Cartesian Therapeutics, Inc. (RNAC) Earnings Call Transcript & Summary

Hi. Good morning, everybody. Welcome to the Cantor conference Day 1. Very happy to be joined by the Cartesian Therapeutics team on stage. With Dr. Carsten Brunn, the President and CEO; and Dr. Miloš Miljkovic, the CMO. Thank you so much for being here today. I really appreciate it.

Thanks for having us.

Thank you.

So let's start with an overview of the space that you're working in cell therapy for autoimmunity, it's really hot space in biotech right now, and you're really looking to join that space, but be a differentiator. But before we talk about your approach specifically, what did we really learn about cell therapy and spaces like oncology, that gave the field an interest to really pivot here to begin with?

Great question for Milos who's an oncologist.

It's an excellent question and not asked often enough, I don't think. So the main thing we learned from oncology early on is that it actually works, which wasn't a given with any modality. So you manipulate the cells a lot, you can do -- many things can go wrong. You don't know that it'll actually hit the target. If you want them to hit, you don't know that it will be safe. So in oncology, we learned that if you want to eliminate an antigen using CAR T therapy, it will work, the antigen will be eliminated. Now both -- what's interesting is both conventional CAR-Ts, lentiviral produced and RNA CAR-Ts were developed around the same time by same groups at NIH and UPenn. But it turned out that lentiviral manipulation was better for cancer. For oncology, it was -- you had greater cell growth, hyperproliferation of cells, which you really need to hit many, many cancer antigen cells -- cancer antigen-positive cells. So RNA sort of fell by the wayside. It wasn't really developed. But there's no reason why that would be. And we saw that opportunity in Cartesian -- co-founders saw the opportunity to actually use RNA CAR-Ts to do the same thing the conventional CAR T-cells are doing to hit an antigen, eliminate an antigen but not an antigen that's so exposed as a cancer antigen and with a better safety profile than you get with conventional CAR-Ts.

Okay. And obviously, it has been very successful in oncology, but it's a different ball game. You're talking about trying to keep patients alive for as long as possible, the risk tolerance profiles, obviously, a lot different there. So -- to that extent, the approach that you're using in autoimmunity is not to include lymphodepletion and treat patients in an outpatient center. Why is this pivot different in this kind of setting?

It's critically important, I think. I mean these are not patients are dying in the next 2 or 3 weeks. These are oftentimes chronical illnesses. They're treated in outpatient setting. So not having to do lymphodepletion. The opportunity is an outpatient setting, I think, is very important to make this a modality that's commonly used. I think the advantage is as well, and the [ DNA CAR-Ts ] were designed for cancer, right? I mean they're done in an inpatient setting, by a cell therapy oncologists. And the same is true for the autoimmune setting as well. They're still done in patient by an oncologist that are they're treating cancer patients, right? So I think the real differentiation we have doing this in an outpatient setting is we can go much earlier patients actually. So we don't have the last resort to train wrecks, but we can actually do this much earlier and we have demonstrated this in our data. And I think using mRNA because it's transient, you don't have the risks actually of genomic integrations. You don't have to follow these patients for 15 years, we're the only cell therapy doesn't have that obligation by the FDA. You don't have the risk of secondary malignancies. So I think these are all advantages that kind of make the modality perfect for autoimmune disease.

Okay. So that's one of the big differentiators. The other one I would say, is that your lead product, Descartes-08 and generalized myasthenia gravis, or gMG for short because we love acronyms in biotech. Why do you believe that targeting BCMA is the better strategy here, your second differentiator?

Yes. So I mean, we are agnostic to the antigen. We can also do target any antigen in CD19, but we do believe that BCMA is an excellent target for many autoimmune diseases. Specifically, we know that MG is caused by autoantibodies. They're expressed -- secreted by cells in the bone marrow called plasma cells. And they express BCMA. So targeting those, you go to the root cause of the disease, actually. There is some interesting data actually that's emerging out of UCSF actually. They developed a technology Phage Immunoprecipitation-Sequencing, which basically, it maps the autoreactome. So all antibodies that are self-reactive and they've actually shown that using CD19 and CD20 has little impact on the autoreactome, whereas BCMA has profound deep impacts on autoreactome. I think there is really emerging evidence around this. And this might be actually and there's as big hype around an immune reset. BCMA actually might do a precision immune reset of the autoreactome. So the cells that really count -- sort of wiping out all B cells.

Okay. And congratulations to recent IIb study, didn't read its primary endpoint. I wanted to see if you can just recap these data for us. And then you did look at different settings where the therapy was administered. Did that change the data at all?

Yes. So it's important to note this is -- was the first ever randomized placebo-controlled trial of any cell therapies. So it was really unchartered territory when we started, wasn't even feasible to do. Can give placebo in a CAR T therapy because we don't use one for depletion chemo and because it's outpatient setting, it makes things a lot easier and smoother, so we were able to do it. So every patient who was enrolled had both the Descartes-08 lot and the placebo lot manufactured and they were randomized 1:1 to get one or the other. It was blinded. So nobody knew what the patient was getting. The primary endpoint was at 3 months. And as you said, it was met. So around 70% of patients who received Descartes-08 were responders, around 27% of patients who received placebo were responders. So it was a very large effect size and it easily met the primary end point. Even the secondary endpoints where we looked at numerical differences in different scores, MG-ADL, MG composite, the study wasn't powered to show the numerical difference, but there was a significant difference in those score at 3 months. You mentioned administration settings. There really were no differences in Descartes-08 response rates across academic sites, community, neurology clinics. And that's another important point. It is cell therapy because it's RNA cell therapy, you can do it in an outpatient clinic, even a multi-specialty clinic. You don't need to be a large academic center to do it. But academic centers have a developed randomized clinical trial infrastructure. They have more diagnostic capability to figure out, especially in patients with seronegative myasthenia, who actually has myasthenia and who has some other neuromuscular disorder, and they have more evaluators who are certified to do complex myasthenia scales. MG-ADL is a PRO, but even for that unique training and MG composite and QMG are 2 scales where neurologists actually assesses and scores patients muscle strength, so you need to be certified. Smaller community sites maybe have 1 or 2 people who do that. And if they're on vacation or at a conference, there's nobody to evaluate the patient. So when we looked at a per protocol analysis where things were done according to protocol from evaluation to administration, to evaluation, we met the primary endpoint in a per protocol analysis and in an ITT analysis in the academic settings, which was actually a prespecified primary endpoint, which we prespecified knowing that community sites might have these issues. And it was after talking to the FDA around the RMAT designation.

Okay. Thank you. So while you did have a placebo, of course, in the trial, can you talk about how reliable these endpoints are. There's a couple of different MG scales would you walked us through, but do we have like a sense of how placebo normally would perform in them? And then you did see a little bit of a response in that first month for placebo. Do you have any theories as to why that occurred?

Yes, absolutely. So, scales first. I mentioned MG-ADL. It stands for myasthenia gravis activities of daily living. It's a PRO, but it's not a pure PRO where a patient fills out the survey. It's a structured interview, that's where you need neurologists training to go point by point about how the patient is feeling. And there are 6 groups of questions about how is myasthenia affecting your swallowing, you're breathing, different aspects of life. The worse your symptoms are, the higher the score is. So any decrease in the scores improvement, 2 points is considered clinically meaningful. MG composite uses all of the ADL questions, it uses all of those PROs and adds some objective neurologist assessments of muscle strength and then you add up those scores. It's a higher span scale. So ADL is 24 points. MG composites is 59 points and 3-point improvement is considered clinically meaningful. Regardless of which scale you use, there were greater than clinically meaningful responses in Descartes-08 as compared to placebo. Now for the placebo response in our trial, it was actually as expected. There was a decrease at month 1, if you look at the placebo group overall. That decrease in scores at month 1 was entirely driven by a few seronegative patients -- patients with seronegative myasthenia. And that's a well-known and well-described phenomenon that patients with seronegative MG have higher placebo response rates, while the treatment is being administered, while the placebo is being administered. And as expected, as soon as the infusion stopped and it's 6 weekly infusions. So the first follow-up after the 6 weeks show reversion to the baseline. But if you look at the AChR antibody positive patient population, which is more than 80% of patients with myasthenia and it's the population that's actually in the primary efficacy data set for all the Phase III pivotal trials to date, their placebo response is much smaller, and it's in line with what's reported for AChR antibody positive patients.

Okay. So you think if you excluded those patients in the future, you might not see that initial degree of a placebo response?

Yes. And in fact, I believe we did report that subgroup analysis, along with the top line results.

Okay. Thank you for that. So investors that I've spoken to, were really impressed with these MG data scale. But one question that we hear pretty consistently, which comes when you're a pioneer of a space, right, is -- how can you correlate these specific scales to other that endpoints that really help us understand what's going on mechanistically here?

I'm smiling because it's a funny question. Usually, you ask for biomarker data, if you don't see a clinical effect, right -- but I mean we -- obviously, we are looking at this pretty seriously. So there's really 2 components around mechanism. One is impact on cells. So we see a shift in the T cell repertoire. So we focus T cells more, which makes sense because we have a large amount of T cells. We also know that we don't impact circulating B-cells, which makes sense. We target BCMA, not CD19. But we've also shown that we reduce circulating plasmablasts as well. So these are the cells that actually secrete BCMA. It's very difficult to measure BCMA in the bone marrow. You have to do a bone marrow biopsy that hasn't been done in autoimmune diseases since the 1980s. So you have to find markers around that. And then on the antibody level, we know that it's a precision approach. We don't impact IgG, immunoglobulins, IgA, IgG, IgM. We don't impact vaccine titers, but we impact the autoreactome, so all, basically autoantigens, and we have shown the Phase IIa, we reduce autoantibodies. There is always a 100% correlation between that. It's just investors are very focused on the autoantibodies because that's the only mechanism the FcRns work through by suppression of IgG -- of all IgG with all those side effects. Ours -- it's like any cell therapy, it's a much more complex mechanism of action. But we'll have more data available, especially on the autoreactome and we're pretty excited actually. That's a very interesting kind of cutting-edge way to assess any immunotherapy really.

Yes. I think you've guided to the shoot that you'll have data at a medical conference. Anything you could say in terms of time of the year, we might get that? And then also, what are you thinking early on at this stage about ways you might want to look at the next trial? Obviously, you've just still talked to the FDA.

Yes. So in terms of data in end of June, early July, we had the top line readout, which is every patient who was randomized got to 3 months. Now after that, there's crossover. So patients who got placebo, crossed over to Descartes-08 open label, so we will have that data. And more importantly, we'll have the durability data, long-term data on the patients who randomized to Descartes-08 for 6, 9, 12 months. Even with the top line results, we had about 1/3 of the patients reaching that 6-month, follow-up time point, and we saw that those data match almost completely 100% to the open-label data. And in the open label, we saw deepening of response, so that the deepest response was actually at month 6 and month 9. And it's correlated with peak autoantibody reduction. And we saw many of those patients. So in the open label 5 out of the 7 got still deep responses at month 12, we expect to recapitulate that with the Phase IIb when we get the longer-term follow-up data. In terms of other studies -- well, Phase III pivotal, we expect to follow the Phase IIb design closely. We already had interactions with the FDA around the Phase IIb, hence the modified ITT analysis. And the effect size is so large in the Phase IIb that you actually won't need that much bigger of a sample size to get 90%, even 95% power. What we'll get from the FDA interaction is how much -- how many patients we would need to treat for the -- for enough safety data to accumulate for a BLA.

And that's second half of the year?

That is -- that we expect to meet with the FDA by the end of the year, yes.

Okay. And then retreatment. Correct me if I'm wrong, but my understanding is that each time a patient goes through this process, they can essentially have 2 cycles worth of treatment. So theoretically, somebody might have to go through this process every 2 years. But let's talk about that because you have some patients where you do have retreatment experience, one patient around month 12. You started to see the effect decline. The other was at 18 months. So how do we think about this translating once you see a much larger patient pool? Do you expect there's going to be a little bit of variability between people, any way that we can predict this in advance?

We can't predict in advance quite yet. Unfortunately, we're looking at biomarkers for that. But I think a worst case scenario is once a year. But keep in mind, out of the 7 patients in the open-label study, actually, 4 had still responses at month 12. So 4 did need a redosing. And then 2, we redosed, what's interesting there, the patient that got redosed and that we have follow-up for 12 months, actually had deeper and more durable response the second time around. So -- which makes sense mechanistically. There's fewer cells to go after, fewer plasma cells left. So this is an end of one now, but it's -- this might be truly disease-modifying actually. So this might be a finite course of therapy. So we don't think it's going to be chronic yearly. That will be the worst case, but the more data we have now, we don't believe that's the case.

And then obviously, for a trial perspective, you're constantly seeing the patients, doing these measurements. But in a real-world scenario, how often is a patient visiting their physician and can we assume that maybe when they start feeling like symptomatic or certain problems arise, it's probably worth testing again to see if it's a good time to consider retreatment?

That's reasonable, and that's what we got speaking to the KOLs about it and their experience. I mean the -- it's front loaded. So there are 6 weekly visits for the infusion themselves. But after that, it's important that we don't have any chronic or even sub-acute adverse events. So there's no reason to follow the patients every week or every other week or even every month for toxicity purposes for dose purposes. And with the durability of effect we saw, you could say that maybe even 6 months after completing infusion would be the first time when these patients would be followed up. And you're right, it's likely to be a clinical judgment on when to reinfuse. AChR antibodies actually aren't used as a big biomarker by neurologists. It's not something that you check monthly, like a tumor marker to predict when to respond. So I don't think they're fit for that purpose. So it's clinicians call ultimately.

And what are kind of some of the symptom manifestations that you start to pay attention to, to make these decisions from like a patient's perspective? Obviously, they know their body. They know they've been living with this disease. So like they have a pretty good sense already, I would imagine.

Yes. difficulty swallowing, difficulty with vision, especially with drooping eyelids, double vision, and overall weakness in any muscle group really that gets worse as the day goes on. That's very difficult of myasthenia. But swallowing and speech difficulties are the main ones that the patients complain about.

Okay. Can we take a minute to talk about manufacturing. Obviously, you're thinking about a Phase III trial here, and we don't know all the details yet, but do you believe your in-house capabilities could support this trial? And then beyond that, what's the next step?

So we've decided strategically to keep manufacturing in-house. We have 2 manufacturing sites, both in Maryland. We have a Phase I, Phase II site, where we serve the Phase IIa and Phase IIb study out of. And we are bringing up and running right now a commercial/Phase III site, 20 miles also in Maryland, where we're going to produce for the Phase III. And for the first couple of years after launch, as kind of the FDA requirement to get the site basically authorized for the study. And we think there's advantages to that from a just owning your supply chain, the costs associated with that. So I think that's a key differentiator we have in controllers, you don't compete with a big pharma with a CDMO.

Okay. And then altogether, based on the early but good data you've seen so far, where do you best see Descartes-08 fitting in the treatment paradigm and early thoughts about what a commercial opportunity is going to look like?

Great question. So we've done some market research, quantitative market research with 100 neurologists, actually. And that's based on the Phase IIa data, but the Phase IIb data kind of confirmed the Phase IIa. So -- and we're surprised actually on any market conditioning, about 30% of neurologists would already prescribe the Descartes-08 ahead of an FcRn antagonist, which is pretty high actually, right? So clearly, we're not the last resort. We clearly see this as a third-line therapy. I mean reality is physicians will first try what's out there, it fails and then they move on, have a good experience and move it up in the line of therapy. But it's definitely not kind of a rescue acute therapy. It's really -- it would compete with the FcRn antagonist and the complement inhibitors. And that's a sizable opportunity. It's not a niche opportunity.

Okay. And how much read should we think about these data as it relates to other indications testing? Obviously, there's different endpoints as we consider other indications, but big picture with the read?

So the read is twofold. One, we suspect targeting BCMA hits autoantigens known and unknown, the autoreactome. So from that perspective, any autoantibody-mediated autoimmune disease would be a reasonable indication to try. On top of that, there's another population of BCMA positive cells. We didn't mention it's plasmacytoid dendritic cells. They're myeloid lineage. They don't have CD19, they don't have CD20. They produce a lot of cytokines and their key pathogenic cells in a different group of autoimmune diseases like lupus, for example, SLE. So from that perspective, it makes sense to target many different autoimmune diseases. And then from a safety perspective, you have a broad area of the types of patients who can get it. Because with conventional CAR-Ts, they really need to be fit. You have to worry about long-term consequences of chemotherapy, integrating vectors. So from 2 ends of the patient population, they could be considered risky. From a frail patients, many of whom have autoimmune diseases, they may not be fit enough to get conventional CAR-Ts. And then, on the other hand, the pediatric population, so children with autoimmune disease and they're many pediatric autoimmune diseases -- there, you'd have to think twice before administering chemotherapy and giving something with integrating vectors. So one of the studies that we've announced is the pediatric basket study, and we had the rare pediatric disease indication for Descartes-08 and juvenile dermatomyositis. There are other juvenile versions of diseases like juvenile MG, juvenile lupus, many other, where it's reasonable to try Descartes-08, because of the safety profile we've seen in adults. And on the other end of the spectrum, there are autoimmune diseases like RA. So RA has rheumatoid factor which is an autoantibody, there is known pDC involvement in RA. And many patients with RA are frail. So it's a disease generally of the elderly who've had many immunosuppressants in the past. They've had biologics in the past. They can be severely immunosuppressed. So that's a patient population where it's not the totality of the RA but a subgroup of patients with RA who could benefit from Descartes-08.

So how do you balance that potential also knowing that you have another compound Descartes-15 that you think have -- may have even better potency considering all these opportunities on hand?

I think that's a heavy problem to have. so many autoimmune indications to go after. We obviously wouldn't try to cannibalize them. But I mean Milos mentioned RA. I think that's a great target for a Descartes-15, it proves to be safe in the Phase I. And -- so I think SLE is another one potentially that's interesting. It's a complex disease, there's many others. But I think those -- we're trying to stay in the realm of neurology and rheumatology. So I think those are the ones that we're focused on right now.

Is there going to be like a go, no go decision when we see the first Descartes-15 data that you'll say, okay, we definitely want to move some of these indications? So this therapy versus the ones that will stay on Descartes-08?

Yes. Definitely. I mean we're trying to be as data-driven as possible. We don't want to report case studies. You want to report a number of patients so we see a clear trend. That will make a decision. You're trying to fail quickly and move on. And so I think we have a great signal in MG, and hopefully, we see the same in SLE and some of the other indications.

Okay. And maybe to close, I would love to ask you what you think is the most misunderstood part of the Cartesian story that investors have yet to resonate and also why this is a great opportunity to consider an investment in your company now?

I would say two things. The first, we have an asset that works in MG, tremendous commercial opportunity and relatively derisked in the Phase III. we've learned a lot. So that's a real commercial opportunity, clear regulatory path. The second is we're actually the most advanced company in cell therapy. So we actually are the first to start a Phase III next year. I think those 2 make a tremendous opportunity. And you can argue we're undervalued just looking at the MG opportunity.

Okay. Great. Well, thanks for supporting us and being at our conference. It's always great to see you, and thanks everybody for tuning in.

Thanks for having us. Thank you.

Thank you.