CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

Good morning, everyone. It is my great pleasure to introduce our next presenting company, CRISPR Therapeutics. We have Sam Kulkarni, Chief Executive Officer with us. By the way, welcome to Barclays Global Healthcare Conference. I'm Gena Wang, I'm SMID cap biotech analyst. And, Sam, maybe why don't give a brief introduction of -- overview of the companies and then we dive into the questions.

Yes. Thank you, Gena. Great to see everyone in what's the -- one of the first in-person conferences in a while, it's great to be back. It's also an important conference for us. As you recall, 5 years ago, Barclays has helped us go public in 2016, and this is one of the first conferences that we presented after we became public. And since then, I think we've built what are the building blocks of what could be the next Genentech. I think we've built a great company with a diversified portfolio with 5 programs in the clinic today and in a position where we could have the first BLA for a CRISPR-edited product in the world. This is our CTX001 program, which addresses sickle cell disease and beta thalassemia, of course. But behind that, we have a whole portfolio of products that are all moving along nicely in the clinic. I mentioned recently that we've dosed over 150 patients. That's an incredible experience set in the clinic that allows us to learn from that and continue to grow. For those who are not familiar with the company, we have about over 500 people now at the company. We have our own manufacturing facility, ever-expanding capabilities, but more importantly, from a portfolio standpoint, we operate in 4 franchises. We have our hemoglobinopathies franchise, where we have an autologous CD34-edited cell product that hopefully can be functionally curative for patients. We have a franchise dedicated to immuno-oncology and where we have a number of different CAR-Ts addressing both heme malignancies and solid tumors. I'll talk more about our products there, CTX110, 120 and 130 and the progress in the clinic. We've now entered the clinic with our third franchise, which is in type 1 diabetes. This is the regenerative medicine franchise where we edit IPS-derived cells or embryonically -- ES-derived cells to make products that can be organs off the shelf. So essentially recreating organs from these pluripotent stem cells. And we're pleased to be in the clinic with that and have dosed our first patient there. And then we also are putting a lot of focus and effort on our fourth franchise, which is in vivo approaches with gene editing. And this can be against both rare diseases as well as common diseases for gene disruption, gene correction, gene insertion and a whole gamut of gene manipulation that can be very powerful and transformational for these in vivo indications. So all in all, I think we're making progress across these 4 franchises. And all of us living in this sort of dip, biotech dip as we call it, and we've seen that happen from time to time. But what we've seen happen in each of these sort of dips is that the stronger companies come out stronger, even stronger and your competitive position gets even more consolidated. And where we are today with a very strong balance sheet with over $2.3 billion in cash and a diversified portfolio, we're being very aggressive where some other companies may become more defensive. And I think we're continuing to invest in capabilities. I'll talk more about this notion of advanced editors, the platform improvements and put that in context around improvements in the gene editing space. But by being more aggressive, by being on the offensive, in such a time, I think we're going to emerge even stronger and build a moat around the segments we're playing in, and change the competitive advantage from just being competitive advantaged right now to a sustainable competitive advantage. So we look forward to providing a lot more updates this year. We have a number of catalysts coming up and very happy to go into each of the programs with you, Gena.

Thank you, Sam. So maybe start with 001, sickle cell, beta thalassemia program. So you -- both you and your partner, Vertex had plan to submit BLA by the end of this year. So can you give us update any alignment regarding the pivotal study designed with the FDA? And has FDA already signed off with your current study design?

Yes. Thank you for that question. For those who are not familiar with CTX001, this is a product where we're taking the bone marrow stem cells from patients, sending it to our manufacturing facility to make an edit, which elevates fetal hemoglobin, which overcomes the deficiency or defectiveness of the endogenous beta globin. And this product is sent back to the patient -- and then the patient is conditioned and then this drug is delivered. The data we showed last year at EHA with -- for 15 patients with thalassemia and 7 patient sickle cell were remarkable to say the least. I mean each of these patients came into the study, in the case of thalassemia, requiring more than one transfusions a month, a severely debilitated lifestyle, potential for organ damage. And then sickle patients came in with average over 2 to 3 VOCs per year. VOCs are vaso-occlusive crises, where the patients end up in the ER and a terrible -- not to mention, terrible lifestyle, but a life of pain, chronic pain, together with the acute crises. And all these patients are doing remarkably well after being treated with CTX001. So this is data like that's never seen before. Maybe we've seen something as remarkable in the hepatitis C context with Pharmasset and Gilead a few years ago, but this is [ harolds ] a sort of a new paradigm in medicine, which is that you're going after cures, you're going after onetime interventions or procedures that can completely change how patients look at a disease. So it's not disease modifying. It's disease eliminating, in a way. But -- so with CTX001, the advantage we had was we started with a clean sheet. We developed the manufacturing process with the blank slate together with our partners, Vertex. And with that, the way we position the trial is that the first-in-man trial would be the registrational trial. And very early on, because we had RMAT status, we had the ability to interface with regulators and have that constant dialogue to understand all the assays that are necessary, what the CMC requirements are that allowed us to go straight into that registrational trial. And where we are today is, again, it's -- we continue to take advantage of the RMAT status and RMAT designation, which may not be as important to all the investors, but for as an operational entity, as an operational company, it's very, very important because it allows you to ask questions that you normally have to wait a long time to ask, Type B or Type C meeting. So with that said, I think we continue to converge with the regulators around our filing package. Our goal for both Vertex and us is to file by the end of this year. And I think there are things that you have to align both on the clinical and nonclinical on the CMC side. But largely, I think we're converging. I think there's some final touches you have to put in terms of exactly how you measure the duration of transfusion dependence, when do you start measuring, for instance and some technicalities, but we're getting to a point where we feel like we have greater convergence around the number of patients and what those endpoints are. We don't make specific comments on any of that given that it's a competitive field, but we feel good about the progress.

So I think one question I got asked a lot is the duration of the treatment -- sorry, the follow-up of the treatment. And so when we look at the bluebird, it's 18 months, they need to follow. So like what makes you comfortable that you do not need to follow 18 -- like for the registration trial part? Do you like shorter time?

There are a lot of nuances here. I think when you say 18 months, what does that mean? Do you start counting on the day of dosing and follow for 18 months? Was it more relevant to start counting as soon as patients have a certain level of hemoglobin functional? Is that when you start counting? What is really the -- there's technicality about when you start counting. What is the duration of benefit you're trying to demonstrate and that depends on the number of patients you have and the number of VOCs they have coming in, right? You have to develop a whole statistical plan. He says, "Here are the number of VOCs patients are coming in with, if you demonstrate elimination of VOCs or reduction of VOCs, here's how many patients you need." So there's a lot more to it than saying, here is -- it's 18 months or 15 months or time point. And I think those nuances are something where we've been fortunate that the regulators have been very forward leaning on all this to say how do we work together to bring what could be a transformational modality to patients. And it's not just the U.S. FDA, it's also the European regulators that have actually -- in the face of all of cell therapies facing clinical holes and everything else that we're seeing, what we've seen is a very progressive approach in terms of how to think about bringing a therapy like this to patients in need.

Okay. So any like definitive time line you can share with the investor that this is the final FDA fully align on the trial design? Like when do you think you can share that with investors?

Yes. No, I think we've been relatively open about the program versus the start of the program in terms of progress. I think we hope to provide another data set, clinical data set this year together with our partners, Vertex, as we have more patients in the trial where we have collected data but also a greater level of follow-up, right? I think -- so you have a larger data set to work with. We eventually want to publish some of these data sets because it's really important for the broader hematologist population to be able to read these. Everyone is very excited, of course, on the first NEJM paper came out with the case studies, but we want to put the broader data set out there. And I think we'll also provide more updates around what the time line of filing is exactly and when it's going to be. But I think a month here or a month there, it doesn't make a big difference. The bigger picture here is, all I'll say is, which is, the Street is underestimating how valuable this program can be. Our position competitively has only strengthened over the last year given some of the things that have happened to our competitors. And in the face of that, I think being there in the market with a very strong commercialization plan with the demand that we anticipate from patients and the ability to supply given we've scaled up effectively. I think this can be a very valuable drug. In addition to the transformative effect it may have on patients, it could have a very important value accrual for both Vertex and us. And that's the bigger piece of this, which is what is the production going to look like. And I'll say this, which is, I almost feel like in all my investor discussions, it's the incredibly -- it's the biotech specialist investors that are more skeptical than some of the others who are seeing the big picture saying, oh my God, there's 25,000 patients here. There is a lot of benefit that patients can have, and there's generations of this program were initially started with this busulfan conditioning, then there's other conditioning agents and everything else. And with Vertex, our partner, they see similar value creation as what they've seen with CF. And so in the face of that, I think we're doing everything we can from an investment standpoint and a preparation standpoint to ensure not just an effective launch initially, but a trajectory that continues to grow for years to come. This could be a growth drug for 7,8 years. And that's how -- what potential we see in the program, which was reflected in the deal that we did with Vertex last year in realigning the operational responsibilities. So we feel very bullish about the program. So I think it's one thing about -- gosh, here's the exact guidance, and here's when the filing is, et cetera. We feel very good about that. We feel like we're converging with the regulators. But most importantly, how are we getting prepared for what could be a very different type of launch relative to everything we've seen in the market before.

So regarding that part, I wanted to ask you, I know it's still very early on the pricing part. And we did see bluebird try to launch in Europe, and it was not successful because of the pricing. Whatever internal price they have, it seems -- does not resonate with the local limb of the government. So here, like what is your thoughts on the pricing of the future market, both in the U.S. and Europe in terms of market opportunity there?

Yes. For those who are experienced in launching drugs and look at the European situation, there hasn't been a drug where you say, oh, here's the price we're thinking about and the government says, great, that we agree with you. It never happens. There's always a big delta between what the health systems are going to say is value. And then there's a lot of negotiation to get to sort of a point where you get -- the companies are happy and the cell systems app. Now there's different setups in each of the countries, whether it's the U.K., the French -- in France, or otherwise, where you can actually launch without having all that negotiated, but then you get to sort of that price point that makes sense. It's hard to argue against the value and the pharmacoeconomic benefit. Even the patients from its suffering from sickle cell in Europe, the cost of care of these patients in the public health system is so great, given the number of times you come to the hospitals, the amount of drugs they have to use to make -- to control their pain. And all that, I think -- forget the value argument, even the pharmacoeconomic argument, you can make a case for a relatively high price point, which is -- but again, that's -- it's not because you're trying to extract value from the system. It's because of these therapies are difficult to make, they're autologous therapies, and they cost more. So I feel I have great confidence in Vertex's ability to be able to navigate the European pricing system. In the U.S., I think there's different payer systems, obviously, we need to navigate the different states that have Medicaid. But eventually, I think if we as a society cannot find a way to pay for these patients who have been suffering from these diseases for years and a population where we've known this disease for over 70 years now as a molecular genetic disease, in the face of pharma not coming up with any good therapies in this indication, if you can't pay for this transformational therapy that'd be shame on us. But I do think the system will find a way.

Okay. Now we switch gear to your allogeneic art. We do have quite a few programs there and share with us pretty encouraging initial data. So maybe go back to the lead indication, the CD19 non-Hodgkin's lymphoma. So you will go with consolidation regimen. So -- but we -- Sam, maybe like what make you confidence that because we haven't seen -- actually the redosing is after relapse and you redose. And when we look at the response rate, if we're separating the redose versus the first dose, then the response rate actually was not the durability and the response rate was not very impressive. So then what makes you confident that now the consolidation regimen before patient relapse, like at the, say, end of the month 1, will have a complete different clinical profile?

Yes. No, thanks for the question. I think for those who are not familiar to the program, we've made a fundamental bet on smart edited cells against cancer. We started the modern war in cancer in the 1960s by throwing a kitchen sink of chemicals against cancers, right, to kill these cancers. And there were times when Dr. Sidney Farber and others were combining 5 different drugs to the detriment and the great side effects for the patients, but at least we moved the puck against getting -- eliminating some of the cancers and treating patients and insuring longevity. Then we went to the era of antibodies, and there was great hope and promise and antibodies have done a great deal in cancer. There are some cancers like breast cancer, et cetera, where the survival has more than doubled or tripled because of these agents. But I think we're now entering an era of smart cells that and go find those cancers and fully eliminate it. The durability you've seen from some of the autologous therapies are remarkable. These patients are cancer-free 2, 3 years out. In fact, as we look at our own data, if someone said, we're going to do a single shot of an allogeneic CAR-T that comes from a young healthy donor into a patient's body, and a single shock can give you -- can have a patient be cancer -- free of cancer 18 months out, this is probably data from the -- data we last has closed. 5 years ago, people laughed at it. Obviously, but now I think it's -- you're seeing these data in the clinic, right? And that gives me great confidence. And it's only going to get better. The one thing that people always say is, oh, there's autologous therapies, there's bispecifics, where do allogeneic CAR-Ts fit? The improvement potential for allogeneic CAR-Ts is a lot greater than the improvement potential for autologous and the improvement potential for bispecifics. People often talk about CRISPR 1.0, 2.0, 3.0. That's a different story altogether. That's around platform edits, there's -- we'll talk more about that. But the real 1.0, 2.0, 3.0 is going to come in the next-generation CAR-Ts. Our Gen 2 CAR Ts have 4 or 5 edits, our Gen 3 CAR-Ts are 7 or 8 edits. And we're already putting that in motion. I think those CAR-Ts are in order of magnitude better in preclinical models. That said, our first-gen program, CTX110, with the RMAT designation that we have is already in a pivotal trial to get to market and fulfill a niche that's quite an unmet need. We've done our work. I mean there are several surveys flying out around out there of different hematologists and physicians around treatment of CD19 positive malignancies and where does it fit versus ADCs and bispecifics, et cetera. But what we see is a very clear space, as you talked to a lot of these cancer centers saying, we don't want to lose patients to economic medical centers. We want to provide CAR-Ts. Autologous CAR-Ts don't make sense from us, both from a logistical standpoint, but also from an economic standpoint. We'd like to have access to allogeneic CAR-Ts. And if you can do allogeneic CAR-Ts in a safe fashion with the safety profile that's manageable in community settings, this can be a $1 billion drug or more. And so that's where our CTX110 is positioned in CD19, and we're moving along fast. I think, again, because of some of the things that have happened with our competitive programs, our competitive position has only strengthened over the last year or so. And it's now upon us to execute and what could be -- it's hard to say, we're already in a position to file the first-ever BLA for a CRISPR-edited drug in the world. This could be a second CRISPR-edited drug in the whole world, if you can get to a BLA. So we're heads down focused on execution in what could be a very attractive segment.

So will we see initial -- the consolidation regimen, initial patients first? And before we move to a pivotal study beaus I know this is the...

No, I think -- so we roll the dice on a pivotal trial. What we think is a pivotal trial that could be registrational. So I think we need to -- given the RMAT status, we need to have the best discussions with the regulators to ensure that we're aligned on a number of patients and what could be registrational or couldn't be, how much follow up, et cetera. But we saw enough in our initial trial to know that the sooner you redose, the more beneficial it is. And you've actually seen that with -- you've seen that in other instances, other programs where if you do a very early redose, you're eliminating the remaining cancer cells and making these patients MRD-negative. And if you don't have any residual disease, these patients can have a very durable response. So we are already in -- we've been dosing patients with consolidation dosing already. We've actually dosed a number of patients in -- with the consolidation dosing arm and we'll have a data update this year where we have continued data from the patients we showed last year and longer duration of follow-up, but also the new patients where we started consolidation dosing.

Okay. And that will be for both CD19 and BCMA or...

Yes. In BCMA and CD70, we've introduced the notion of redosing and consolidation dosing. It's -- those programs are about a year behind CD19, as you know, So we're trying to figure out the optimal dosing, the redosing schedule, everything else. I think on BCMA, we're going to see where we land in the middle of the year. It's going to be a strategic decision at that point. How close are we to autologous therapies? And is this worth going into registrational? Or do we unlock our next gen, which seems to be very promising in preclinical models? In CD70, there's really no competitive bar. The competitive bar -- people asked about competitive bar in CD70, and I say, look at these indications. If there's an RCC, for instance, even the frontline PD-1 combo trials had a 10% CR rate. And these people don't even talk about complete responses in these indications, they talk about overall response rates in PFS. In some of the heme malignancies with CD70, there's, again, very little competition. These are patients that have no therapies available to them. And so it's very different how we think about the bar there. And the question there is, once we see where we land with the initial data, what is the development path forward for these drugs? So that's sort of the questions in front of us.

So maybe go back to the BCMA, you said depends on the clinical profile. Midyear year you would decide to then -- you would decide the next step. So what would be the threshold if we're just growing like a CRE that you think that achieves your threshold that moving to the next step?

Yes. I think, again, there are a lot of nuances. I think people talk about, oh, here's a 65% CR rate or whatever. And I think, again, you have to look at what is the patient population that was treated. Did they -- what kind of disease? How spread out was it? And you'll see that even if you cut the data differently with what J&J, Legend have shown or other things, there's different response rates for different subsegments of the population. So we'll characterize this more as we talk about it. But really, the question is, there's a tolerance window around autologous therapies, with -- for allogenic therapies, but it has to be within a certain window. And I think in CD19, what we've seen is all these patients progress very quickly. So they don't want to wait even a week to get a therapy. They want to get a therapy, they want to get dosed right away. In multiple myeloma, there's a little more tolerance around waiting. So I think there's a lot of factors to put in place to say where do we go forward than BCMA. But on CD19, we have a very clear path, very clear subsegment of that population where we feel like we can not just be first, but also be best. And then CD70 looks very promising as well.

So when should we expect to see the data from our 3 programs this year?

Yes. I think for BCMA and CD70, we'll have an update midyear. I think for CD19, it's more likely that it's in the second half. We want to show some data with consolidation dosing. So I think we don't want to rush the data out there. But I think we're pedal to the metal in terms of enrolling patients in that trial.

And what about BCMA?

Midyear.

Midyear. Okay. I see. So like midyear, could that be at ASCO?

Well, we don't -- we never comment on when the data releases are. I think that it's just -- we make the best decision based on the program, the maturity of the data, when the data cuts are, et cetera. So we won't comment on the data timeline.

Okay. That's fair. Well, thank you very much, Sam.

Yes. If I may make one last comment, which I think kind of we're out over time. But -- we generally don't end up ever having time to talk about regen med and in vivo. But if you think about the time we spend internally across the franchises, I think a big part of our push and our focus this year is going to be in vivo. We're going to -- given what we've learned about the translation between NHPs and humans, I think we're putting a number of programs forward in vivo. On regen med, again, I think there's this notion of multiple generations of programs. We're well ahead of anyone else who's doing gene-edited pluripotent stem cell-derived products. And the interest is tremendous in the clinic from patients suffering from type 1 diabetes.

So for your in vivo, you -- will you disclose the targets mid this year when you have your R&D day?

Yes. So I think we hope to have an R&D day this year, midyear this year and talk a lot about our portfolio, our pipeline, the breadth of our pipeline. And then we'll also disclose which targets we're going after in the time.

Okay, sounds great. well, Thank you.

Thank you.

Thank you, everyone.