CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

Okay. Welcome to the afternoon session of the Bank of America Healthcare Conference, virtual Vegas. Hopefully, next year will be in-person Vegas. My name is Geoff Meacham. I'm the senior biopharma analyst here at BofA, and got Greg Harrison with me as well. And we're thrilled to have CRISPR Therapeutics for this session. And speaking on behalf of CRISPR, we have Sam Kulkarni, CEO. Sam, how are you doing?

Good. Thanks for having me, Geoff and Greg.

Yes, of course. Do you want to give a quick background or, Sam, just a couple of minutes and then we can get right into some questions?

Yes, happy to. As we come up on half the year here in 2021, we feel very good about what we've accomplished over the last few years and where we stand with respect to our programs and our portfolio. More importantly, we've also built a lot of capabilities. Pleased to say that we're over 450 people now at CRISPR. We'll have our own manufacturing facility come online next year and our new R&D headquarters in South Boston as well. So we're in the midst of COVID, and in this global environment, we continue to make solid progress on all fronts. From a program standpoint, we have provided updates on CTX001. We just had the EHA abstracts released today where we show data now for -- or at least in the abstract, there's high-level data for 10 thalassemia patients and 4 sickle cell patients. If you recall, last ASH, we had data for 7 thalassemia patients and 3 sickle cell patients. So there's -- we continue to make progress there and show that CTX001 can be transformative for these patients and potentially curative. And we've now streamlined operations in the Vertex with the recent deal that we announced that not only allows for a seamless global launch of CTX001 should we get approved, but also aligns us the operations well against the capabilities of both the companies, Vertex and CRISPR. And so we're well positioned on CTX001 to take on the leadership mantle in the space for patients that really need and deserve a curative therapy. For all our immuno-oncology products, we have -- we continue to make progress. We have 3 different CAR-Ts in the pipeline, where we're conducting trials, which we'll have readouts for CTX110, CTX120 and CTX130 this year. For CTX110, this will be our subsequent data release because we had some initial data release last year that showed that the drug was active, and we saw responses in patients suffering from relapsed and refractory DLBCL. And this year, we'll have data for more patients with a longer follow-up. And for CTX120 and CTX130, there'll be initial data releases given the trial started later for those 2 programs. For CTX130, interestingly, we have trials in both heme malignancies as well as solid tumors. So plenty to look forward to. And lastly, I'll say that we also will bring our regen med program, which we're partnered with ViaCyte on, to the clinic, and that should be exciting or not just type 1 diabetes patients, but also type 2 diabetes patients.

Great. It's a great background. Thanks, Sam. Yes. Let's dig into, first, some of the more recent news. So if you go back to last week for the Nkarta deal, this gives you the capability that [Audio Gap] therapies. Just wanted to get maybe the background for this and then how you think about this CAR NKs relative to efficacy of CAR-T. Just want to get a sense for maybe the strategy there.

Yes. At a very high level, our fundamental thesis is that genome-engineered or smart cells in cancer is a very good bet. I think we've gone from an era of small molecules against cancer to antibodies, and now we have this era of cell therapies against cancer. And what we're seeing -- while we're seeing very encouraging data with cell therapies, it's becoming clear that genome-engineered cell therapies are going to be down much better. So we're doubling down on that fundamental bet. With T cells versus NK cells, it made a lot of sense for us to start with T cells because that was the most proven of all the cell platforms, but we're seeing encouraging data from NK cells. And much like our bodies that use different kinds of immune cells to fight pathogens, it makes sense at the end of the day to use more than just T cells, potentially T cells, NK cells and B cells to fight cancers. And we're diverse. With this deal, we'd not only diversify our bets from T cells and enter into NK cells, it may actually be synergistic in the long run where you can put NK cells and T cells together in eliminating cancers and potentially providing cures. We're also very fortunate to be able to partner with Nkarta, which -- who we view as one of the best-in-class companies in the NK space. There are a lot of companies trying to do NK cell therapies. But Nkarta, right from the scientific founders all the way to the technology they've developed to the manufacturing capabilities, we thought were very mature and give us the best chance of pushing forward a platform that could be powerful in the future to clinic as quickly as we can. So overall, very pleased with the NK-Nkarta deal, and we're basically kicking off the collaboration so that we can bring more than one program to the clinic in short order.

Is it just on that point, Sam, do you think it's reasonable in the next, say -- is it in the next 12, 18 months? Or what's your -- what's kind of your general time lines for getting into the clinic?

It's not unreasonable. I think we just want to wait until we kick off the collaboration, get the teams together to really pressure test all the aspects given that there's complementary expertise from both ends, I mean, coming to bear on these programs -- all these programs. I think once we have those discussions, that sort of brainstorming and coming together of the minds, we'll have an update.

Okay. Okay. Perfect. And just on the data today, so from looking at a high-level perspective, it's kind of what we had thought is you have a bigger end, more patients and longer follow-up for beta thal and for sickle cell. Just if there's anything else that you can talk about in the context of the abstract, that would be helpful. But I mean, the efficacy, obviously, has been fantastic with a very nice durability of effect.

Yes. And the data just reinforce that consistency of the effect that we're seeing from CTX001 across patients, whatever the genotype is, whether it's beta zeros, non-beta zeros. Across all thalassemia patients, you're seeing a very similar and consistent effect of elevation of fetal hemoglobin. With sickle cell, you're seeing patients with varying degrees of VOCs per year or severity coming into the trial all benefiting from this therapy, and they're all VOC-free since treatment, which is remarkable for these patients. And the notion of consistency and durability with the safety being consistent with busulfan conditioning gives us increasing confidence around this program -- frankly, increasing excitement that this can be something that can be brought to patients broadly in a commercial setting.

Now you've mentioned that this trial should be, I think, fully enrolled by the end of this year and, obviously, looking towards filing for approval. Obviously, this data seems very supportive of that and what we've seen of the profile of 001 so far. But with this -- the FDA seemingly becoming more conservative on gene therapies, and possibly they would have that same attitude towards gene editing, what do you think the risk is to your approach? And how can you mitigate that to ensure that you can move through the clinic without a necessary delay?

Yes. Yes, I wouldn't characterize the FDA stance as conservative on gene editing. I think they're appropriately cautious around any new modality. But one of the big differences between gene therapy and gene editing is the fact that, in gene therapy, there's inherent variability. Whenever you're dealing with viruses, it's a very stochastic process from a manufacturing standpoint. You will get viruses that have empty capsids, for instance, or viruses, a drug product that is highly variable in output, for instance, in the autologous CAR-T settings using lentivirus, you see very different results from the manufacturer. And it's not because any of the companies are not doing their job. It's because it's a -- from a biology standpoint, it's an inherently variable process. Gene editing, on the other hand of the scalpel, you're like doing -- having a much more deterministic way of making drug product and that is resulting in consistency that is now reflected in the CTX001 data. And I think that's going to give the FDA a different way of looking at it. If you look at the 2018 guidance from the FDA around cell and gene therapies, one of the biggest concerns they have is variability. And if you take away that variability, you will have an easier path towards approval and the quality bar will be different. It's always a high-quality bar, but I think the thresholds are easier to cross. And I think -- so I don't think you can necessarily extrapolate what you've seen in gene therapy or gene editing. And in fact, that may be one of the competitive advantages that gene editing have over the gene therapy platform.

Great. Yes, that makes a lot of sense. Maybe we can talk a little bit about the market opportunity here. Obviously, whenever you report data like these, that obviously has to increase patient interest. But how far up the severity scale could you go with in, say, sickle cell patients? Would you be able to treat patients that are maybe less severe, more moderate disease? And what would you say that does to the pharmacoeconomic argument for what we assume will be a costly treatment?

Yes. I think the primary driver of patient demand will be the risk-benefit equation. I think to go through a transplant procedure, our sense is you need to be suffering from reasonably serious disease, which is we would define as greater than 2 VOCs per year in our protocol, right? And that the VOCs, or vaso-occlusive crises, being the most objective metric. There's other things that patients have to deal with, obviously, like chronic pain and everything else. Now even with that sort of metric, you're looking at 45,000-odd patients in the U.S. that are considered severe, that would all be eligible potentially for a therapy like this should this get approved. Now that doesn't stop anyone who doesn't have 2 VOCs per year to say, "I want to benefit from this disease because I don't want to live with the chronic pain. I don't want to live with this disease. And I'm still young and it's only going to get progressively worse. I want to get this done now, right?" I think you can't deny those patients a therapy like this. The pharmacoeconomic argument is not going to be on a case-by-case basis. In the aggregate, it does make sense, from a pharmacoeconomic standpoint that you've seen the patterns over time. All these patients tend to get worse over time, and the cost of treating these patients or caring for these patients is well above $300,000 a year once they get severe. But more importantly, the pharmacoeconomics, while they support the reimbursement and everything else, to me, it's unconscionable if a country like the United States cannot pay for a life-changing or curative medicine or a patient population that's been largely ignored for years or decades. And if there's a therapy that's available and the system cannot mobilize to pay for this, it's a shame.

Yes. Sam, just a follow-up on that. I mean if you -- we had a discussion with JJ from BioMarin, and he was talking extensively about the ICER recommendation. And even if Roctavian has a $2.5 million price tag, that's still economically extremely attractive given the standard of care. I would say in beta thal, sickle cells, same thing, right? There's a pretty well-established economic impact in these markets. Would you -- a, would you agree with that? And b, what else would you seek out to help support that? Would it be post-marketing studies? Would it be ICER? Are there other elements that you could do to -- other things you can do to kind of support the economics of it?

Yes. I mean, I think we may not need to do too many post-marketing studies, and the answer is pretty clear. On sickle cell, CMS released some data last year in terms of what the burden of disease is from their database. And it's the number of emergency room visits, the number of hospitalizations that these patients go through. It's very clear that the cost for caring for these patients is relatively high on a per-year basis. And even without considering the fact that you're adding life years to these patients, you're -- this isn't a chronic state without considering what happens in the acute state. Beta thalassemia, you see all sorts of organ damage that come into play later years of life. So -- and then obviously, you haven't even considered the cost of -- or the benefit of productivity that these patients will return to being normal productive citizens of society. And there are so many arguments. So I don't think this is a marginal argument. And so while we'll do what we need to do in terms of health economic studies and providing and consolidating the support for a therapy like this, I think the arguments are quite clear that this is very beneficial to the system.

Right. Okay. That makes sense. Well, let's switch gears to the immuno-oncology portfolio. So you guys have had some data on CD19 and then you still have for this CTX110 and you had data for CTX120 and CTX130 likely there later this year. What's kind of the -- has COVID affected the enrollment or the progress of some of these? And are we still looking forward to having data from these 3 programs over the course of calendar '21?

Yes. I think we're on track. We'll have data from all 3 programs. COVID did have an effect on early days when I would say last -- sitting there last April or last May, we were trying to figure out how to do trials in various sites around the world when we can't fly over, we can't open new sites. But -- humanity has a remarkable way of learning, and necessity is the mother of invention. And in some ways, we've fundamentally figured out new ways of opening new sites, training sites, monitoring sites all through Zoom or any other -- or WebEx for that matter. I think that's here to stay. I think our drug development is going to become inherently more efficient as a byproduct of COVID, if you're looking for any solar linings. And that business transformation under a crisis has happened across the industry, but it's starting to happen in biotech as well.

Got you. And when you look at CD19 and BCMA, obviously, there's a ton of competition. If you were to look forward a year or 2, what do you think are the biggest differentiation points? Is it something on the safety tolerability side? Is it lower CRS rate? Is it conditioning regimen? Or is it the typical endpoints durability of effect then and kind of response rate?

Yes. I think the way I see it at least is I think over the next couple of years, there's going to be a threshold set for a response rate and durability. Let's say, in DLBCL, you want to have 1 in 3 patients get to a 9-month complete response or something like that, right, as sort of this threshold effect. And then beyond that, there's so much variability patient by patient. It's hard to say how you compare. And so once you have the threshold set, safety is going to come into play. CRS is a big factor. I think if you look at all 3 different autologous CAR-Ts now, one of the things that's moving share is safety. And I believe that allogeneic therapies will end up being safer than autologous therapies in the long run from that standpoint and convenience. I think why go through autologous when they can have something off the shelf? So my sense is if products meet the efficacy threshold or bar, then a key differentiator in share is going to be safety and convenience.

So moving on to CTX130 where you're going after some solid tumors there. Can you talk about where you see the most differentiation within that program? Whether it's the edits that can prevent exhaustion or the indications that you're going after in solid tumors?

Yes. I mean I see it in 2 different angles. One is establishing cell therapies in solid tumors, right? There has been -- there's 0 data at this point on allogeneic therapies and solid tumors, right? So if we have any responses, we'll be breaking new ground in terms of cell therapies in solid tumors. So it's a pretty big moment for the field in a way to see if this allo therapies do work. I mean there's some evidence for -- there's some good data from TILs in solid tumors, but even auto CAR-Ts haven't worked in solid tumors. So CAR-T working in solid tumor is a pretty big thing. But then I always say, okay, that's a big thing, sure for -- but what is the competitive dynamic? Is this a market? Is this a business? And take an example of renal cell carcinoma, where we have our CTX130 trials. When you get the third line setting, it's pretty weak. There's not many options for those patients. There's a large number of patients that end up with -- end up in third line renal cell carcinoma, and they don't have any options. 10% CRA is a huge deal in our space, for instance. We got the PD-1s approved. So the bar is low. Patient population is -- addressable patient population is high. And if we see any activity or response, it's a pretty big thing for the field.

Okay. That was kind of going to be my next question is what expectation would you have for data that you would consider positive in solid tumors that would give you confidence in the approach in moving on to later-stage trials? I mean is there any responses? Or better than the 10% response rate you mentioned? Or kind of what would lead you to believe that it's working and is worthy of pursuing further?

Yes. I mean it depends on the audience, if you ask any of these key opinion leaders in CAR-Ts from Penn or Chicago or any of these places with cutting edge or Memorial, MD Anderson, they'll say that any activity for CAR-T in solid tumor is a big deal, right? It's an important advance for the field. But we always have our eyes on the ball in terms of particular indication. I think we want to see at least a certain rate of response within these patients. The second thing, again, is durability. You always want to -- there's a balance between response rate and durability. And from a safety standpoint, anything you do with CAR-T is going to be much better than what they have to deal with other therapies right now anyways. It's the safety profile of some of the TKIs and stuff that is not great for these patients, and they stay on it for a long time. So the borrower is not relying on safety either.

And Sam, just to tie in for the CTX130 program, the NK component of it. I mean we've seen multiple targeted therapies go from monotherapies to doublets. That's true for IO. That's true in a number of indications. That's a lot of complexity, though, to have different cell populations, right, a CAR-T and a CAR NK. But is that something down the road that you think is reasonable to tie in different elements of the immune system, both adaptive and innate? Or are we not there yet in terms of trying to figure out these pathways?

Well, it's not hard. I think -- let's say, you start with the same donor, an allogeneic donor and you make -- you take a split it and make CAR-Ts and you make NK CARs, you don't see why you couldn't combine because it's if you have different donors, obviously, it's a very difficult proposition. And that's why this partnership is very important, the Nkarta partnership, because we have that T cell capability, they have an NK cell capability. We can source from the same donor and make something that's compatible, which is -- it's very difficult for a company that's only NK or only T to do that because they can't just take a different on-market product and try to combine it. It's too complex. But as we reduce L time, we certainly can provide that sort of product that, that could be synergistic.

Got you. Perfect. Yes. And when you think about all the different programs that you have, obviously, you have 001 that's advancing. I mean Vertex is taking a leadership role there, but your IO program is yours. You have a ton of the things in development. Talk a little bit about manufacturing and how much of an investment you have still to make in that part of the business and how important that is from a strategic standpoint.

Yes. Very critical in cell therapies. I think so we invest -- made our investments starting 2 years ago in building our own manufacturing, which should come online early next year in the Boston area. So we're quite pleased with having that capacity and the flexibility. We'll still continue to use the CDMOs because we'll have more demand than supply. But given having that flexibility on our own is very important. And if anything, we may expand it even further in the future because if you start seeing success with one CAR-T, likely that you're going to see success with other CAR-Ts involved given its impact you see. And so we'll continue to make that a priority, I think. And not to mention the talent associated with manufacturing is critical in ensuring timely BLA filings and timely advancement of the programs.

And from a pipeline perspective, you have a lot of rare diseases later on -- earlier stage in the pipeline. From sort of a priority standpoint, where would you put those were -- obviously, we're not close to having data on that. But I'm assuming that the CF program may be the first to kind of have to win the race in terms of -- first to have clinical data. But are there other programs that you think you could advance pretty fast on sort of the rare disease side of things?

Yes. I mean, I think we've now essentially become half oncology, half rare disease company, if you look at it. On the rare disease side, there's thalassemia and sickle cell, but the next one would be regen med, which is type 1 diabetes as the next rare disease we can go after. And then beyond that, I think we have a whole group of programs that are all moving at a similar pace, whether it's hemophilia, cystic fibrosis, DMD, GSD Ia or DM1, they're all kind of move in a pack. And so you'll see a bolus of things coming to the clinic beyond the type 1 diabetes program.

In the manufacturing capacity, is there to move all these into the clinic looking to '22 and then beyond?

Yes. I think we're -- we're building on it, right? I think today, do we have capacity to do all that? We don't. I think it's complex. And we also don't want to invest ahead of where we need to because it's not capital-efficient. So I think there is the right timing for each of these programs where we kick in, what we can call it a development candidate nomination. And at that point, we kick into manufacturing resources for all these programs. But I think, over time, we'll internalize the manufacturing for all of these, but early days. We'll use -- continuing to see CDMOs more efficient. But there's a lot coming. I think overall, we're just quite excited that there's a bunch of rare disease indication that are all making progress. In vivo just take longer, but once you get there, it can be a very competitive product.

100%. All right. Well, that we're out of time. So Sam, thanks for the time. Really appreciate the time.

Thank you for having me. Enjoy your day.

Bye.