Arcellx, Inc. (ACLX) Earnings Call Transcript & Summary

[Audio Gap] Bank of America Health Care Conference. We are joined by Arcellx. We've got the team here, we've got Rami Elghandour, Chief Executive Officer; Michelle Gilson, CFO; and Chris Heery, CMO. I'm Jason Gerberry, I'm one of the SMID Cap Biotech Analysts at BofA [indiscernible], my colleague. So first off, thanks, guys, for joining us. You guys had a much anticipated update recently, so it's good timing.

We appreciate being here, Jason, and excited to talk about that update.

I could rehash the key points from the recently announced study. But I guess like why don't you -- if you want to just maybe relate to the group, what you think are some of the key aspects of your [indiscernible] for BCMA CAR-T for multiple myeloma, and then we'll go into maybe some more specific questions?

Sure. Yes. Actually, I'll zoom out just a little bit. There were 2 other elements of this release we had a couple of days ago, the first of which is that we reiterated guidance for our iMMagine-1 data release, which is our Phase II pivotal study at the end of this year. And second, we completed our tech transfer to our partner, Kite, which enables the question that you're asking about, which is the Phase III randomized control study, which we call iMMagine-3. Our iMMagine-3 study is going to be in a dual exposed patient population exposed to anti-CD38 and IMiD therapies, which really aligns with the current standard of care. It allows us to really run a study in a population that's much more commercially relevant and allows us to really capture the majority of the second-line treatment population as well as cover almost the entirety of the $12 billion multiple myeloma market for CAR-T. So we're really excited about this design. If I can expand on it just a little bit. From a standard of care perspective, anti-CD38 therapies are moving towards the front-line and combined with [indiscernible] comprise the anchors of the regimen that is the standard of care for patients in front-line therapy in myeloma. So targeting that patient population very much aligns with the current standard of care. When you think about relevance, focusing on an exposed population instead of a refractory population is actually really -- it's a bit nuanced, but really meaningful. If you are familiar with the definition of refractoriness in myeloma, you have to progress from your last line of therapy within 60 days and that tends to be difficult to document and to sort of line up with slot availability and everything else in CAR-T therapy. So actually having an exposed definition, both makes it easier to enroll clinical studies and ultimately makes the therapy much more accessible in a commercial setting, especially. And when we think about this population, we actually believe that we can cover 93% of CAR-T-eligible patients with this study design in second-line, and again, almost the entirety of the $12 billion multiple myeloma market for CAR-T. And so it's a design that's actually really efficient and gives us the ability, again, to have really broad coverage in a single trial. And we're really excited that our partners at Kite are going to be both manufacturing and executing the study. Their commercial footprint is going to be really valuable here. The study will be executed in over 100 centers globally. We expect a vein-to-vein time in the study targeting a median that's around 17 days. And obviously, the Kite brand and their ability to scale manufacturing or play a pretty significant role in our ability to roll out the study worldwide. So I couldn't be more excited about it. It's an incredible opportunity to really demonstrate the next kind of phase in the growth of [indiscernible] and expand patient access and have a really big impact with this therapy.

So when we think about trials that have been done in the space, obviously, you're making a move forward with kind of how standard of care has evolved. There was an advisory committee for CARVYKTI, which highlighted certain, I guess, shortcomings. How did that factor into certain decisions that you made either around bridging therapy or perhaps maybe in the end of the day, just having a faster vein-to-vein time that might help with some issues that we're seeing with [indiscernible] with early OS detriment and things like that?

Yes, I think you nailed it, Jason. I think actually having a -- not just a short but a repeatable vein-to-vein time that is short, which are nuanced important things, should help us address that challenge that we saw in some of these other studies. But I think the biggest thing for us listening to that ODAC was confirming the decisions that we have made. So one thing I should have mentioned is that our Phase III study, iMMagine-3 is not a crossover study. So I think that was one of the things that was discussed and we took away from that. We had certainly the right decision to keep the study in the format that we disclosed. And again, as you mentioned, the vein-to-vein time, obviously, it's kind of a duality between that and bridging. And obviously, if you have a shorter time to bringing these cells to the patient, you don't necessarily obviously need to bridge for longer and need more complex bridging. So it certainly is going to play a big role.

And as you think about conducting a trial, what impact, if any, do you think commercially available BCMA CAR-T or bispecifics may have with either pace of enrollment or sort of post-progression therapies? Or do you feel like, ultimately, given the supply constraints, you don't really think that that's a major complicating factor?

Yes. So supply constraints is definitely one consideration. The global nature of the trial, again, where we're going to be in a lot of centers internationally that aren't going to be overlapping with some of the other commercially available CAR-Ts as a consideration. But the third one, which is incredibly relevant is of that 93% of second-line CAR-T-eligible patients that we have coverage of, half of those patients are unique to us based on the label that we're pursuing, meaning that they're not on label for the other competitive CAR-T studies. So that carves out a patient population for us where we're treating an unmet clinical need, which is great from a patient and physician perspective, but also is an operational advantage from an execution of the study perspective as well.

I guess I want to go back to the bridging angle or the bridging question. I know you said there's a quick turnaround time. Maybe can you help us understand your choice of optional bridging therapy and how do you ascertain that patients are getting bridged and there's no imbalance between the drug and the placebo arm. But remember that, that was an issue with [indiscernible] trial that the bridging is more optional and there is no requirement of at least one cycle. I think for CARVYKTI, there's like a requirement for at least one cycle. So maybe help us walk us through if there's additional thinking in terms of how you plan to minimize imbalance and bridging study beyond just having a fast CAR-T turnaround time?

Sure. I'll ask Chris to cover that, but there's no placebo arm, right? There's a control arm.

Yes, thanks for correcting me.

Sure. So let's start with how is bridging selected. So at the time that a patient enters into the study and is randomized, in order to be randomized, the physician has to have already selected what their control arm regimen would have been. And that is the same regimen that would be used for bridging. Similar to CARTITUDE-4, there is a requirement that if bridging is given, there is some period of washout to ensure that there is not ongoing toxicity from the bridging regimen. But if you can deliver the cells consistently somewhere in the range of 2 to 3 weeks, you can give one cycle and not have to go through all the thought process that you might have had to if the vein-to-vein time is more like 79 days, for instance, which is what the number was in [indiscernible]. And my guess, although we don't know this for certain, is that there was a period of indecision when some clinicians were waiting to find out if the cells were going to be delivered or not, which led to, how do I give this round of bridging or don't I, that led to some of the patients getting sicker and then progressing and then having these early deaths. That would be my best guess just looking at the curves and how that all played out. So anything we can do to reduce the number of decisions that the physicians have to make about how to manage the patients until the cells arrive, should provide that security that there won't be an imbalance because they'll be getting the same therapy in both arms while the control arm is getting the standard of care and while the treatment arm is waiting to receive their cells.

Got it. Great. So these studies can be 3 to 4 years. You do have MRD as a secondary endpoint in the study. Can you just overlay that with kind of the recent regulatory Ad Comm? And how you think about MRD? I know that you've set the expectation that this is not your registrational endpoint and path, and I get that. But it's also been sort of flagged as potential optionality to revisit down the line and sort of what could be the key learnings that could make that a potential avenue just for, I guess, scenario purposes?

Sure. Chris, do you want to take that as well?

Yes, sure. So I think the ODAC was overwhelmingly positive for the field. Obviously, a tremendous amount of work by the academic team that put together all the data retrospectively looking at MRD as a surrogate marker for PFS and OS, and I think those data were strong enough that even the FDA team seemed very supportive of that in their commentary. I don't want to speak for them, but I came away after watching it and thinking that this was a very collaborative process. So what they seem to be finding a consensus around was the MRD negativity at 12 months is a good surrogate for both PFS and OS. And for a second to fourth line study, that's a nice thing to have as an option, but it may not be necessary because we may see the curves start to separate before waiting 12 months from the last patient dosed, for instance. So the hazard ratio may already start to get into statistical significance before waiting for the MRD negativity to read out. Now in first-line, that's almost definitely not going to be the case. You are going to almost certainly need MRD negativity to shorten the time line for your primary endpoint for first-line studies. So my takeaway from the ODAC discussion is that this is really a way for therapies like [indiscernible] to use MRD negativity as a path to get into first-line without having to wait 5 or 6 years of follow-up.

So that could maybe cut the time line down to like 3 years from 5 years or something like that?

I think somewhere in that, it could be -- I think closer to that 3-year range could be possible, depending on how quickly a study can enroll and how large it has to be, et cetera.

And was there any FDA interaction, that short window of time between the Ad Comm and your unveiling of the Phase III design? Or were you able to have those discussions? Or those discussions...

Yes, it's a great question. We were not surprised, I guess, by the ODAC. We were very happy to see that, that is how it went, but we had built in some assumptions in our design, and we were happy to see them confirmed both by the MRD ODAC, but also by the ODAC for CARVYKTI [indiscernible] second-line and third-line, respectively. So those were very helpful for us to confirm some of our assumptions for the design of iMMagine-3 and what we're thinking about for subsequent studies for first-line.

Yes. Our design was set, and we had prior interactions with FDA. So there wasn't -- there wasn't anything in that interim. Obviously, it's a very short period. But I think as Chris said, it's something that we will evaluate and look at, but we don't necessarily feel like it's going to be super impactful in iMMagine-3, but definitely very impactful in a frontline study. So we're really, really happy to see the news, but not something that is necessarily super near-term...

And is it fair to say, I mean, now that there are commercially available CAR-Ts, would you think that competitors enrollment time lines as a directional proxy are the appropriate thing for investors to look at and think about for this study?

No. I mean look, I think there's kind of different things you can think about in terms of enrollment. Competitor time lines are certainly one of them. They're always a reasonable correlate, but obviously, the world is always kind of changing and evolving. I think I touched on like the uniqueness of the patient population is in our favor, the turnaround time that Kite is going to provide is in our favor. The footprint that, again, over 100 centers that Kite is going to be able to open for the study is certainly in our favor. And I think one of the most underappreciated elements of our story still is the advantage of the Kite brand and their commercial footprint. So we feel like all of those things are in our favor. Having said that, we talked -- we're aligned with our partners at Kite that we're not providing guidance in terms of enrollment time lines. Yes, we want to get the study going, get a sense of how it goes, and then we'll provide more color down the road.

Okay. Well, you also mentioned at the beginning, there's an important update around the end of the year. Presumably, that's around a medical meeting that's popular in the multiple myeloma circles. Maybe stepping back, I mean, as we think about the evolving need to sell profile, clearly, it seems like there's a lot of interesting elements here between [indiscernible] profile and just the ability to supply with like 100% consistency. Would you say that those are kind of as you think about the 3 core kind of tenets of the value proposition that are key? And on a couple of those, I think we can probably get a good line of sight on the year-end update if that's holding up. Is that fair to say?

I think absolutely. Look, we're looking forward to that update. You're right. It is a meeting at the end of the year [indiscernible] yes, I think that is exactly right. The value proposition here is being in line from an efficacy perspective, being differentiated from a safety perspective and actually being able to deliver on the promise of these therapies at scale. And we feel like, certainly, the update for iMMagine-1 can tick those first 2 boxes, and we're actually hoping that iMMagine-3 through that expanded footprint through the turnaround time can actually get folks a preview of what the commercial execution could look like. And I think, again, iMMagine-3 actually gives us the opportunity to start getting a large number of sites around the world [indiscernible] and to see the strength of this partnership with Kite and ourselves.

Got it. And maybe if you can just -- maybe a question for Chris. Thinking about delayed neurotoxicity. I think you guys said last year, to be safe and conservative, maybe this ends up looking [indiscernible] maybe there's a case that emerges at some point in time. Is that more or less just kind of driven by background risk at this population? Or do you just think that maybe there are certain intrinsic factors around [indiscernible] itself to a different profile, but maybe your -- what drives that differential, do you feel like, in your view?

That's a question we get an awful lot, and we don't know the answer. I'll start by saying we don't know the answer. The things we have heard as hypotheses that seem to be pretty reasonable, are related to some of the unique attributes between our 2 constructs. So what are the major differences between CARVYKTI [indiscernible], the major difference, obviously, is the binder more than anything else. But what does that binder enable? Our binder is not associated with tonic signaling. It's associated with higher transduction efficiency and therefore, a higher proportion of the cells that are infused or CAR-positive and a very small number of CAR-negative cells being infused. So taken together, the things that we know have been associated with these delayed neurotoxicity events or things like hyper expansion of the CAR-T cells in the peripheral blood with CARVYKTI. We've said we haven't really seen that, and that may be associated with tonic signaling. It may be associated with the way the binder engages with its target. We can't answer that for anyone else. But we know that the things that have been seen with that we have not seen. Now when we have answered the question, we can't say we will never see it. It's because we don't know that, right? We just don't know it. If we knew for sure what the reason was why we haven't seen it and why they have, then maybe we can answer the question, but we just can't say at this point. I will say though that based on the experience of 38 patients with a minimum now of well over a year of follow-up for every patient on that study, having seen no cases, what it would suggest is at least statistically, it's unlikely that the rate with [indiscernible] would be even close to what's been seen with CARVYKTI. And that's just one of those things where, again, we'll need to dose enough patients and show enough follow-up that people believe that, but that's what the probability would tell us at this point.

Yes. I mean I think a lot of times when we don't know the answer, it seems like data is like the thing we have to fall back on. And so if we can get to the end of year update, and I imagine you're going to have a lot of patients beyond the 3-month minimum follow-up. And that is my understanding of typically the onset of this. So if you end up having a sample with Phase I plus Phase II over 100 patients beyond that minimum follow-up, it seems like statistically, a stronger case for that differentiation.

I think that's right. Yes, I think especially in those patients in the 3- to 6-month range, that's where these events have tended to occur. So with a certain number of patients beyond 3 months to add to that denominator of 38, that would certainly bolster if there were no more cases.

What are you allowed to say about the upcoming data update, be it -- I don't want to try to be too [indiscernible] about it, right? So in terms of framing the expectations for a follow-up, focusing on, I imagine [indiscernible] is going to be a measure that you can look to, to get comfort around being in a ballpark of competitiveness and then obviously, the lack of delayed neurotoxicity and things like that. I mean what can you say to sort of frame some of the updates that we'd get by the end of the year?

Yes. I think -- look, I think you nailed most of it, right? So people I'm sure are going to look for [indiscernible] MRD negativity and safety profile being primarily the key drivers of the profile, and those are certainly things that we haven't committed exactly to what we're going to hear, but I think it's reasonable for folks to expect us to share information along those lines. I can -- I think you outlined it well, Jason, that can give you a sense of that the program is tracking as expected and continues to be positioned to be that best-in-class profile potentially in the market.

You probably don't get a great read on this, but Chris, you said something, we did a dinner like last year about -- like with extramedullary disease, like the physicians are maybe operating a little bit in the blind at the time of the treatment choice that they don't have all the scanning work done to know if they're getting -- if the patient has extramedullary disease. So if you have a drug that gives you coverage, better coverage against extramedullary disease, that would seem like an important point of differentiation. So can you give us a sense of like typically how the clinical practice that works like where and what proportion of instances doctors do have that information in hand when they are making a treatment decision?

It varies from center to center, how patients are managed. At academic medical centers, you'll find a higher proportion of patients that have imaging of some kind because a higher proportion of those patients have been considered for clinical trials, so they'll have had imaging. But if you look through IMWG Criteria, which is the criteria for how to evaluate patients with multiple myeloma, there's no requirement to image the patients at all to evaluate and follow patients. So unless someone has a symptom, a lot of times those patients are not imaged. So at an academic center, it might be 20% to 40% of patients that have had some imaging at some point. And in the community oncology setting, that might be 5% to 10% for various reasons. And again, I'm saying if they're not symptomatic. If they're symptomatic, almost all of those patients would have had some imaging of the symptomatic area. I did want to just comment one thing on the previous question that Rami answered about the sort of setting of expectations and maybe have Michelle just run through some of the things we've seen with the evolution of CARTITUDE-1 because it's important that as we think about the data that we would see at the beginning or an early cut of the data, it's very different than the last cut of the data. So I don't know if Michelle could maybe run through that?

Yes. So CARTITUDE-1 had 5 data cuts that we've seen and so we want to make sure that folks remember that if you have a preliminary data cut like the one coming up at the end of the year for us, that you comp it appropriately. So one of the things that we've seen with CARTITUDE-1 is that the data is -- the data are different at all 5 data cuts. So the first data cut that we saw was at a median follow-up of 8.8 months. And the second was at 12.4 months. The third at 18 months was the one that they filed the BLA off of. And then the fourth at a median follow-up of 27.5 months was the first time we saw an 82% CR rate. And then the last one at a median follow-up of 33 months. It's the first time that we saw that mature median PFS of 34 months. So it wouldn't be appropriate to comp a preliminary data cut to a more mature data cut of CARTITUDE-1. So we want to make sure that folks keep that in mind as they interpret our data and things like CR rates.

So you're going to provide us with a very good data table that gives us cuts through 5 because you're not going to tell us where you are, if you're a cut 2 or cut 1 as a comparable measurement point?

And then we'll certainly -- I mean, as we come out of the summer and into the fall, it will be certainly a point of focus to make sure that we're level setting into the data presentation.

Yes, sure. So curious of your thoughts on if you think the registration requirement for the late-line setting has evolved along with the evolving treatment therapy. Obviously, CAR-T were initially approved in late line a few years ago. And presumably, you have met with the FDA on feedback in terms of regulatory requirement for getting an approval [indiscernible] plus setting now that CAR-T has moved up, and then there's also a recent MRD Ad Comm. Do you think any of those elements may have changed or may have impact the registration requirement in the [indiscernible]?

No. I mean we've had multiple interactions with FDA, and we're very set in our path to approval, and nothing has changed.

Got it. Is there a certain threshold of fourth-line exposure that could facilitate a broader label?

I mean there is -- we don't know what that is. And typically, with the agency, when you ask those kinds of questions, the response is, we'll see that review, right? So obviously, I think there is a very clear path to the fifth line, I think for fourth line that is less clear. But we're hopeful, given how the study will enroll that's something that can be certainly on the table.

Yes. So I mean you've talked about Kite and their marketing prowess, their manufacturing prowess. So maybe I'm not trying to get the crystal ball out, but you have a market that's potentially moving upstream, thinking about kind of how your launch could look and the availability of fifth-line patients to compete with versus sort of the weight for an earlier line approval to access the market, sort of where do you see the pockets that you'll be able to get patients in that first couple of years?

Yes. We feel like there's a tremendous unmet need in this market even in later lines. I think what I -- and certainly, this is a question that we've gotten a lot. I think there's a lot of extrapolation right now on the behalf of some folks with respect to both single 1 or 2 data points a quarter here or there and where there's a lot of confounding factors around slot availability and manufacturing challenges and out of spec rates and all these kind of things. So we're confident that the market is there. Again, it's a huge market. There's a lot of opportunity. We feel like we have a differentiated profile, and we don't have any sort of concern. We feel like it's going to be a huge opportunity to meet -- to address a lot of unmet needs in this market and to do so in a meaningful way when we get to launch.

And the -- I guess the cadence of bringing this out and rolling this out in the U.S. market would be obviously first and how quickly can you access the broader OUS sort of late line opportunity with your pivotal data set?

Yes. So we haven't commented on that, but certainly, the U.S. approval will certainly be first.

All right. And then I know that you guys have been more vocal about immunology. When could, I guess, investors sort of anticipate an update and I believe that this would be with the BCMA program where it was an interest in potentially exploring immunologic applications or indications?

Sure. Michelle, do you want to take that?

Sure. Yes. So there is a subset of autoimmune indications that might make sense for BCMA CAR-T. And some of the things we already know about [indiscernible] the ability to deplete plasma cells completely might be useful in some autoantibody-driven autoimmune diseases. So it's a relatively low investment in terms of dollars and times for us to explore some of those indications since we've already scaled manufacturing and you have already clinical data showing you that [indiscernible] completely depletes plasma cells. So we think that it's a good way to spend a relatively limited amount of time and money.

[indiscernible] on that, right? Is that outside of the reach of the Gilead partnership?

Yes, yes. So the Gilead partnership is [indiscernible] for BCMA in multiple myeloma and lymphomas.

Okay. And so it sounds like potentially an update in the year, early next year, small pilot studies, sort of things that you might be contemplating? Is that the logical next step?

We haven't provided any guidance around it, but we are making efforts towards bringing the program forward.

Okay. And then maybe just 20 seconds left here. I know you're probably not going to want and to this, but [indiscernible]?

We're working on it. I think you can tell our approach is to focus, obviously, on the guidance around the lead program, and we'll certainly provide updates on the pipeline when it's appropriate.

All right. Great. Thanks so much for joining us.

Our pleasure. Thanks.