course, then we would approach the FDA to try to ascertain is this suitable for a BLA on its own? Do we need more follow-up that those sorts of pre-BLA conversations would begin. And then if a BLA is submitted, of course, then there's a review interval as well. So that's going to push us into 2028. So we will have at least a year, if not 18 months of time to build out a commercial team and get ready for launch.

Makes sense. Okay. And so then you did mention the uptake of MRD testing. And if you follow those companies, they're all telling a very similar story where the uptake has just been growing at a very strong place -- I'm sorry, pace. So what does that tell you about physicians' overall appetite to adopt MRD testing in large B-cell lymphoma, but also just more broadly across oncology?

I think we are witnessing nothing short of a revolution in how we think about management of patients with cancer. And we're now -- within the last 3 months, there have been major events from a regulatory approval perspective in -- with MRD. So beginning in May when we had the approval of the IMvigor011 study, which is atezolizumab study in completely resected bladder cancer, very analogous to the ALPHA3 trial. Patients with MRD, got a year of atezolizumab versus placebo, very positive from a disease-free survival and overall survival benefit. Just last week, we saw the SERENA-6 data set approved, which was a little bit of a surprise, a good surprise because the ODAC that they had back in April suggested that maybe the FDA would not approve that drug based on the use of the MRD test in that context. So this is -- we're absolutely starting to see a sea change in how people are thinking about these molecular tests to first understand prognosis and then eventually to make treatment decisions. And so internally, we have heard from our investigators that this is the future. We've heard that since the day we designed ALPHA3, and that momentum has grown really consistently, almost sort of exponentially actually in the last couple of years. And to cap it all off, we recently conducted a quantitative market research analysis internally here at Allogene and asked many questions, one of which being exactly this, what percentage of your patients are you currently testing for MRD, and in the hypothetical context of a cema-cel approval, what percentage of your patients would you test? And already, it was sort of in that 25% to 30% currently being tested, which was a large number. But then in the context of an approved agent for use in the context of an MRD-positive result, that number jumped to about 80%. So we see the world is really building quite an appetite to start to utilize these advanced diagnostics, particularly when it allows them to make a treatment decision for their patients.

Yes. And that's a measurable already, which I think is a bit surprising based on what maybe you had guided several years ago when you started ALPHA3. Can you just talk about like -- I mean, is it just excitement around the potential for a therapy that's really driving the use even though there's nothing to be done for these patients if they're MRD-positive right now?

So it's both, Sam. And right now, you're absolutely correct. There is no -- there is no treatment option for an MRD-positive result that doctors can offer their patients. And that's actually really the niche that cema-cel will fill eventually. And right now, we're the only one that's really focusing on this area. So that is great for us from a competitive standpoint. But in the current moment, most of the patients with large B-cell lymphoma are cured with their front line therapy and about 2/3 or so. So people are ordering these tests now, which are commercially available because they're hoping to get a negative result because that does significantly enhance their prognosis. So right now, PET/CT is the standard of care. Its false negative rate is quite high. Its false positive rate is even higher. So it gives you a hint about what might happen with your disease. But if you have an MRD test, particularly when it's used in conjunction with the PET/CT, that is a much stronger prognostic sign that your disease is cured. And so that is the reason that these tests are starting to take off. It's just a useful tool for prognosis. That will be further accelerated overnight once there is an opportunity to treat in response to an MRD-positive result, which is unfortunately kind of an awkward conversation that doctors have to have with their patients at this point.

Right. Okay. That makes a lot of sense. And so then when you think about, I guess, how the commercial potential for cema-cel is in the context of the MRD testing background being quite positive. One of the things that you've made a big push on is moving into community centers for adopting cema-cel. Like what feedback have you received from the community physicians and their comfort with prescribing cema-cel?

It's been...

Potentially...

Universally positive. And this is coming from primarily the community oncologists who are part of our trial and about 50% of our sites are community centers, many of which don't have CAR T or transplant or any kind of cell therapy available. So this is their first cellular therapeutic that they're administering in their clinics. And all of them are really overjoyed to have access to CAR T, some of them for the first time in their career. But even outside the sort of folks who are on the front lines in the trial, we are hearing really quite positive feedback that this would constitute a revolution in how they -- the services that they can offer their patients, the ability to offer these potentially curative therapies when those patients generally are not actually receiving those. So that's one of the biggest conundrums that these community practices face is if they have a patient who relapses, as I said, about 1 in 3 will relapse, that's really a difficult moment because many of these patients, frankly, are not interested in being referred to an advanced care center where they can receive CAR T even if they live in the same city. So this is -- there is such a demand for CAR T throughout the spectrum of treatment centers. And in a world where only 15% to 20% of patients who could benefit from autologous CAR T actually receive autologous CAR T, we are going to bridge that 80% gap in our view with the cema-cel strategy with the consolidation, the safety profile that we showed at that interim futility, no cases of CRS, no cases of ICANS, fully outpatient regimen. This is really going to allow us to maximize that commercial opportunity, which is, in our estimate, about $2.5 billion to $3.5 billion annually.

And my understanding is that activating these treatment centers, whether they're community or academic is a bit simpler than autologous CAR T. I guess how do you think about initially choosing which centers to launch in? And how quickly are you capable of expanding from there to really maximize across the country and then globally as well?

When I was at Kite and we were completing the ZUMA studies and then planning for launch, there was just an awful lot of work, and I understand that work is ongoing about what are the basic requirements, the training, the facilities, the personnel, the beds that are needed to onboard an autologous CAR T. And it is an awful lot of work -- it's an awful lot of investment by the company, and it's an awful lot of investment by the hospitals. And I think you see that those challenges, financial and logistical reflected in the restricted access footprint that exists today for autologous products. For -- and there's an accreditation process known as FACT that's also involved. These centers have to be accredited by FACT in order to offer commercial and clinical CAR T. In ALPHA3 with cema-cel, we are currently treating patients at centers that do not have FACT accreditation. They do not have any of the infrastructure build-out that is required for autologous. These are research personnel, nurses and physicians who have never given CAR T, who are thawing our product at the bedside and infusing it in their outpatient infusion centers and the patients are being sent home. This is the vision that we would want to carry forward into a commercial launch where the onboarding process is straightforward. This is what the product looks like when you receive it. This is how you handle it. This is -- if you need to ship it back, this is how you ship it back, right? On-site storage is not something that we envision as being necessary because these products are shipped on liquid nitrogen. This is how you thaw and infuse. So while all those steps are yet to be built out and will be under the purview of the future commercial leader, it is undoubtedly going to be significantly more straightforward than it is for an autologous product, and that really is key to our vision of increasing access to these products.