Cabaletta Bio, Inc. (CABA) Earnings Call Transcript & Summary

Noted, and we cannot conclusively say this is the reason, but we have a standard, well-characterized 9-day manufacturing process, so this is the same process that was used by Shet in Erlangen University. He also used a 9-day process. What we noted, and this is publicly available in the publications, that BMS is using a 5- to 6-day reduced manufacturing process in terms of time, and Novartis is using a 2-day process. When you use a shortened process, you produce CAR-T cells that are more stem-like or are actually more likely to induce pro-inflammatory cytokines when they engage with their target. When you have CAR-T cells that are inducing more pro-inflammatory cytokines, you are now putting patients at risk for higher events of inflammatory events, such as CRS, ICAN, and IECHS. So knowing what we know, I think that us sticking with the standard 9-day process.

Process was a decision we made years ago because we knew that safety was paramount for patients. And now it looks, in retrospect, it was a very good decision that we stuck with the standard process that allows for now patients to be able to be treated so far very safely. You know, it’s interesting because in the Novartis discussions with at least 1 analyst, based on their report. What the analyst was told as they reported it was that Novartis was on hold for all of the autoimmune uses of their fast, I don’t know what they call it, but their fast manufacturing, for autoimmunity, but that the same decision has not been taken in oncology. And I think that’s really important. And again, we don’t know what we don’t know, but based on what is known, the fast manufacturing seems to be the problem. David has described how fast manufactured cells reproduce much more aggressively, or expand much more aggressively, not reproduce, expand much more aggressively, and cause there to be a substantial increase in interferon gamma, which triggers macrophages to then secrete IL-6 and IL-8. Those are the cytokines that cause the bad things to happen. It’s bad enough that the cells are going to demonstrate a much more aggressive progressive posture on pro-inflammatory interferon gamma secretion when they are used, when they engage with B cells, but they’re doing it in the presence of an autoimmune macrophage. And it turns out something that we were very focused on years ago and we remain focused on over time, is that the macrophage of an autoimmune patient is far more hyper-responsive to interleukin-6 and interleukin-8 to cytokines, than the macrophage in normal patients and presumably in oncology patients as well. And so it’s 2 things happening here. 1 is faster manufactured products seem to be producing more interferon gamma. And by the way, we don’t know whether the events reported by analysts about Novartis and Bristol products are We just don’t know enough about it. But what we do know is what’s published. And Novartis published a paper showing that Kymriah with 9-day manufacturing versus Kymriah with 2-day manufacturing, you dramatically increase the reproducibility of those cells and the interferon gamma secretion and the IL-6 and IL-8 secretion. So that’s why they developed it. For cancer, it’s the perfect product. It’s great. For autoimmunity, it’s exactly what you don’t want. You need a gentle profile. You need a profile that can tolerate the already activated condition that the macrophages are in in an autoimmune patient. Resicel delivers on that promise both with our translational data, which has been exhaustively presented, as well as the clinical data, which equally will continue to be exhaustively presented. And that’s the reason why we feel encouraged about our own data, is the linkage between the product design and development choices we’ve made, the patient situation with these activated immune system macrophages and the clinical data that shows that our safety profile is emerging to be 1 that seems like it might be very differentiated at the end of the day.

Makes a lot of sense. I guess just given the profile you’ve seen so far, you know, where do you see it fitting into sort of the treatment paradigm? You know, this another question that comes up quite a bit.

Yeah, it’s really interesting. There are many pharmaceutical products that are being developed now for myositis. Right, a couple of recent high-profile products. I think there’s a few things to pay attention to. 1 is the efficacy and how it’s achieved. These products are being added on top of existing therapies, and they are achieving, let’s say, moderate dis-response as the modal response, the most common response of the patient. Let’s look at the safety. In addition to the black box warning of some of the drugs indicating risks that go as far as death and as little as heart attacks and strokes, there’s a black box warning associated with that. Let’s look at the financial cost. They’re pricing, in some cases, $300,000 to $500,000 per year in order to add that drug to existing standard of care in order to get a moderate TISH response. Let’s look at what we do. Very hard to manufacture. There’s no history of any success in autologous CAR-T land for anybody investing in the space. We claim that we will have a far more efficient, lower cost of goods. We will be able to scale unlike anybody has scaled. And our safety data looks remarkably different from the history of the space with CAR-T. So what’s our efficacy? Our efficacy is most of the patients reported by us with dermatomyositis have major TIS responses that look like a single infusion, whatever its cost will be, a single infusion provides a durable, reliable outcome off of all medicines. The market is going to have to figure out the labels that exist with the other products and the chronic therapy required at the cost and with the side effects versus a drug that is a 1-time infusion with the cost, with the side effects, and with the efficacy. And, you know, honestly, as a patient, as a physician, I think there’s a real difference that’s going to have to be made, especially for payers. They’re going to have to figure out which tools they want to push or hold back for use with patients and with payers and with providers. At the end of the day, we don’t know where we’re going to fit until we have our data. But I like our prospects based on our Phase 1/2 data. Yes. Yes, so I’ll let Steve answer a little bit more. And about 100 patients dose. So I’ll let Steve answer a little bit more about the commercial and the durability of what’s required, but I do want to say that what Professor Shet has done in Germany, if you look now, there’s a body of evidence on Resicel. We have replicated, perhaps a bit better safety in some ways, but we have replicated that exciting experience that he reported. He’s now on 4 and 5 years of durability. So the threshold, we’ve done a lot of research in this area, as you can imagine. So there’s a very clear 2-year threshold requirement from the private insurers. We’ll be well beyond that once we launch. The 1 thing, though, I do want to say, we haven’t really got into this, but it’s very clear in this space, is it’s kind of been a quiet drug-related space compared to some of the places I’ve come from, from myeloma, things like that. What’s what needs to change? And I think this is going to change. It’s been an additive cost model up to now. So you have standard of care. The next thing comes along, they add to it. The next thing comes along, they add to it. And before you know, when you’re looking at adding drugs that are $400,000 plus on an annual basis, all of a sudden you get to you get you cannot manage should I class any longer for the private insurers? We’re starting to hear that very clearly in the research work we are having today, where you could have a 1 and done. I can’t stress that loud enough, where you are giving a single product and you are on off of all medications. That is very much of a paradigm shifter in terms of the cost model for the space. So as you can imagine, insurers are very attracted by that because they’re saying, wait a second, a lot of new drug launches coming here, they seem very costly. In this case, you’re basically shifting the old paradigm, so to speak, very rapidly. So we were talking about this to see if you see a shift in terms of does private insurance And by the way, you know, private insurers for CAR-T is almost what you’ve never seen before. The launches that I’ve been involved with are always the Medicare populations, right? For private insurers, they are looking at managing this class possibly, but also does the class shift in a sense where you’re stepping through CAR-T therapies first as opposed to getting on to these additive additives, you know, indefinitely at maintenance therapy. So it’s a lot of work to be done there, but I did want to point that out because it is a big shift, not only clinically but also financially.

Yes. Just maybe a follow-up question there, just the question on durability, right? Your single dose. very dramatic impact, safe, and patients have been, I don’t know, 1 year, 2 years? How far have your patients been out so far? We’ve reported publicly 1 and a half, but we’re now 2 years and so forth. Yes. And where do you think that durability sort of needs to go? Like what’s the threshold? And I want to highlight, all of this depends on our data. And we don’t have our full body of data yet, right? But if and when we do have data that replicates our Phase 1/2 experience in myosin, we’re going and scleroderma, I think there’s going to be a lot of discussion about where the CAR-T product should fit. Yes. Yes. It makes a lot of sense. And you’re shifting things, you know, commercially potentially, but you’re also shifting things with cell therapy without preconditioning. And, Stephen, you kind of brought this up earlier, so maybe we can talk a little bit more about that. Why is that such an important development, and how could that really change things? Yes, I’ll turn it over to David after only saying that the most important thing we can do in the autologous CAR-T space, and remember, autologous CAR-T is the only 1 that has delivered on the promise so far. Resicel looks like it stands alone and is emerging to be a differentiated safety profile where all drugs in the category of autologous CAR-T look to be comparably effective. So the next step is how do we do even better? And the market research teaches us that the #1 thing that they would like to see disappear in order to use it in even more of their population would be to get rid of the preconditioning. To do that, you have to be extremely safe with conditioning. So David, do you want to talk a little bit about our path and our plans, what we’ve been doing?

Yes, so we’ve already reported on a preliminary data or initial data in PC-free, so precondition-free, in the pemphigus vulgaris population, as well as, I think, report on the first lupus patient that was treated. But all these patients, all of them, but the limited number of patients we treated were dosed at the exact same dose that the entire RESET program is being treated, which is 1 million cells per kilogram. But the only thing that we did differently is we removed the fludarabine and cyclophosphamide. And we’re showing, we had shown some pretty good initial responses, biological responses, as well as clinical responses. But we feel that we’re probably right at the threshold dose. We need to go maybe a little bit higher to get more consistent response and more durable responses. So we are now exploring the second dose, the higher dose, in the pemphigus vulgaris population, and we’ll do the same thing in the lupus patient population as well. And this PC-free. Obviously, there are advantages. 1 is at least perception of safety, because you’re not giving chemotherapeutic agents, which cause neutropenia, lymphopenia, et cetera. There’s convenience for the patients. There’s more compliance. And so all these are important. And I think for certain patient populations, the young patient population, especially a woman of childbearing potential, where there’s concerns about cyclophosphamide causing infertility, I think there’s an advantage there. But also, I mean, really more than anything else, you reduce 3 days of infusion inpatient or outpatient treatment for fludarabine and cyclophosphamide, which could be eliminated. So there’s that factor. I think this is certainly an area that a lot of people are very interested in hearing about this.

Every single investigator said this will be a game changer for us. No, for sure. Can you talk a little bit about the dosing? You mentioned you’re kind of at this threshold dose, you’re going to go higher. How high have you gone in the past? Is there risk around going higher, or just how to think about that?

We haven’t disclosed what dose we’re going up to, but we looked at our data on the initial dose, and I think 1 thing we really value is patient safety. So we want to be cautious knowing what we know about safety issues that have now emerged. So instead of rapidly going to a much higher dose, so typically, 3, 4, 5-fold higher, we may be looking at a dose level not quite really much higher, but a little bit higher than what we were doing before. The risk is, there’s 1 risk here that we know is a potential risk, is that if you don’t give the lymphodepleting chemotherapy, you don’t reduce the B-cell load as much, so now your target B cell antigen is higher than you would see if you had actually given lymphodepletion. So we know that that is actually 1 of the factors that can increase the level of activity of the CAR-T cells and increase the potential cytokine levels. So that is a risk, and I think Stephen had talked about about this earlier, that that’s why if you’re not safe with lymphodepleting preconditioning, you probably don’t want to explore this because you don’t know. I mean, on the flip side, you could say it could be safer because you don’t do the cause cytopenias, but also your creating more space and a lot of your CAR-T cells work. So we don’t know for sure until we do the dosing, but we know that there is that potential risk.

Yeah, there are competitor and industry implications to the data that we are generating. We have a really robust body of evidence with preconditioning across multiple different autoimmune diseases. And as we will publish in the coming months and years, it will be clear how each of them differentiates from the other. It will also be clear how consistent the Resicel impact is across the portfolio of indications. Because you need to be very safe in a PC-free environment, because of that increased B-cell. I think it’s first important to recognize that it will be difficult for any autologous product that doesn’t have an outstanding profile of safety with preconditioning, 1 that is, we would argue, at least as good as Resicel. It’s going to be hard to try to get to an effective dose without preconditioning. The second point I would make is no matter what modality of therapy you are developing, if you are doing it without preconditioning, you run the same risks. And that may partly explain why many of the in vivo transactions have centered on oncology, not on autoimmunity. The patients are different. The risks are real. The evidence comes from Novartis and Bristol Myers that they can be deadly even. And I think it is going to matter when scientists and physicians and investigators begin to think about evaluating advanced modalities in autoimmunity. I think the, you know, the warning signal, the flare has now gone up, that this is not the same as oncology. And I think over time we will see what the data show. But we ourselves are being very cautious in our efforts to pursue higher doses without preconditioning.

Makes sense. I also wanted to touch on manufacturing. brought this up earlier as well, but you’re doing some innovation there. So maybe talk us through that and when that might get rolled out or the current status?

Yeah, so we’ve always had a multiple supplier mindset. Sure, it would be cheaper to have a single supplier and just use 1 and be done. It probably gets the job done, but you can’t really reliably scale and you don’t have redundancy that can cover you in case your supplier goes sideways. So we have always had a multiple supplier mindset. It has always been multiple suppliers. And by that, I mean, we have Lonza as a standard partner supplier. At launch, we expect that they will be joined by ElevateBio, another CDMO that has developed an excellent relationship with the company. And, you know, we’re confident that those 2 can tolerate and can supply the first year, year and a half of our needs in the initial indications of myositis, adult and pediatric. We also have announced that after launch, you can picture within a year after launch, we expect to have the scalability and the flexibility that can be afforded by a fully automated manufacturing platform, which is what Solaris uses. And so we have dosed a couple of patients with Resicel manufactured in the fully automated Solaris system, and the results from those patients have been reported to be both the product and the translational data the same as any other. In fact, every unit operation as well as the overall operation of manufacture of our product at Lonza and at Solaris has been identically compromised, comparable. They have passed the test of comparability that FDA would require. In fact, FDA allowed that Solaris is nothing more than another manufacturer for us. The business questions around Solaris, as I think those who would be listening to our discussion today would be familiar, Bristol Myers and Solaris have had their own sort of kerfuffle, and that relationship has been terminated. After it was terminated, but before it was publicly announced, the folks at Solaris, with whom we’ve had an exceptionally strong relationship for many years now, called us up, informed us, and then flew out to see us to be sure that their reorganization was going to meet all of our needs. By the time they left, they had substantially changed their thinking on their reorganization, and they have now publicly implemented the reorganization that we believe is going to allow us to continue to not only remain highly confident in the data which I do say we are confident in the data at this point, but and at this point being we were in the past, we remain equally confident in our data with them and in their ability to deliver for us. Now, like all young companies, they’ll have to continue to finance over time and we have to play the mitigation of risk game by having 2 other manufacturers who can more than sufficiently meet our needs. So we’re really excited about both the profile of Resicel with preconditioning, in the near term, the myositis program, scleroderma coming up and running in a pivotal program this year, the juvenile indication in dermatomyositis could earn us a PRV within the next year and a half, 2 years. And that’ll be followed by a scleroderma indication where, similar to the juvenile myositis, not only are there patients with without acceptable therapies of any sort available, but there’s an urgency to treat. If you’re in 3rd grade and you can’t bend your fingers because your knuckles are not able to function and you can’t type or you can’t interact with the computer or whatever it is you need to do in 4th grade, your parents are going to be, our experience, your parents are going to be pretty aggressive about getting you the best therapy as soon as possible. In scleroderma, I think there’s a similar paradigm where the risk of death at 12 years for a 30- or 40-year-old typical diagnosed patient with scleroderma, the risk of being alive in 12 years from diagnosis is 50-50. It’s a 50-50 shot that you make it to be 10 years, 12 years from now. And there’s a real urgency as a result to treat there. So really excited about not only the clinical programs, but the commercial prospects that follow.

Yes. Great, looks like we’re just out of time. So Steven, Steve, and David, thank you so much for your time. Really appreciate it.

Thank you, Mike. Appreciate it.

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