CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

With that, Sam, thanks for joining us. And to start here, maybe just to kind of level set everyone on the business, what do you think of your various modalities, I would say, of in vivo gene editing, ex vivo gene editing, the allogeneic oncology platform and then the regenerative medicine platform will have the greatest impact on your future.

Thank you, Salveen, for having us at this conference. We've enjoyed coming to this conference for the last 5 years now. And it's always -- it's a great time to reflect on how the year is going. It's the midpoint of the year, and we're very pleased with the progress to date. To your question on which platform, we're bullish about all these platforms. I think, in general, we think that CRISPR, whether it's directly used to fix or make mutations or it's used to engineer cells as therapy will have a big wave that's going to change the nature of medicine and the way medicine is delivered. Within that, I think, obviously, it depends on the time horizon. In the next 5 years, we see a lot of impact with our immuno-oncology platform, on the company and the direction of the company. And if I take a 10-year or 15-year horizon, we think that regenerative medicine will have a tremendous impact. The ability to replace organs, if there's any failed organs or use the organs as biofactories to cure almost every disease could be transformative for medicine. I think that's something we're quite bullish about. But we think that all these fields, whether it's in vivo, ex vivo gene editing, they all will move forward and produce transformative medicines.

And you recently announced a partnership with Nkarta to codevelop and co-commercialize 2 CAR-NK cell product candidates, one targeting CD70 and one combining NK and T cells. Maybe just help us understand the strategy behind this given you have some overlapping programs here, too?

Yes. I think, we're quite excited about the partnership with Nkarta. I think it's a different type of collaboration between 2 cutting-edge biotech companies as opposed to the traditional biotech big pharma type of collaboration. We're bringing the best of our capabilities to enable a new frontier in oncology. Much like our immune system, which uses both T cells and NK cells to fight pathogens, we could use both T cells and NK cells to fight cancers. And if you have a collaboration where we're doing this together, and we're using the same source of cells, the same donor, you could conceivably make NK and T cell products that are synergistic. So that's sort of the big idea behind the collaboration. In the meantime, though, we also think that the 2 products, 2 cell types are going to be important in cancers. Obviously, we are still quite bullish about allo CAR-T in hematological malignancies. But as we look at solid tumors, you may need very high cell doses. And I think with NK cells, you can get to very high cell doses with very little side effects and it's a cell type we want to expand into as a company. And we thought -- as we looked at the landscape, we thought that Nkarta is one of the best in the space and bring a lot of know-how, expertise, experience and manufacturing capability to the mix, which made them an ideal partner. I think together, we hope that 1 plus 1 equals 5, and we can move very quickly in bringing those NK-CAR products to the clinic.

And then we've already talked about how diverse your portfolio is, but how are you approaching BD on the [ forward ], maybe not even so much on an asset basis. And I'd be curious if that's a focus, but just on adding tools to your toolkit?

Yes. We have a very active BD group. I think we're looking at different types of potential deals. One is tools to add to the toolkit, as you said, whether it's delivery technologies or any additions to our CAR-Ts that would amplify their efficacy. We're also looking at assets. Are there assets that fit with our core expertise and our core competence, where we can add further value to the asset that someone else may have developed to a certain stage? So we're looking at both. And at the same time, though, we don't want to -- we only wanted deals where it makes sense and it's prudent. So we'll continue to keep an eye out and add assets as necessary. But for now, I think we have enough going on in our pipeline that would define several growth horizons, not just one. We don't feel the need that we need to bring assets in, but we would always bring it in if it made sense.

And then as we look to the remainder of the year, what data catalyst you have untapped across your portfolio?

Yes. Plenty of data this year. We -- obviously, with CTX001, we continue to update on data and also progress towards filing and any regulatory discussions, those are updates we'll provide this year. With CTX110, it will be subsequent data. We had initial data release last year, and we'll have more data now with additional patients and longer-term duration of follow-up. And initial data for CTX120 and CTX130, CTX120 being targeted towards multiple myeloma with the BCMA CAR-T and CTX130 with the CD70 CAR-T in renal cell carcinoma as well as heme malignancies. So lots in terms of catalysts and news flow. We're also very excited about moving our regen med program to the clinic, and that's progressing nicely. So that will be another frontier, another trial we'll be opening up.

So maybe just start with CTX001 in sickle cell and transfusion-dependent thalassemia here. You recently amended your collaboration with Vertex. Could you just briefly kind of walk us through your decision-making process on that front and whether you'd be willing to give away more economics and then your plans for using that cash?

Yes, I'm happy to. This all started, as you look -- as we presented data last year at ASH with 10 patients' worth of data, and all 10 patients had remarkable outcomes. They were all symptom-free after treatment with CTX001 [indiscernible] saying, wow, these are amazing data as good as they get, we need to move this program fast with a sense of urgency to get to as many patients as we can in a commercial setting. And with that, we started having discussions or discussions or even thoughts about what is the best model to do that. Until this point of getting to POC, the collaborative model made a lot of sense where we were doing 50-50 decision-making and that creative tension between the companies actually led to the best outcomes. And now we're at a point where we need to execute and launch this not just in the U.S. but globally. So we looked at the current operating model or the past operating model, which was that CRISPR would be responsible for U.S. commercialization and Vertex for ex U.S. commercialization. And as we started looking at some of the commercial planning, there are a lot of common elements. This is 1 trial that's global. There's going to be 1 launch that's globally coordinated between U.S. and Western Europe as opposed to a regional type of approach. And when you put all those pieces together, I said it makes sense for 1 party to sort of take the lead and lead that launch. And I think with Vertex's existing capabilities globally, it made a lot of sense to leverage that versus rebuilding. So all those things led to sort of this discussion around what's the best operating model going forward. And in that sort of discussion, I think it made sense for us to change the economic split. For one, I think we want to retain -- we wanted to retain as much upside as we could in the program. We don't want to give up too much of it because I think we believe that -- I think there's vast underestimation of the number of patients that could benefit from this treatment and what the uptake might be. This is all with the current conditioning agents. Then you factor in the fact a milder conditioning agent, and the addressable market is 3x or 4x will be contemplated now. And we want to retain the upside as we can in the program. But I think doing this 60-40 model made a lot of sense to bolster our balance sheet, allowed us to put money back into developing general conditioning agents, further investing in our capabilities and contributing the program where we're best. It takes us back to our core competency, and I'm pleased to say that the collaboration continues on very solid footing, and we're working together with a great sense of urgency to try and bring 001 to the market as soon as we can.

And then on the cash usage?

Yes. I think a strong balance sheet allows us the ability to further bolster our internal capabilities like manufacturing, further invest in new cell types, further invest, whether it's in immuno-oncology or regen med, further bolster our capabilities on the in vivo side. But again, we're going to do all this very responsibly. I think just because we have a strong balance sheet, we're not going to lose the discipline we've had in terms of how we spend our capital and how we think about a key metric, which is return on invested capital.

And given 001 is intended to be a registrational trial, could you just help us understand kind of the path to potentially the filing and what you might need to do to modify the current trial if anything?

Well, our hope -- when we designed this trial upfront, the goal was to do the first-in-man trial that could be registrational. So everything we did at that point was sort of with that mantra in mind. And we continue to believe that, that first-in-man trial should and could become the registrational trial. So we continue to have discussions with regulators. But if that's the premise, then the question becomes how many patients' worth of data do we need? And what's the duration of follow-up on the clinical side? And then on the nonclinical side, have we met all the threshold conditions around CMC and other requirements? And so those are all on -- active ongoing discussions that we have with the regulators. We have the benefit of having RMAT status, which gives us the ability to have much more frequent dialogue and constructive dialogue with the regulators. And at the point where we have a good deal of confidence in what that path forward is, we'll update the street.

Okay. And given that you've had the benefit of kind of watching what bluebird has encountered with the FDA and even payers as they've moved their program along, how are you thinking of addressing, I guess, one, the assay work and anything else that might come up on the clinical development side and then the reimbursement side of this business?

Yes. I think -- first of all, I think kudos to bluebird for doing a lot of the hard work in the space. I think they came over the last -- a lot of people don't know this, bluebird's almost a 25, 30-year-old company. They've been around for a long time and developing how we think about transplant-based procedures. But some of the aspects that they're facing around CMC is inherent to lentivirus. I think a viral approach inherently has more polydispersity compared to a CRISPR approach. There's inherent variability. It doesn't matter you put the best CMC person in the world on the task and you'll still have variability, because that's how viruses behave. And with CRISPR, it's much more deterministic. And so we believe that 2 factors: one, this inherent nature of controllability of CRISPR combined with the fact that we designed a manufacturing process de novo to support commercial upfront has been a good decision that's allowed -- now allowed us to have potentially an easier path in terms of CMC requirements. But again, it's hard to comment until you've actually completed all the regulatory discussions and know exactly what we need to do, but at least we have a good setup. I think on the commercial front, I find it unconscionable that countries like the U.S. or Europe would not almost create a separate fund to pay for therapies for patients suffering from sickle cell disease that live a horrible life. Compare this to every disease is bad, Alzheimer's or whatever else, but sickle cell, these patients have had not had a therapy for the longest time in their lives. And they live through chronic pain, episodes of hospitalizations, and if our country cannot come together to pay for this, it will be a shame. And I think in Europe as well, they will follow. Some of the dialogue that bluebird may have, we are not privy to what dialogue they have in Germany, but the pharmacoeconomics support -- support it, the data support it, and I'm confident that we can actually make a very strong case for strong access to patients suffering from these diseases.

And how quickly can you in parallel bring about the milder preconditioning regimen?

Yes. That's become a big focus for now. We have a dedicated group devoted to milder preconditioning agent. And we're working with antibodies, antibody drug conjugates, the whole gamut as we develop these agents. And while we think it's -- there's a lot we know about targets and what we want to go after, I think all these things do take a little bit of time. They're now -- I last counted 6 companies that are developing milder conditioning agents outside of our efforts. So something is going to click somewhere. The question -- and it doesn't matter if it's our agent or someone else's agent, I think all the players in the space will benefit from utilizing that agent if it gets approved. But in any case, I think it's a huge focus for us. It may not be very near term, but I think eventually, it will come to bear. And some ways were --it's advantage to launch with busulfan conditioning and scale up our manufacturing and go through the mechanics of patient experience and delivering this therapy to patients before we need to scale up and have to meet a huge demand should a milder conditioning agent come to fruition.

And maybe just a last question on this program. You had 2 abstracts accepted for EHA. 14 patients versus 10 we've seen recently. I mean how consistent does this profile look like at this point? Is there any more optimization required?

No. I think that's one of the amazing things about this CRISPR-based approach. I think it's very consistent patient to patient, whether regardless of genotype within thalassemia and across the 4 sickle patients, you're seeing a similar sort of trajectory of fetal hemoglobin elevation, a similar study state of fetal hemoglobin and all well above the bar required for "cure," functional cure for these patients. So I think -- glad that we have data for more patients. I think when we had 10 patients' worth of data at ASH last year, it was certainly a really important landmark in the fields, which we're going to look back and say that was the time when it was the first sort of derisking of a CRISPR-based therapy or a gene editing-based therapy. And I think now it's on a continuum of more data as we dose more patients and gain more momentum in the trial.

Now moving to the oncology franchise, we're going to see first data from your BCMA program in the second half. How do you see your program as differentiated, I guess, from the allogeneic players that are out there, but also comparing to autologous, where it looks like maybe it's a bit of a higher bar than what's seen with CD19. How are you thinking about the outlook for this program?

Yes. If you ask 10 top hematologists is the bar higher for CD19 or BCMA, you'll get a split in terms of the answers. Because the reason is, you have upfront CR rate and durability, right? In CD19, you have a lower upfront CR rate for autologous therapies, 1 in 3 patients when you look at the intent-to-treat population or less. But the patients that do get durability beyond 6 months are very durable. They keep going past 2 years in some cases. So they could be cure, right? But in BCMA, you're getting much higher response rate, CR rate upfront, but you're not getting the same durability. That's probably because there are some stem like B cells where that don't express the BCMA antigen and are not taken out by the CAR-Ts. So it eventually comes back. So what is the -- I don't know that I would say that the bar is greater or higher or lower for BCMA versus CD19, but it's certainly very encouraging to see the data that we saw from legend in terms of the response rate and what median PFS they have or median duration of response. And for allogeneic therapies, it sets a bar. So I think for all allo players, we do need to be close to that bar with a much better safety profile because that's one of the Achilles heel of the BCMA auto CAR-Ts is the safety profile doesn't look great. And if you're a safer therapy in range of the efficacy of autologous therapies, then allogeneic therapies have a big play in the space, not just a foothold.

I guess I'll just add a nuance to my question, but I was thinking about how you take allogene, where we've already seen their BCMA data. We saw their CD19 data right away in line with autologous. We saw that they needed to optimize on the side of BCMA. So is that kind of the case here where there's going to be need to be more levers kind of implemented when you think about BCMA versus CD19?

Yes. I mean I think it's one of the things I've always said is the limit of improvement for allogeneic therapies is a lot higher than the limit of improvement for autologous therapies. And the degrees of freedom you have to improve allogeneic therapies are much greater than the degrees of freedom you have for improvement in autologous therapies. So eventually, I think allogeneic therapies are going to get better than autologous therapies even in BCMA. The question is it going to happen with the first generation or is it going to take more iteration. And the good news is, I think it's not like autologous therapies are available everywhere to every patient today. It's still available on a limited basis. There's still work to do in getting -- bringing that to the market and scaling up. So there is a window of opportunity here for allogeneic therapies to make a mark and gain a segment of that population. But each indication is different. They all have their sort of unique aspects. And I think you need to figure all that out to make these therapies work in those indications. So we'll see as more data emerge in terms of how this all stacks up.

And then with the CD70 program, that's going to be the first data we're going to see for allogeneic in solid tumors to a degree, just curious how the drug -- I guess, the target choice right off the bat and then how you're going to overcome the challenges that we would see with solid tumor? And what you think the clinical bar really is here?

Yes. Yes. No, the choice of target, I think we always knew that you would need high doses of CAR-T in solid tumors relative to hematologic malignancies because it's harder to get to these tumors and need a lot of cell trafficking. Now that brings the question, which is you want it to be safe. You don't want to have any targets that have expression outside of the cancer cells. And I think CD70 for us was a clean target that only is expressed on these cancers, is not expressed otherwise. And something that also is uniformly expressed in cancers like renal cell carcinoma. You see a lot of uniform expression of CD70. That means you can get most of the cancer out. I think, that combined with some prior experience around how other modalities have worked have made us bullish about CD70 as a target as sort of the first target where we go after solid tumors. We'll see how the data turn out. But the bar for solid tumors is a lot lower, right? I think at this point, third-line RCC patients have no choices. And you saw that even a 10% CR rate in early lines in RCC was held as a major win in the space, after years of just dealing with the small molecule kinases as drugs. And so if you see any responses or any activity in solid tumors with allo CAR-T, it heralds a new frontier in the organs cancers. And I think, again, it only gets better from where you start.

And I guess, finally, on the CD19 program, we're going to see longer-term data here. Are there, I guess, as you think about the levers that you could implement to optimize here, is it preconditioning regimen for you? Is it cell type manufacturing processes, redosing? How are you thinking about?

The major consideration is redosing. And I think the 2 schools of thought around redosing are redose every 4, 5, 6 months, maybe, or redose upon relapse. Or do a preemptive redose to consolidate, right, this notion of consolidation therapy. And I think -- what's we still want to -- our hypothesis is that a single dose is sufficient to get durable responses. But as we look at more data, if it makes sense to do a consolidation dose, we would attempt that where -- not for every patient, but you could try it for some patients, right, that actually are able to tolerate it and do it in a manner that's safe for the patient and not cause neutropenia or something else. But what's becoming clear is that durability is highly correlated to your initial depth of response, which may be a more important factor than persistence of the CAR-Ts. Now if you have a mix of both, that's even better, but that becomes a very important factor. And so we're -- we want to control experiments. We want to move forward with a single dose and see how that plays out. And then if necessary, we'll pull the redosing lever, but -- or consolidation redosing lever. But at this point, I think we're watching carefully.

And then you've talked about the regenerative medicine platform and are progressing the program with ViaCyte this year, help us understand, a, how you're progressing it? And what next study you're initiating? And how quickly you get proof of concept? And b, how it's differentiated from the Vertex summer program?

Yes. Yes. For those who are new to the program, what this is, is a -- it is as next-gen as it gets. We're simply saying, for people suffering from diabetes, we're just going to make artificial pancreas and insert it or implant it into your body to serve as pancreas. Now this is not a new concept. In the past, people for organs were always reliant on animal organs, whether it's kidneys or something else because you couldn't really get fresh cadavers and get human organs in most cases. People where possible were getting fresh cadaveric cells and getting these islet cells from the pancreas and injecting them into a severe type 1 diabetes patients. And that's the Edmonton protocol. And that seems to work. I think people have been free of glucose excursions and severe hypoglycemia after being followed for 20 years. But how do you industrialize that? How do you make that available to every patient? And the only way to do that is to have a stem cell-based product. And that's the notion. Now a stem cell-based product because it's allogeneic would get rejected by the patients. And the original thesis that ViaCyte had was to take severe patients and immunosuppress them and give them the cells that are islet cell progenitors to serve as artificial pancreas. And that's where CRISPR comes in. In fact, that's where CRISPR comes in across the board in regen med. You can make things allogeneic. And if you can make cells allogeneic, then you can literally recreate every organ of interest. Now other than the 3D organs like the lungs and everything else, but at least organs like liver, kidney, pancreas, you can just regenerate these organs and have artificial organs that you put in versus trying to treat these indications like NASH and everything else by trying to fix your existing liver. Want to just create a new liver. And so that's a whole new frontier where the 2012 Nobel prize in iPS cell-based work for Dr. Yamanaka meets the 2020 Nobel prize in CRISPR to enable an entirely new approach for medicine. So our first approach -- our first program, obviously, is in type 1 diabetes where -- with ViaCyte. And Vertex and Semma have a similar program. The differences being how far you differentiate the stem cells into islet cell progenitors. And second is what is the delivery aspect. And so we do think that our editing -- edited product approach will be -- will do the job in terms of preventing rejection. We have 5 different edits that we make in these cells, including beta2M. And we also encapsulate them in a device that actually prevents a foreign body reaction. So essentially, it's a tiny device, this size, that you're implanting into the flanks of the patient that would serve as artificial pancreas and prevent glucose excursions, you may not become insulin free right off the bat, but it'll prevent hyper or hypoglycemia. And over time, I think will reduce your insulin need. Over time, could reduce the need for any medications for diabetes for both type 1 and type 2 diabetes. So overall, we're quite bullish. We're working closely with ViaCyte on this program to bring it to the clinic, and we'll provide updates once we get to that point.

Great. Maybe a last question here. We are going to finally see first time in vivo systemic data for CRISPR/Cas9 this year, and you've been working on that and optimizing it for a while here. When do you think -- I know you're partnered with Vertex on the lead programs here in DMD and DM1. But when do you think you're going to finally be able to be optimized enough to kind of enter the clinic? And what are the -- what are you solving for right now?

Yes. So we have 2 classes of in vivo approaches, one that use viruses to deliver the CRISPR/Cas9, and there are 3 programs there, DMD, DM1 and cystic fibrosis that are all in partnership with Vertex. And I think Vertex is building a lot of capabilities here, including large-scale vial manufacturing to meet the need should these programs go forward. So all those utilize an AAV-type vehicle or AAV vehicle to deliver the CRISPR/Cas9 together with the guides to make the edit we desire to make, right? So that's 1 approach. So there, I think, it's more about optimizing the editing. Initially, it's about finding the right guides, finding the right editing tools. And then making sure that you deliver all these cells -- deliver this vehicle to all the cells and getting a higher rate of editing, right? And that's the key, is can you get high enough rate of editing as you move through species from mice to rats to, let's say, dogs or nonhuman primates, and then that allows you finally to translate into humans. The second part of it is to reduce their variability. I think when you use viruses, again, there's inherent variability. And so you want to get to a point where you see editing at a high level across all the patients who treat ultimately. And so that's the second bar. So I think that's what we're working towards is there we know what edits to make. We know how to -- we have the guides for it. We're optimizing the delivery to get both a higher rate of editing as well as greater consistency. On the other side, we have used nonviral vectors. So we use lipid nanoparticles to package CRISPR/Cas9 and deliver that whether it's into the liver, it could [ consumable ] into the lungs, the eyes, different organ systems. And there, again, it's -- there are a few challenges there. One is the CRISPR/Cas9 is delivered as an mRNA in most cases. And so the mRNA optimization is important. The formulations are highly important. These are tiny 10- to 100-nanometer size -- size nanoparticles that you're putting in, right? So I think how many you get in there, what the density of these nanoparticles are, and then again, ultimately, we want to get the high editing rates as well as low variability, while not having any safety issues. Again, you want to make sure that it's very safe because when you put things in vivo, you want to make sure there's no off target, but you also don't want to have any reactions to the lipid nanoparticles themselves. So those are all parameter. It's classic drug development and delivery, there's a lot of PK/PD involved and a lot of optimization. I think that's what we're seeing. We're excited about seeing Intellia's data in TTR. I think, hopefully, that signals -- after seeing all the sickle cell and thalassemia data, hopefully, TTR signals in vivo indication where CRISPR is making a huge impact. And all this is just the start of what we're going to see over the next 2, 3 decades as major transformation in this medicine landscape.

Great. Well, with that, Sam, thank you so much. Really appreciate the time today.

All right. Thank you.