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

Good morning, everyone. I'm Anoumid Vaziri. And I'm joined on stage with Bing Wang, CFO of Cellectis. Bing, thank you for being here with us today.

Thank you for inviting me.

And so to start, Cellectis is a clinical stage biotech company using its TALENs gene editing platform to develop allogeneic cell therapies. Could you provide an overview of your portfolio, both on the partnered and the wholly-owned assets and then discuss how you're differentiated as a company in the cell therapy space?

Great. Thank you very much. So I would say we would put our portfolio in 3 buckets. The first is our wholly-owned clinical asset. So we have UCART22 going after ALL. We have UCART123 going after AML. We can go into that in details in a bit. And then we have UCAR20x22, which is the first off-the-shelf dual CAR-T in clinical study right now, and that's also in our portfolio. So those are assets that we have wholly-owned economics. So that is the first bucket of our portfolio. And we're very excited with potential readout on all 3, either towards in Q4 or Q1 of next year. The second bucket are our partner product, the CD19 CAR-T also off-the-shelf, partner with Servier and Allogene. I know Allogene just presented here, I believe, a day or 2 ago. We're very excited by this data. We also have other asset partner with Allogene that includes target that goes after BCMA for multiple myeloma as well as CD72 for renal cell carcinoma. So all very interesting targets over there. And then we also have a partnership with Iovance and we're very, very excited by this asset class. In particular, because if you were to think about the broad application of gene editing, it falls into 2 buckets, right? The first bucket are the ones that I just talked about in our wholly-owned portfolio with Allogene-Servier, which focus on access, which focus on manufacturing to make them off-the-shelf. But the second use case of gene editing, at least within oncology, is to make these cells more robust in the tumor microenvironment. So this is the use case that Iovance is using with us. And again, we're very excited by this. I'd like to, I would say, brag a little bit in the sense that from the time that we signed a deal with them to the time they got into the clinic, it was 2.5 years, which is, I would say, a record among gene-editing companies in terms of working for our partners. So very excited by this in terms of second use case. So this is the second bucket. We also have earlier-stage partnership with Cytovia, with Primera using base editors to look at mitochondrial diseases, for example. So -- and then -- so in the third bucket, we had an order in the third bucket, I would say, our more early-stage platform, technology platform, which again goes into Cytovia to look at iPSC applications and base editors. So this is a program we have with Primera in looking at the application of TALEN-based editors in looking mitochondrial diseases. So to summarize, 3 big buckets in terms of our portfolio, wholly-owned clinical assets are on Phase I. Although for UCART22, we potentially can hit registrational in 2024, we'll have to see. And then we have a late-stage partner program with Allogene and Servier and Iovance as well in Phase I. And then we also have more of a platform approach, looking at iPSC and looking at base editors as a third part portfolio. So technology access.

Great. And so to date, there have been several hurdles facing the allogeneic field. I guess in this context, can you frame where the field stands for us today? And I guess, what are the remaining levers of optimization required to bring the profile to the level of autologous CAR-T?

Great question. I think we're in a very interesting and exciting time for off-the-shelf CAR-T cell therapy. First and foremost, as we've seen from a lot of the leaders in autologous CAR-T, whether it's CD19 or BCMA, manufacturing access is a key hurdle. And they're actually interrelated. You think about, again, great data, phenomenal data coming out of -- I would say, coming out of Kite phenomenal data, coming out of Legend and J&J, kudos to them for really providing this type of transformative therapy to the patient. However, as we heard from even the leaders of some of these companies, they go into a new hospital, they're getting 1 to 2 new patients a month. So the fundamental bottleneck is not some big pharma can drop $300 million and create a new vector plant and solve manufacturing problem. We think the fundamental bottleneck, at least in the United States, is there's only 150 transplant center in the U.S. across 38 states and Washington, D.C. That is something that is very hard for any, I would say, biopharma to change even with the capital investment because that is a structural limitation of the U.S. health care system. So I think with that in mind, Allo has an excellent opportunity to really just -- not just, I would say, take over market share from autologous, but to actually expand market share. For some of the indications, in particular, say, non-Hodgkin's lymphoma, where there's a lot of patients being treated in community hospital channels, which doesn't want to deal with this vein-to-vein cold-chain logistics situation. And to provide something that can be sort of local liquid nitrogen tank, I think it's a phenomenal opportunity commercially. So I think we are at that time where, I would say, in combination with us and our partner in Allogene really pushing the use case for off-the-shelf and really expand access, and that's absolutely critical for Allo. And I think we're definitely a leader in this space.

So Cellectis has invested significantly in its manufacturing capabilities. And in the context of cell therapies, manufacturing is vital. So as one of the few gene editing cell therapy companies with its own operational GMP facilities, could you talk about your current capabilities and why it's so important?

Great. Thank you. We'd like to say we're the smartest in terms of having created end-to-end solution manufacturing. But the honest truth is I think every cell therapy company has to go through this learning process. It's just that we paid our tuition 3 years ago. Okay? And manufacturing is not just making one component. I think you have to understand that there's a lot of input component in going to, in particular, gene editor cells, right? So what we have is that we can make the buffers, the plasma, the MRAs of vectors in Paris, and then we make the final cell products in Raleigh, North Carolina. And the fact that we have the entire supply chain and is absolutely critical to making, I would say, best-in-class products. And we can go into the differentiation of our in-house made product from the CDMO product in a bit. But the ability to optimize not just a single component, but to optimize from a system perspective is very critical. I'll give you a very specific example. And again, I won't mention any names. But if you were right now in cell therapy, any CAR-T company or any cell therapy company, if they want to make -- whether it's Allo or autologous, they want to make any set of cells for any target, they actually need to get a CGMP batch for vectors. So they spend 3 to 6 months negotiating a contract and then the CDMO that make the vectors, will make the vectors, go through engineering runs, production runs, CGMP runs. And after maybe 1 year, 1.5 years, it has a product that fulfills a release criteria that sign in the contract and then it goes into either the in-house cell manufacturing plant or CDMO making the cells. Once that release criteria is met and that thing is made, there is no incentive for that manufacturer of vectors to improve on the product. So -- and again, this is not a comment on them. This is a business decision. However, when you have the input materials, including, for example, vector design and the cell manufacturing and the process development, all in the same enterprise, you can continually optimize until you get the best product. And we're, again, without missing specific names, we're seeing this in the -- for example, in the BCMA space, right, where companies that have control of the vector engineering and the cell and process development have, I would say, right now the best data out there.

And I guess having your own end-to-end manufacturing facility, do you think that gives you an advantage in terms of time lines for approval with respect to other companies that need to outsource their manufacturing?

I would say -- so I'll hedge this answer a little bit. I would say, 1.5 years ago, this is an absolutely critical capability because the CDMOs are so jammed up, right? So the fact that we don't have to worry about, "Hey, there's a delay in an input material." It cascades down through, say, a time slot at the CDMO for the cells, and then we may lose that slot, for example, because we didn't get there in time, right? I would say 1.5 years ago, that's a critical, I would say, core competency, as a differentiation. Although these days, I've heard that a lot of CDMOs are running at 50% capacity given what the market is. But that being said, the ability to just tune and optimize the whole supply chain according to our needs. And when we have a new product in the pipeline, we need to optimize it, we can just feed in and not worry about resigning contracts and slots. I think it's an absolutely critical advantage.

Okay. So let's get into the pipeline, Cellectis' core portfolio. So the first program, UCART22 is a Phase I/II allogeneic CAR-T targeting CD22 in acute lymphoblastic leukemia, where we saw early dose escalation data at ASH last year and then some additional data at EHA this year. I guess from the data that we've seen today is from both the CMO manufactured products and then the in-house product. Can you frame the efficacy and safety profile to date in the context of the unmet need in ALL?

Sure. So first, we -- both the EHA data and the data that we actually webcast in mid-December are all made from the CMO. And that data in itself actually shows very good response. I would say, right now, the leads we have is 3 out of 6, at 50%. Again, published from EHA. I think this is actually a very good outcome for a set of patients that basically is refractory everything else. These are transplant refractory, CD19 CAR-T refractory. So these are a set of patients where basically there's no other options. And we are able to get, I would say, 3 out of 6, 50% response rate is very promising. And again, a lot of the details in the presentation on the outcome of the 3 responders. So I think we're very excited by this data. On top of that, as we've seen in our own in vitro study, that in-house made product is, I would say, probably at least a log improve over the CDMO product in terms of potency. And this is why right now, we are doing -- repeating that. So the -- however, from dose level 3 to dose level 2, just because we have the log improvement in potency. So we're very excited by this. And I would say, we can replicate the same set of 50% response rate that we saw. For this target patient population, it will be considered a success. So we're very excited by this. And then the other part I want to highlight is related -- in particular, very related to UCART22 is that this is a target product and patient group where we have seen from the early set of data that Allo, in particular, Cellectis' Allo CD22 is superior to autologous CD22 CAR-T. Again, small numbers on all sides, but you've seen in some academic publications from Stanford, from UPenn and ASH in December that they have autologous CD22 CAR-T that we actually have, I would say, better durability data than the autologous program. There's this allo versus auto conversations been going on. I would say we have to look at these case by case. And in the case of UCART22, allo is superior to auto, right? It's a function of the superior product we made, but we also has to do with the patient population. A lot of patients have gone to the stage of CD22 CAR-T probably have failed all the therapies, probably have failed CD19 CAR-T. So these are patients where they're -- the lymphocytes are just not that greater shape to make the implant material for an autologous CAR-T product. We use healthy donors. We think that, that contributes to the fact that we're seeing better outcomes for these patients. Again, I want to be very, very conservative saying, in this small for all sites, these are Phase I studies. At least we're seeing early signals where we have a superior product.

So the trial is currently enrolling at dose level 2. Can you provide us an update with how enrollment is going? Are there any headwinds that we should be aware of in terms of site activation or patient recruitment?

Yes, enrollment is going very well. I would say, again, we're going after a patient population where there's critical unmet need. There's no other options. So from an enrollment perspective, we're pretty confident in providing the same set of guidance that we provided earlier this year and the potential data readout in Q4 of this year.

So I guess could you frame expectations into the data readout at the end of the year? And do you think that you are getting pretty close to identifying the recommended Phase II dose at this point?

Yes, I don't want to provide too much color, I would say, on the data readout. I would say, we can get close to where we are from the office -- from the CDMO manufactured product in December. I think it's a pretty good outcome for patients from a response rate and durability perspective. So I'll mention that. And I think that's all the color provided there. In terms of recommended Phase II dose, I think potentially by early 2024, we can have some visibility there. We want to see what the data looks like as we print that. So potentially 2024 is -- the first half of 2024, we might provide some guidance on registrational pivotal design for UCART22.

Are there any significant differences in the performance of the product that comes from the CDMO and the in-house product?

Yes. So yes, as I mentioned earlier, we're seeing about a log improvement in potency of our in-house manufacture product versus the CDMO manufactured product. So at least from an in vitro study perspective, the human data is still, right, to be seen.

And you're not going to need to do any comparability studies as you move into later phases of the trial?

We don't think so, at least not comparability study with respect to our in-house manufactured product, at CDMO, we don't expect that we need to do that.

So the next product from the portfolio is UCART123, which targets CD123 in acute myeloid leukemia. And we did see CAR-T activity in 4 out of 16 patients at dose level 2. Can you frame the efficacy and safety profile to date in the context of the unmet need in AML?

So it goes without saying, AML is a very tough disease. Of our 3 clinical program, AML, it's -- again, it's very, very tough. We've seen even in recent days, some of the failures in this space. So what we saw, I would say, in the cohort that uses FCA preconditioning is 2 out of 8 with very good response. And among those, one was able to get the black down far enough to get a transplant, which in many case, I think, is what the hematologists would want to get to, right, to get these patients into transplant. So we had one case of that of the 2 out of 8 FCA responders. And this is in our ASH presentation in December. The other patient, as of -- when we presented that data in December has been alive for over a year. And in this disease population, where that patient was refractory for everything else, literally had probably weeks, being able to extend survival by year is meaningful. Albeit, this is still 2 out of 8. So call it, 25%. This is not a very high CR. However, just from talking to some of the folks that have more experience -- commercial experience in the field, they recognize AML is a very tough disease. And what they saw though that they like is a durable response. The fact that the responders do very well. And obviously, everybody would love a 50% CR in 3 years. But in terms of our profile, I think it bodes pretty well based on what we have right now. And what we're trying to do now, having a 2-dose regimen is to improve upon that, 2 at DL2 so that the first dose can, I would say, debulk the tumor significantly. And then the second dose, 14 days later, really just cleaned up any potential residual cells. At the same time, minimizing the CRS, which is a big problem, both for the target 123 as well for AML patients.

On the 2-dose regimen, has that impacted enrollment in any way? Has it caused a slowing of recruitment of patients?

Not quite. I would say, patients that need this treatment, whether it's 1 dose, 2 dose, it hasn't changed in terms of the demand. And from a supply side, well, we have enough product to give the 2 dose. The one thing that will happen though I think, it extends the amount of time that we need to basically get patient recruitment because before for one dose is 28 days, for 2 dose because between dose 1 and dose 2 is 14 days, now it's 42 days between patients.

And having the 2 doses, what gives you confidence that safety won't be impacted?

Sure. So in the ASH presentation, when we went from dose level 2 to dose level 2i, there was one case of Grade 5 CRS, right? So we kept that at dose level 2. But we saw dose level 2 that the patients were definitely responding to the product. We just got to manage the safety profile. So we were able to give an anti-IL6 in dose level 1. Again, very commonly used strategy in CAR-T treatment. So that would actually mitigate some of the CRS we've seen. And on top of that, instead of having a higher dose, we have basically dose level 2, 14 days apart. And when you see the blast reduction, the peak, of the VCN, viral copy number, it actually matches very well. So that's where we take to 14 days. Really a combination of getting the patients all the cells they need to really eradicate the tumor. But manage the CRS, which is an absolutely critical point for this disease with both the 14 days apart as well as the anti-IL6.

So in AML, CD33 is also a well-known target. I guess what differentiates targeting CD123 versus going after CD33?

I'm not going to pretend to be an expert of CD33. My understanding is 123 is a more potent target and I would say, from an antigen expression perspective. However, traditionally, we have seen the CRS is, I would say, a bit higher than CD33. Again, I'm not the expert on CD33. So I won't go too deep on that. But I would say we're going after a more potent target. We just got to manage the side effects profile more diligently.

So your next candidate is UCART20x22, which is the first allogeneic dual-targeted CAR-T, which targets CD20 and CD22 in non-Hodgkin's lymphoma. Can you describe the commercial opportunity for the allogeneic dual CAR-T? And then where in the competitive scape -- landscape within the CD19 space would it fit?

Yes. We're absolutely excited about this product. I would say, this is the one product that has true blockbuster potential among our 3 clinical programs. ALL is not a huge disease, as you know. AML is a bit bigger, but going after non-Hodgkin's lymphoma, that for us, is a game changer, right? So a few things. First is that the targets itself are noncontroversial, CD20, CD22. So from our perspective, the mechanism of action is pretty derisked. And mechanistically, you think about a B cell, right, expresses multiple antigens. And by having multiple synapses, combining with the CAR-T, you actually have more killing. So imagine on the cell surface, you have a bunch of them that CD19, bunch of CD20 and CD22, the fact that you have more connections on that improves killing. So that's number one. So it's not just the fact that it's an orthogonal antigen or 2 orthogonal antigen of CD19 is the fact that we have more CAR-T connections to facilitate cell killing. So CAR-T can come in here, can connect with 2 CD20, 2 CD22 or 20 and 22. So these are all things that I think improves potency, number one. Number two, from a commercial perspective, the use case for off-the-shelf cell therapy is even more potent for non-Hodgkin's lymphoma than for ALL and AML because a large portion of these patients actually comes through community hospitals. So right now, we're talking maybe not so sunny Southern California. But a large portion of the people in California are covered by Kaiser, right? Kaiser HMO. They don't want to deal with cold-chain logistics. So to the extent that we have a product that can be stored in the hospital liquid nitrogen tanks. And by the way, if you don't have a liquid nitrogen tank, McKesson will deliver for you, right, not to put a plug in for them or anything. But access is not an issue at all. So the issue has to do with hospitals that just if you're not a City of Hope or Stanford UCSF, again speaking for California, you don't have that specialists. You don't want to deal with making sure that you, after leukapheresis, keep that liquid nitrogen cylinder upright when you flight across the country for your manufacturing and bring it back like they just don't want to deal with that. So when you have a patient population that goes through a community hospital channel like non-Hodgkin's lymphoma and you have a product that can be stored in liquid nitrogen tank, I mean, the commercial opportunity is significant. This is a case where I think a true allo product wouldn't necessarily only take market share away from autologous. And by the way, there is no autologous 20x22 as far as we know, that's in anywhere being close to improve, but it would actually expand the market because now if you are a community hospital where now if you're a Kaiser, you might get referred to a Stanford and UCSF. And by the way, the insurance company still pays for it, even that patient goes out of network. Now you can actually treat it in-house and manage our costs a lot more efficiently. So the fact of the matter is, from a hospital level, you have an auto CAR-T, you have AlloCAR-T, regardless of the price for 2, use at the same price, hospitals make more money from Allo. They don't need all the PAs and nurses and the real estate on the infusion chairs, right, on the transplant center to deal with all that. And again, I'm only talking about 150 transplants in the U.S., right? But hospital make more money from Allo, even if they could do both. Now we have a patient population that is perfectly suited for community hospital. So I think the commercial opportunity here is huge. So I think we're very, very excited. This is definitely where we see multibillion-dollar blockbuster status.

Is the ideal setting for this product in the post CD19 CAR-T setting? Or do you think that there's a place for it ahead of that?

I think the initial set will probably be, I would say, CD19 relapsed/refractory patient population. I mean the fact of the matter is CD19 have been approved for what, 5, 6 years now. It's been a while. So it's a well -- it's got an installed base of people who now have treated. And unfortunately, there's also got an installed base of patients who are potentially refractory for it. So when that doesn't work, you can look at a CD19 refractory setting and then you look at the 2 orthogonal antigen that's very highly expressed that we have solutions for. So that's a pretty easy use case. And I think we can do potentially a pivotal study for that. Again, not to get ahead of ourselves, but I think that's a pretty -- was a straight forward, but that's easily designed study, right? If we're going to have to go head comparison against CD19, that's a very expensive pivotal study. And by the way, we have a dual CAR-T that includes CD19, that pivotal study will go against autologous CD19 CAR-T. That is an absolutely astronomical pivotal study because if you were to go head-to-head against a CD19 pivotal study, I don't know what is that 150 patients per arm. And the cost is about $900,000 to $1 million per patient in these pivotal studies. So you literally spend about $100 million, $150 million paying for your control arm. That is ridiculous, right, for a biotech to do, especially in this environment. So to the extent that we go through our -- we had to get through our Phase I first and, let's say, the data profile is attractive, and we think about a more registrational study later. By going after CD19 refractory, we don't have to worry about that as a control. So that'd be a lot more cost effective. And then we get that approved and potentially as an additional indication when we have that in the commercial setting, when the market cap and the capital market improves, then we can fund potential head-to-head. But again, that's way out in the future that we haven't really thought about. But at least for now, I think from an economic and cost perspective and cost of capital perspective, I don't think we want to go in the same line as CD19 for the dual CAR-T.

And through your conversations with physicians, what has been the overall feedback towards this dual-targeted CAR-T?

I would say, initially again, I'm second half from our CMO, but people are very excited about this. Again, going to the fact that if you're a relapsed and refractory from CD19, there really isn't any solution because this includes a patient population that transplant probably doesn't work, right? This is a lymphoma set of population and CD19 refractory, there's not much out there. So I think given the lack of other options for these patients and because CD19 has becoming standard of care for that line of therapy, that there's a lot of patients out there that are looking for solutions. And they realize this is a solution with a non-controversial set of mechanism of action and the product is actually very easy administered because of the fact that it's off-the-shelf.

Could you frame the first data that's going to come from this program?

We have to be a little bit careful. We're early stage. We're just doing early dose escalation. So I don't want to get ahead of myself right now. I would just say we're very excited, and this is completely made in-house beginning to end. So we're very, very excited by both the commercial potential as well as the quality of the product. I think the UCART22 is a very good example where we clearly show that there's a log improvement to our product because our ability to optimize at all levels of the supply chain over something that's made by 3 different parties. So I think the fact that our first dual CAR-T, 20x22 is made completely in-house has us very excited on the quality of the product. As you know, in cell gene therapy, the manufacturing is the product.

Are there other programs that you're most excited about from your early stage pipeline?

Yes. I would say we are absolutely excited about our base editor program. Right now, a recent publication we have a conference, we show we're able to do pretty good base editor, at least for C to T conversion. We don't have the complete library yet the way that Beam has for example. But I think the differentiation of the TALEN approach is clear. For example, we recently announced that we're helping a company called Primera, would license our technology to them to do mitochondria base editing. CRISPR goes into mitochondria and the protein just doesn't form right. Whereas TALEN, we don't have such an issue, right? So this fundamental protein, I would say, differentiation of TALEN versus CRISPR, at least in that particular use case. And in other areas, I would say TALEN have been shown to be a more specific, I would say, targeting gene editing just because you have a longer read. So just from [ simple commentary ], it's, right, 23 base pair, guide RNA versus 32 base pair. TALEN, we just have a more specific targeting. And all the use cases that you have with base editors out there are something that we can go after, albeit we're a little bit earlier stage in the development. But I think the potential is clearly very, very exciting.

And then in April, you entered into a partnership and supply agreement with Sanofi regarding the incorporation of alemtuzumab, which is an anti-CD52 antibody to the lymphodepletion regimen. How do you intend to incorporate it into the pipeline? Are there specific programs that you think would benefit most from the antibody?

Sure. And obviously, we use that in all 3 of our Phase I clinical product right now. I think for heme/onc, it's clear to us this is the best approach for AlloCAR-T, right? Because compared to other approach where you have, say, B2M knockout, for example, that is on or off. But using an anti-CD52 monoclonal antibody, for example, allows us to actually dial in the lymphodepletion and we can actually control what that looks like over time. So a very good example. We're using 2 dose for CD123, 14 days apart. We only need to do one round of FCA preconditioning, right, because of duration of alemtuzumab. So that ability to tune depletion and the duration of that with this antibody is -- I think it's the best approach for at least heme/onc applications. I can't really comment on solid tumors because that's still -- everybody sort of figures out how to hold off on that. But for our clinical program, it's absolutely in our market because that tunable capability, it's the best way to do it.

Okay. And then lastly, can you remind us as to where you stand in terms of the cash runway and what activities are you looking for that cash runway to cover?

Sure. We guided towards cash to -- into third quarter of 2024, that is still our guidance. We're focused currently on getting data for our 3 Phase I clinical product, and we're absolutely focused on that. And again, that cash runway was absolutely critical, and that is the interesting stuff is our CSO, CMO. I just had to make sure we have enough money to fund all that. And we have to make some not-so-fun portfolio decisions as a result of that, for example, where we think there's a lot of potential for our CS1 program. But as you know, better than I do, just given where the success of BCMA out there for multiple myeloma, recruiting have taken a bit longer. So from a portfolio perspective, we're going to focus on the clinical asset that can generate data in the near term. So to make sure our cash is able to deliver for that. So very critical, I think, having that cash runway through Q3, and that cash runway definitely allows us to generate 3 potential catalysts in Q4, potentially Q1 of next year. And then having some runway to, say, take advantage of whatever happens with positive data.

Great. And we're looking forward to seeing more data from the pipeline at the end of this year. Thank you so much for joining us today.

Thank you for the invitation.