Cellectis S.A. (ALCLS) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us for Day 4 of the Goldman Sachs Healthcare Conference. We're really pleased to have Cellectis here. And with us, we have Bing Wang, CFO. So just to get started. So Cellectis is a clinical-stage biotech company using its platform to develop cell therapies.

Could you give us a quick overview of your portfolio, both partnered and wholly owned? And where do you see the most value? And how derisked are these various assets from a biologic or clinical point of view?

Great. Thank you, Matt. Thanks for having us. So I would say we put our asset in 3 big buckets. I would say the first one are our 4 wholly owned assets that we are pushing in the clinic right now. So there's 3 already in Phase I with 1 will starting 20x22 that we'll in IND in Phase 1 second half of this year. And within these 4 assets, I would divide them into 2 groups. One is our UCART22, which is in Phase I right now as well as UCART20x22, which, again, as I mentioned, will file IND second half of this year. So I would say in these 2, they're very well-validated target within cell therapy. So from a biological perspective, we think they're largely derisked. UCART22 goes after ALL. It's a smaller market. But given that the population skews young, the health care economic is very significant. For 20x22, because we go after a large number of B cell malignancy in particular lymphomas, we think this has true blockbuster status. So these are very well validated target within cell therapy. The other 2 targets -- the other 2 assays is UCARTCS1 and UCART123. Both of these are in Phase I. In UCART123, we go after AML. This is, again, a very interesting target with a critical unmet need with very interesting potential biologic capability. For UCARTCS1, the target has been, I would say, already demonstrated in the antibody, alemtuzumab. Although we definitely think there's a differentiated approach using cell therapy, and in particular, what the market is for BCMA CAR-T today, I think we have a very unique opportunity in that we provide cell therapy approach in a market that's rapidly expanding. So this bucket are ones that we have wholly owned. Another bucket would be things that are further along in the development. So this is our products that are partnered with Allogene and Servier. So they have targets going after CD19 as well as BCMA, but from an allogeneic approach. We definitely believe Allogene will very likely be the first allogeneic CAR-T in the market. And it will address a number of critical manufacturing commercial issues that's limiting autologous CAR-T right now as well. Again, the logic holds for their allogeneic BCMA CAR T as well. So that's the second bucket, which is more -- I'd say further along in clinical development and a bit more wholly owned asset. And then number 3 are how we can access really interesting novel technologies of today. So for example, we have a partnership with Iovance, we have partnership with Cytovia. Iovance focused on TILs. I mean it goes without saying that right now, the best data for solid tumor in cell therapy is still TILs. And we're happy to work with the leader in the space. the fact that they picked us over other competing technologies to partner with the TIL to do a knockout of PD-1, for example, is a very interesting validation of our approach. I'm happy to go deeper on that topic as well later. And for Cytovia, obviously, iPSC and CAR NK. Again, another very interesting, I would say, adjacent cell therapy approaches, and it makes sense for us to partner with folks that are really good and focused on doing it than having to do it in your own programs.

Great. So in terms of the allogeneic versus autologous CAR-T debate, given the scaling cost and logistical issues associated with auto CAR-T, there is a general expectation there might be slightly lower clinical bar for allogeneic CAR-T products, which have the potential to solve many of these key issues. How should we think about this from a commercial, regulatory and physician standpoint?

Sure. I mean from a commercial approach, it's pretty straightforward, right? I think by having allo product, you actually expand the market. Right now, autologous are very limited to these highly specialized academic centers. And I know that the commercial companies commercializing is trying to expand this. But the fact of the matter is cold chain logistics is very difficult. You have anywhere from 3 to 4 or 5 or 6-week vein-to-vein turnaround time. And that's just very difficult to monitor logistically and some of the patients don't make it through the end of it. So I think from a commercial perspective, allo will actually expand the market significantly. From a regulatory perspective, obviously, the agency wants to see definitely that these products can materially improve outcome for patients. So I think that decision is -- will always be there. So we want to make sure every allo product provides a value to patients and the regulatory agency absolutely look for that. And from a physician perspective, again, it's worth reminding that a lot of the efficacy data for autologous treatment right now are somewhat enriched, right? Not every patient that starts that they get identified for these clinical study actually get on the study. And to my earlier point, a lot of the patients don't make it during this vein-to-vein turnaround time. And then I think what also doesn't get talked about is from a manufacturing process, the cold chain logistics is quite difficult. So going back to the early commercial point that I want to point out as well is that right now, a lot of these autologous companies have manufacturing issues because if you think about cell therapy, it requires multiple interlocking components. So for example, if you have a delay or a mistake in manufacturing of your lentivirus, for example, then to input for your cell product is delayed. And sometimes, your slot for a CMO, for example, is only there for a certain amount of time. So if one of your input products delayed, the whole logistic and queuing with your manufacturer partners becomes a very big problem, and these things cascade. So having an allo product that's wholly manufactured in-house is absolutely critical for that. So I think from a commercial perspective, I highlighted allo will fundamentally change the market. From a regulatory perspective, you still need to create value for the patients. And number three, from a physician perspective, you absolutely need to be able to address near-term clinical need. And one thing that's worth pointing out is yes, autologous may set some bar from an efficacy and safety perspective and then allo needs to find a way to be competitive with that. But what people don't ask is what happens if the first-in-class product is an allo for a particular target. Then I would say the hill that the autologous product to come after were is much, much higher, right? With an allo needs to meet and be close to where autologous is, but if allo comes in first, I think the autologous has basically a very, very difficult chance of taking market share.

Great. So just moving to the platform more generally, could you give us a brief 30,000-foot view on your flagship talent gene editing technology? Specifically, what are the competitive advantages versus other gene editing platforms such as CRISPR-Cas9 and what makes your platform unique?

Sure. I think TALEN and CRISPR-Cas9 both have advantages. I think TALEN is with over 170 patients. I think it's definitely the most validated gene eating program out there from safety and efficacy perspective, very low chance of genomic instability. CRISPR-Cas9 is a fantastic platform for life science research. You can have a lot of guide RNAs very cheaply and look at a lot of targets at the same time. But the fact of the matter is TALEN is a more stable and safer platform for therapies. I mean, even if you talk to the CRISPR experts today, almost everyone have moved on from Cas9. People are looking at Cas12, CasX, CasY, looking at a number of other approaches in Cas to address the shortcoming of Cas9 or they look at more interesting subsystem like base editors and prime editors. But from a Cas9 itself, even the experts in CRISPR have moved on from the system.

Got it. In terms of manufacturing, Cellectis has invested significantly in its manufacturing capabilities and is one of the few gene editing cell therapy companies with its own operational GMP facilities. Could you talk about your current capabilities? And why is this so important to Cellectis? And how do you think about the role of manufacturing for IP and cell therapy?

Thank you. Great question. I think this is a problem that investors are just beginning to realize in the last 1.5 years because mainly because of some of the other companies have issues with manufacturing. I think it's absolutely critical for any cell therapy company to have their own manufacturing or have most of their product manufactured in-house. And the reason is, at some point, a point that I mentioned earlier. So all cell therapy with our autologous or allogeneic have multiple components, right, whether it's plasma is going into these lenti, lenti going to the cells, these are interdependent products. So when you have a delay, whether it's because of manufacturing issues or because it was a mistake in a particular batch, it cascades down the entire manufacturing chain. And the problem is if you have manufacturing with different CMOs or CDMOs, and they dedicate a particular queue in a particular time for your batch, these delay actually cause a lot of headaches for this whole manufacturing and cascades down in a very unpredictable way. So when you have your manufacturing, you can tightly control and you know the problem as it happens, for example, any delay that you can manage your own manufacturing accordingly. So that is just absolutely critical. So I think a lot of these decisions are made well before I joined and I applaud the management and the board years ago for making this decision to have [indiscernible].

Great. So in terms of Calyxt, Cellectis has not guided specifically to more data this year from your wholly owned assets. But could you walk us through the 12-month Calyxt path for Cellectis? What should investors be looking at?

Sure. And we haven't guided specifics on individual programs. I would say look at UCART123, we haven't guided when we will potentially announce data, but we can say our investigators are very excited about this product. Definitely, in particular, the profile for AML, I think people are very excited. For UCART22 for ALL, we are at dose level 3. We're in the process of filing with the FDA on our own wholly owned manufacturing products because right now the doses we made are made by CMOs, and we're switching on to our own manufacturing products. So we are in the process of talking to the FDA to get some guidance and to think about dosing because we know for a fact that our own self-manufactured products is more potent. So do we have to change the dose escalation? That's a conversation we're in the process of having what the FDA about. And then UCART20x22. This will be one of the first product from beginning to end is all manufactured in-house. We're very proud of this accomplishment. We plan -- we're in June right now. We plan to -- in the second half of this year to file an IND and start human dosing in second half of this year. And then lastly, but not least, for UCARTCS1, we're still we're in phase and still in the early stages, but we are actively adding centers and physicians excited about this. And in particular, what gets us excited about CS1 is some of the recent data in just a few days ago at ASCO on BCMA CAR-T. And the fact that people are talking about extending that from fourth line to third line, which can potentially triple or quadruple the number of patients you have access to, actually significantly benefits us. So I think from a Calyxt's perspective, we are not providing specific guidance on data. But as I highlighted, there's a number of development events that we're very excited about.

Great. Moving to financials. You've guided to cash runway into early 2024. How comfortable are you with your cash position given you have multiple wholly owned programs in the clinic now and as well as the current market conditions?

Sure. So from a cash runway perspective, I'll put it in 3 layers. Most of the spend for UCART22, UCART123 and UCARTCS1, most of them have already been spent. That is not true for UCART20x22 because, again, we're still in the process of filing IND and first human dosing. So some of that spend will still be coming up in the coming quarters. But for the 3 products in Phase 1, most of it has been spent already. So from a sort of time to Calyxt in terms of [indiscernible], that's one perspective. The other one is from a revenue perspective on milestone payments. We probability adjust these regularly. I would say our current cash runway guidance baked into, I would say, a modest probability adjustments, not overly conservative, but not on the other direction as well on these milestone probability. We can't disclose details because a lot of these terms are confidential, but we are very aware of the market condition and how that may affect that. And then the third part, I would say the thing that more concerned about me and I'll say this is true for every management every CFO of biotechs out there is really inflation. I think it will affect us materially for 2022 because while people don't get raises until beginning of the next year, for example, and a lot of contracts are baked in for most of 2022. And the fact that we have all manufacturing actually helps us significantly in that we're not affected by, say, CMO or CDMO price increases. But that being said, we still use CROs, employees still expect us to provide a competitive comp package. And we have a lot of other consultants and service providers that we need to think about. So I think we are hyperfocused on seeing how this could affect our cash runway and our budget for 2023, and that's something we're very actively monitoring right now.

Awesome. So you guys have highlighted recently that your focus for 2022 is essentially generating clinical data to determine a Phase II recommended dose and lymphodepletion for UCART22, 123 and CS1. Could you just talk a little bit about how the progress is coming on this front? And then maybe separately, you've also noted that you have a goal of releasing clinical batches of 22 and 20x22 this year. Where do you guys stand on this?

Yes. On the manufacturing side, I think it's progressing very well. UCART22, again, as I mentioned earlier, we're in the process of talking to the FDA in terms of just guidance, right, because there's a wholly manufacture product, it's more potent. We know for a fact, it's more potent than product made by CMO. So right now, UCART22 is a dose level 3 using the external manufactured product. But once you go over our own manufactured product, we may have to reduce the dosing and how much of that is a current conversation we're trying to figure out. 20x22, again, it will be completely wholly own manufactured from beginning to end. We're very excited about that. And I think some of our recent data that was published in academic conferences, we showed that having a dual CAR approach allows us to eradicate in tumor models a large number of lymphoma, whether it's highly expressed of CD20, CD22 and some lymphoma have high expressions of both. And the fact that this is an independent antigen of CD19 allows us to not go into that very competitive environment and to go after a number of folks who are refractory after CD19. Although we haven't made a decision that we will only go after CD19 refractory, we're potentially competitive with that. But the product is something that we're very, very excited about. And from a manufacturing perspective, again, we have so much experience right now going through a program -- a lot of it through, for example, UCART22, that the process is getting easier and easier for us.

Great. So just maybe digging a little more on 20x22, Cellectis has expressed a lot of excitement about this asset for B-cell malignancies. You briefly just talked about it, but could you maybe just talk to us a little bit about the logic behind a dual targeting approach and what the potential is here? And then is the IND Phase I initiation still on track for this year? And then I'll have a few follow-ups.

Sure. Yes. So Phase 1 IND is still on track for second half of this year. We will be the first allogeneic dual CAR CAR-T in the market. There's a few other dual targeting, but I believe they're all autologous. And we're very excited by this program. We've shown that it addresses a critical unmet need. Right now, CD19 is very, very crowded. You still have companies these days, even looking at autologous, you have new programs coming up. So the fact that we can go after 2 additional antigen makes this a very, very unique product. And as I mentioned earlier, we've shown clearly that for large different types of lymphoma, either they have highly expressive CD20, CD22. And the fact that we go after both of them prevent antigen escape in a lot of these products. And the fact that we go to lymphoma and the fact it's allo, which allows us to go be academic centers, go after community hospitals that also means we expand the market significantly. And we think this will be our best chance of giving a multibillion-dollar blockbuster in our program. So we're very excited about this product.

Great. So for CS1, we saw interesting data from the Phase I MELANI-01 study evaluating CS1 in relapsed refractory multiple myeloma. What are you hoping to see at the next program update? And when might we see that?

Yes. Again, we haven't provided specific guidance, but we are actively executing on patient recruitment. Again, I think this -- the market size for this have changed materially, even in the past few days. Just again, if you think about a scenario, call it, 2, 3 years from now, where BCMA becomes potentially standard of care, whether autologous or allo. And the fact that if BCMA can move up 1 line in the multiple myeloma treatment regime from fourth to third line, for example, the number of patients, I mean this is brought up by, I think, the CEO of Legend recently that the market goes from 22,000 patients to 80,000 patients a year, and that's significant. So that means you have more people getting BCMA, but when those patients, you have, I think, medium duration response on the order of 2 to 3 years. Again, it's getting longer as we speak. But the fact of the matter is when those patients relapse, there are no other options. When CS1 provides an orthogonal antigen that is actually higher expressed in myeloid cells than BCMA. So we think there's an excellent commercial opportunity. But how do we respond to that? Again, we'll provide additional disclosure when we have more data.

Great. Moving to UCART22. If you see success with your dual targeting 20x22, what does that mean for 22? Would you maybe deprioritize this asset? Or does it make sense to pursue regardless?

They are different indications. So UCART20x22 goes after ALL. This is a smaller but very critical unmet need target. We think there's a lot of value there. And it's a small enough market with [indiscernible] indication that I think a company our size can potentially detail U.S. and Europe, and it will be wouldn't be a significant commercial investment. So we think this is a very interesting product, and it's focused on ALL. 20x22, we're going after lymphoma. This is a huge market, and we're focusing them on just separate indications. And given the size of this market, there's a lot of ways we can think about commercial potential, they may involve partners and whatnot, but it's a much bigger commercial franchise if we were to develop that later.

Great. Moving to UCART123. We may see first data from the Phase I AMELI-01 clinical trial in AML potentially this year. Could you help us level set by framing expectations for the data in particular, where does enrollment stand at the moment? And how should we think about the opportunity here given the challenging patient population?

It's a very difficult disease. I think -- we know that the investigators are very excited about this product. So again, we have not provided guidance on timing of the data release, but we know our investigators are very excited about this product. It's a very difficult disease. I think -- looking at the potential commercial opportunity of this, there's 2 levels, right? I think for first line relapsed/refractory, I think we can potentially get about 10 to 20-plus percent of the market based on the fitness of the patient for stem cell transplant, for example, depends. But I think there's a very good opportunity for us for patients that undergo stem cell transplant and potentially relapse within 6 months. And in that market, our view is the potential we can get up to 30% of that market just based on consultants and KOLs. So we think there's a sizable commercial opportunity. Obviously, some of this needs to be supported by data. But it's a very difficult to treat disease. I think the bar for that wouldn't be as high as AL from a CR perspective. But we're very excited, investigators are very excited, and we look forward to sharing the data when we have.

Great. So moving now to the earlier stage pipeline and partnerships. You have a collaboration with Cytovia Therapeutics to develop gene-edited iPSC-derived NK and CAR -NK cells. What opportunities could this unlock for Cellectis?

Sure. I mean I think for these newer technology Cytovia, for example, I think there's a lot of excitement around iPSC, a lot of excitement around NK cells. We've seen some very data from some other companies recently. From our perspective, it's a portfolio perspective, right? We can either invest and do this ourselves or we can work with folks who just hyper-focused on this type of platform, have a lot of experience in it. So that was a decision to partner instead of do this in-house. And the team at Cytovia, I think, have done a good job. They're very smart folks and they have a very good platform. So to the extent that we can use our platform to facilitate and accelerate their development, we're excited by it.

Great. And you mentioned earlier briefly the partnership you have with Iovance Biotherapeutics for gene-edited TILs. What is the opportunity here? And how do your respective technologies complement one another?

We're very excited by this program. And my last endeavor also looked at these type of PD-1 knockout programs. So if you think about it for a second, the benefit of cell therapy is ideally one and done, right? So -- and the other part of it is you think about it from a TILs perspective, I mean, we have our own solid tumor program, but the fact of the matter is the best clinical outcome right now for solid tumor cell therapy is still TILs. And the fact that the leader in this space wants to work with this as a huge validation. And right now, they have a late-stage development of using TILs with the monoclonal antibody that targets PD-1. If you think about it, if the goal of cell therapy is one and done, but the patient still needs to go into the hospital every 3 weeks for a dose of pembrolizumab or nivolumab or atezolizumab, for example, it's technically not one and done. So that's the first layer. So the fact that if we can provide a technology, the fact they use our TALEN technology to knock out PD-1, you actually are delivering on the potential of one and done. So from an administration perspective, it's a big benefit. Number two, from a biological perspective is also -- is very compelling, right? Because then you think of PD-1 as an exhaustion marker, the fact that you can down-regulate or knockout that in the T cells to be in the tumor microenvironment and not get exhausted, but all the other immunosuppressor mechanism or Tregs in the tumor microenvironment is very powerful. You don't need to make -- you don't need to be sure that the monoclonal antibody had the same level of penetration in the TME, for example. And the third point is, I mean, people in the antibody space are very well aware that checkpoint inhibitors cause autoimmune side effects in areas that's not near where the tumor is. We know that for example, combining PD-1 with CTLA-4, for example, a lot of patients get colitis, right? And it has nothing to do with lung cancer or melanoma, for example. So by actually knocking out of the gene at the TILs at the T cell level, you don't have those autoimmune side effects. And that's an actually critical benefit that our technology can provide compared to other ones that you have to combine with the monoclonal antibody. So we're very excited about this program.

Great. That's really interesting. And then just briefly, you all have an emerging portfolio of wholly owned assets in solid tumors. I think UCARTMESO and UCARTMUC1. Could you talk briefly about this, just what's your method for target selection and how these programs are progressing?

Sure. We also have program for [indiscernible] which we're very excited about for solid tumors. But for example, UCARTMESO, we had a publication in SITC in November last year where we combined it with a knockout of TGF-beta receptor, right? Again, very similar logic is knocking on PD-1. We look for targets that are CAR targets as well valued in solid tumors and where we can use our technology to modify certain gene targets that are highly synergistic. So in the case of MESO CAR-T, with TGF-beta receptor knockout, you think about these CAR-T goes in the tumor marker again. And the TGF-beta, for example, will modulate from an immune effect, immunomodulatory effect on these CAR-T to basically prevent them from doing everything they're supposed to do, right, either getting exhausted faster or just getting the shutdown earlier. So the fact that we can knock out these genes provide a very potent approach to solve some of these immunomodulatory effect that's in the tumor market environment. So that's just an example that we published, for example. So from a strategy perspective, solid tumor target that are highly synergistic with gene knockouts that can actually facilitate the improved penetration and proliferation in the tumor macro environment.

Great. Just moving to our last question here to wrap up. What aspects of the Cellectis story do you think investors may be underappreciating? And where should investors spend more time?

Sure. Well, obviously, Matt, you're more aware of the current market environment than I am because I'm sure you talk to companies all the time, you talk to investors all time, but we're in a very unique market situation. But I would say what I want investors to focus on, and this is coming from sort of the value investing perspective, it's just at, I would say, on the first level, our collaboration partnership with Allogene and Servier, any way you look at it, that already provides a valuation floor that is greater than our market cap today. I think that itself is one thing, just from a pure financial investment perspective. And then if you look at our wholly owned clinical product, some of them are very, very exciting. We have, I would say, more near-term derisked asset that's well validated like UCART22 for example. And then we have potential blockbusters like UCART20x22 that goes after lymphoma, that can really allow a dual CAR system to be allogeneic and go into the community hospital setting beyond academic centers. So that has true blockbuster status. And then we have a very interesting product, I would say, in UCART123 and CS1 that actually takes advantage of some of the current development as we speak in immunotherapy. I mentioned earlier, CS1 benefits from the fact that BCMA is significantly expanding the market for multiple myeloma, and we will significantly benefit that from a commercial perspective. So -- and all of that, given where the market is provides significant upside to investors. And then we also tap into some of the newer technologies. I think we are not one to dismiss newer platform like TILs or iPSCs or NK, we think they're interesting. We just think from a management focus perspective, we much rather work with folks that have a lot of experience or in the case of Iovance best-in-class in TILs and benefit from that than to divert our financial and management resources to do that ourselves. So I think from a portfolio perspective, what I would like investors to think of it in that perspective, the partnership sets a floor based on current valuations. And our wholly-owned program just provides a lot of upside from an investment perspective.

Great. Well, with that, Bing, thank you very much, and we look forward to the next company updates soon.

Great. Thanks, Matt, and thank you for letting us present.