CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

[Audio Gap] conference and the afternoon sessions. My name is Geoff Meacham. I'm the senior biopharma analyst here at BofA. And we're psyched to have CRISPR Therapeutics today on stage. And speaking on behalf of CRISPR is CEO, Sam Kulkarni. Sam, welcome.

Thank you for having us, Geoff.

Good to do some stuff in person, you know?

Yes, finally.

Exactly. It's been a while. So CRISPR overall, I would say, is a relatively new technology. There's a lot of companies in sort of the editing space, and you guys are sort of the -- in front, right? So -- but for those that may not be as familiar with kind of the nuances of the technology, just give us a sense for how you think the platform is differentiated versus some of the other kind of next gen or different platform technologies out there.

Absolutely. Thanks, Geoff. And it's good to have this fireside chat and what feels like a big biotech meltdown, but you've seen all the cycles before. By my estimation, when I looked at folks at this conference, I think half of them have probably never seen a down cycle in the last 5 or 6 years. But what stands out to me from a fundamental standpoint is how far along we've come from a technology standpoint and a science standpoint. In the early '80s, there was a lot of excitement around antibodies when Genentech was formed, Amgen was formed, some of these companies were coming up with new recombinant proteins. But that cycle took about 25, 30 years to come up with meaningful, transformative drugs, right? I think. And even if it's all the promise there is. And here we are with CRISPR, and I think 10 years after elucidation of the technology platform, we're on the cusp of filing for what could be the first CRISPR-edited product in the world. This is for sickle cell and thalassemia. And I think 10 years may seem a long time for those who are not in the industry, but this is remarkably fast from discovery and invention of a platform to bringing it to patients at scale. Now to your question of what is CRISPR and what's the platform. Fundamentally, the technology, it comes from bacteria. And the technology is the ability to use RNA-directed proteins. In the initial form of it, it was molecular scissors with a barcode, and now it's more better encapsulated by saying molecular trucks with a barcode that can take any other effect or function to any site on our genome to make a cut, to make an edit, to make a single base pair of change or whatever you want to do with it. And then the scheme of history of biotech and our -- of humankind is pretty meaningful. In the early 20th century, more than 100 years ago, we discovered that we had something called genes, that our bodies have sequences that tell us what to do. 100 years after the discovery of that notion, we have the ability to rewrite those genes and edit, make changes, ameliorate diseases and the possibilities are endless. And the field of medicine is going to change towards this ability to change disease a fundamental genetic level. I can go back to the question you asked about our platform versus other platforms. There are a lot of nuances. But at the core, it's a platform, we're using proteins in a very directed fashion to make specific edits to your genome. And everything else you're seeing around it are improvements on this fundamental technology. We use all these different tools and techniques with, of course, the ability, and we're preeminent in sort of the gene-editing field with the base technology on CRISPR/Cas9. And I'll talk more about the possibilities and the different platforms out there, but we're broad-based in our platform.

But by far and away, you have the most robust and durable data out there and the highest number of patients treated by a pretty wide margin.

Absolutely. I think we were formed as a company 7 years ago, 7 or 8 years ago. And it's been remarkable. We started with 5 people and a printer. And today, we're over 500 people with what is probably one of the world's most modern GMP facility for cell manufacturing. And we just won the award for the most innovative facility recently. Typically, it's with big pharma companies that win it because they invest a lot of money in it. We have that, a pretty efficient investment, and we have over 500 people, but the technology has come a long way. And in the process, we've dosed close to 200 patients. And I think we're at least a log full higher than anyone else. In fact, there's only 3 or 4 companies that probably dosed patients at this point with edited products. So we've had a lot of experience that we can leverage and learn from and apply to our future programs.

Right. So let's talk about 001, the beta thal and sickle cell program. Just kind of remind us of where we are to date with the number of patients treated. And then obviously, you guys are -- just reiterated the plans to file your first BLA by the end of the year. Maybe just at a higher level, kind of characterize how the regulatory conversations over the course of the -- as your data has matured, how that has evolved, too.

Yes, absolutely. Both Vertex and us, our partners, Vertex, we're both incredibly excited about CTX001. This program is basically a gene-editing program where we take the hematopoietic stem cells from a patient, edit them at our manufacturing facility, then condition the patient and then deliver the new hematopoietic system effectively. And we're replacing the bone marrow of the patients with this edited bone marrow that produces a high level of fetal hemoglobin that overcomes the deficiency or defectiveness of the endogenous beta-globin, right? That's the mechanism of this drug. And what's remarkable in the data that we disclosed last year at EHA, almost a year ago now, was that in 15 patients that were dosed, 15 thalassemia patients, severe thalassemia patients, and 7 sickle cell patients that had very severe form of the disease with several vaso-occlusive crises, they were all symptom-free after about a month or 2 after they were dosed with CTX001. It's transformative data, the likes of which we've seen a few times in the history, but I think we saw something similar with HCV with Pharmasset and Gilead back in the day. We've seen something quite remarkable with PD-1s in cancer in the early days. But this data set, I think, is just incredibly exciting for the patients. The investigators are all very excited. The number of people that want to be part of our trial just keeps growing. And I think ultimately, I think if we can get this to approval and get this to patients in a broad-based fashion, we can impact lives all around the world, not just the U.S. By our estimates, I think just in the U.S. alone, there's 25,000 outpatients that could benefit from a therapy like this. And there's great support from ICER and others around reimbursement for this type of therapy. In terms of regulatory discussions, we don't -- our practice is not to go too deep into the exact details of all the discussions, but what I will say is having the benefit of RMAT designation and having an FDA and an EMA that are forward leaning around gene-edited programs, I think it's been great to work with them collaboratively to understand all the requirements for filing. Now it's not trivial by any means. These are giant filings because not only do you have all the clinical data, you have a ton of CMC data that you need to file. Obviously, the product characterization, the manufacturing elements of it, this is a complex manufacturing, but I think we're steadily making progress and converging towards all the requirements. And both Vertex and us have maintained that we aspire to file for CTX001 by the end of the year. Now I think there's nuances of -- on the clinical side, how many patients, how long a duration of follow-up, do you need same on the sickle side. But when you have data sets so powerful, where you're dramatically changing the life of a patient and making them normal again, I think all these -- you have a lot of noise around requirement x or requirement y, but I think we're converging towards what could be a very powerful drug that ultimately changes the way we think about medicine for these patients.

Yes. And Sam, when you look at the opportunity here, clearly, the most severe patients, the beta thalassemic patients and sickle cell patients are the biggest unmet need. But help us with how the product could evolve to -- 001 could evolve to a healthier potent maybe doesn't have quite the severe manifestations or cumulative effect of disease. Is that a separate sort of regulatory -- are you in the works for studies to look at younger patients, healthier patients?

Yes. I think we're going to -- this is going to go in layers. If you take the 100,000 outpatients with sickle cell in the U.S., about 1/4 of them suffer from severe sickle cell. Now what does that mean? They live day in and day out with chronic pain, they wake up in pain, they can't function normally. A lot of them have at least 3 or 4, 5 hospitalizations a year, they're called vaso-occlusive crisis. In any one minute, they have severe pain. They have to go to the ER, they're treated as drug addicts asking for opioids instead of getting the medication they need to reduce their pain. And so for those patients, the current form of the drug with busulfan conditioning, I think, will open up that market. I think there will be significant demand within that population. Now we're trying to get this done even sooner with adolescents and pediatric population because one of the things that you don't -- people don't realize with thalassemia and sickle cell is lot of organ damage that happens throughout the course of life. And by the time these patients are 35, 40 years old, they've already had significant organ damage. And if you can prevent all that by going earlier in age, that's even more powerful to give these patients longevity, but a normal life, essentially. So that's, I think, a trial that we've started now in pediatric population, so we're going to expand that. Eventually, one of the other major thrust and strategic focus for us as a company is a better conditioning agent. And when I say better conditioning agent, busulfan actually does a great job of conditioning the patient, but there's some side effects. And if you're able to [ come up with a ] conditioning agent that only gets rid of the stem cells in the body without causing any systemic toxicity, that can be done in a much more seamless fashion and apply to every sickle cell patient, right? So then you expanded not just the addressable market, but the trajectory of uptake. And so that's something that both Vertex and us are working on quite diligently. And this is in the form of both antibodies and ADCs that are targeted to conditioning the stem cells within the patient, and I think that will truly make that a much more scalable product.

You mentioned the ICER recommendation. And when you think about kind of the cost benefit, I know you're obviously not going to guide on pricing, but what would you say, is it just the cost of hospitalizations annually? What -- how do you factor? Is it number of crises? Is it severity of disease? I mean, obviously, you're talking about a curative-intent therapy that is a pretty long tail, right, for how you would assume that you'd have an economic benefit, not to mention, obviously, a risk benefit?

Yes, absolutely. I think regardless of what lens you take to look at the value from this drug relative to the benchmarks, I think this is quite transformative. I think you can take the value lens. I mean what is the price of helping patients who've not had any cures or any medicines for the last 60-plus years that we've known the disease, is there a price on that? Is there a price on giving people 20, 30 extra years of life and give them a normal life span? Is there a price of making them productive citizens of society? There's all these arguments. But then you can say, forget all that, let's just boil down to the economics, pharmacoeconomics. Here are the patients, and if you look by -- at CMS' own data, they say that the cost per patient for a sickle patient is about $300,000 a year. Because the patients have a number of hospitalizations, they're on pain killers, they take a lot of other medications. And not to mention that they're not really productive as citizens of society, and it's a burden on Medicaid as opposed to the employers. And you take all those considerations and all of a sudden, it becomes very easy math to say, you should do a onetime treatment, even if it costs a couple of million dollars, that's what ICER's recommendation was that they can support a $2 million therapy in the U.S. for something like this in sickle cell. Thalassemia is a slightly different equation, but most of the thalassemic patients in the U.S., a lot of them are either on commercial pay or Medicare. It's not as much a Medicaid population. And commercial payers, obviously, we look at it a slightly different way. But again, some of these patients require transfusion every 2 weeks. They have to go in and you're getting a transfusion. And towards the tail end of that transfusion requirement, you ask them to run from here to the door here, and they're going to have a hard time just making it there and huff and puff. Their quality of life is horrible. So I think all these different ways of looking at price, I think -- but I'm convinced that whether it's the government, whether it's CMS, whether it's some of the commercial payers, they're all looking at sickle cell and saying, "This is an area we need to do something." This is the oldest known molecular disease. There's finally a medicine that can actually change people's lives. But this is somewhere we need to [ go in and ] create a constructive solution to make sure that patients have access to this therapy.

Right. I know you're going to have additional data this year and then going into the filing, but are there any noteworthy sort of findings about patients that maybe have a really robust immediate response for those that have not as robust a response? Or I mean, I know the durability is obviously very, very good, but are there any themes that you can tie in from the patients that you've treated so far, just a profile?

Well, in fact, I think we'll have more -- we'll have a data update this year at some point. We'll go into more of the details around the different patients, et cetera. But in many ways, boring is good here. I think if every patient within a month or so of being dosed has high fetal hemoglobin and then become VOC-free in the case of sickle cell or reduce their transfusion requirements or become [ transfusion independent ], that's a great thing. We don't need to see too many interesting things in all this. But I think we'll disclose the data. We'll talk about it, all the patients and what we're seeing. There's many different genotypes. There's many different types of sickle cell patients. And remarkably, I think this edit, BCL11A, seems to be an important edit for all of these subtypes of patients.

Great. And what's the longest that you've seen -- you followed up for the sickle cell and beta thal populations?

Yes. I think over 2 years. I think at the last EHA, we talked about the thalassemia patients that have gone over 2 years in terms of follow-up. The sickle patient hadn't yet reached that point, but subsequently have. I think they've been subjects of some media articles, and one of the patients actually came out with a video on BBC that talked about their own experience with taking the medicine. So I think -- I mean, it's relatively durable at this point. I think it gives us great confidence that this is a durable therapy that is a lifelong cure.

Yes. Let's talk a bit about -- so we talked about the ICER recommendation and some of the considerations on cost benefit. What level of investment would you have to make to educate payers, Medicare, Medicaid, even commercial pay? I guess the math seems pretty simple, but I mean a lot of times, these curative-intent therapies look at an SMA and maybe in hemophilia, it can be a lot more complicated when you're -- when they're having to write a check out for a patient. So it's a different conversation versus an ICER recommendation.

Yes, I think there's a lot of education that's needed across different payer types, right? I think it's the commercial payers, the CMS, different states on Medicaid, and we need to figure out mechanisms by which we can pay for this or the payment mechanisms by which you can do amortized payments if you go that route. So there's certainly been a lot of receptivity in understanding the therapy and openness around talking about it. I think there's work to do in making sure all the mechanisms are in place. But I think the message and the story is quite simple and digestible. And I think I don't sense a lot of resistance around this. I think -- and all the efforts that companies like Novartis have made on SMA, for instance, they're all helping here because they've kind of opened the road for understanding and thinking about therapies as a onetime treatment. But certainly, I think it's -- it is not a simple launch by any means. I don't want to underappreciate what it takes, but I think the openness is there. And this openness is there in the government also, on the Hill, across both sides of the aisle for something like this therapy.

Right. And last question on 001, you mentioned Vertex as your partner. Just can you remind us of the economics here for those that may not be as familiar. And what do they bring to the table for you from a commercial perspective? They're obviously going to be the commercial partner.

Yes, yes. So the -- when we started off with the development of the asset, it was a 50-50 asset. I think from the get-go, we did a lot of the discovery work at CRISPR to understand the edit, the kind of edit we're going to make, develop the manufacturing process. But I think Vertex were -- and us worked hand-in-hand right from the get-go to say, "How do we build a robust therapy but also do it in a way where we've designed the manufacturing process to be commercially applicable from day one, so we don't go through all the problems that other companies went through in terms of CMC requirements for registration and everything else?" So I think, actually, it's been a very joint effort. We changed the 50-50 model into a 60-40 model, with Vertex [ owning ] 60% of the program last year in a -- where we actually got an upfront payment, and we gave -- we changed responsibilities to a certain extent where Vertex was doing the global commercial execution. And that made a lot of sense because as we were thinking about doing U.S. commercialization in global. There's a lot of overlap for these rare diseases, it's one global launch. And that's how you're going to be effective, especially with the distributor supply chain that's networked. And I would say that I think we've been lucky with having Vertex as a partner, incredibly nimble and flexible as a company, with a great deal of experience in commercializing rare diseases. And I think that will be a big differentiator as people look at our situation versus other companies that have tried to commercialize and may not have been as successful or are attempting to commercialize. And I think having the infrastructure, the know-how, the experience, I think, all comes into play.

Yes. Let's switch gears to the allo CAR-T program. So you have BCMA and CD19. Help us with kind of how you see the -- let's start with the CD19 program. I mean those are obviously 2 targets that people are fairly well aware of. So there is a lot of competition. But how do you see the landscape like playing out from a competitive standpoint in the next several years?

Yes. I think the -- CD19 is one of the most validated targets for cell therapies, right? I think that the idea behind going with allogeneic therapies in CD19 was let's take the target risk off the table and go with the platform risk or the vehicle risk. And we also knew that autologous therapies have shown tremendous promise in CD19. But even today, with all the success we're seeing for Yescarta, you're still only reaching 1/5 of the population. And so allogeneic therapies have the potential to reach a much broader population, assuming the work just as well are close to autologous therapies. Interestingly for us, as we -- the idea was 60 years into the modern war on cancer, our bet is that smart edit itself is going to be the way we're going to treat cancers in the future. We knew that going in. Gen 1 may not be the one that immediately works and is better than autologous. But the idea was can Gen 1s be good enough where they're a product and can be launched successfully with a meaningful contribution to sustain the company and to the franchise and allow us to keep investing to make Gen 2s, Gen 3s better. I think with allogeneic, you can make it -- keep making it better, whereas autologous, it's very hard to change the process and make it better. And so where we are right now is on our data with CD19 -- CTX110 and CD19, with a single dose was quite interesting. I mean you had response rates at the -- at DL4 of -- the ORR was 75%. The CR rate was in the 40% range, which we've seen similar to autologous therapies. The durability was a bit lower because I think of all the people that achieved CRs, only half of them reached 6 months of CR. At which point you got -- you essentially say that they're past their cancer risk, right? And so the question is, how do you make that better? And so we said do a consolidation dose, where you do a second dose to eliminate any residual cancer similar to doing adjuvants in solid tumors after surgery will be the way you're going to get greater durability or a greater proportion of patients to durable remission. And so we're going through that right now where we're doing consolidation dosing in our CD19 CAR-T program. On BCMA -- so once we looked at the CD19 data last year, we said, "Okay, the consolidation dosing may be helpful in other settings as well." We have BCMA program, CTX120 and the CD70 program, CTX130. And I think on -- in those cases, I think, again, we said maybe consolidation dosing will help here as well. Let's see if we can get more durability. CTX130, which is in -- targeted against CD70, is a very interesting target and we're sort of first-in-class in that, both in solid tumors as well as hem malignancies. And what we're seeing is that this can be a very interesting target. So we actually doubled down that target with our Nkarta collaboration. So we're going to have a CAR-NK that goes up for CD70 as well. So more to come on all the CAR-Ts. But I think if you ask me if Gen 1 is where we want it to be, yes, I mean, it's much better than where we thought it was going to be. And Gen 2s are looking even better beyond that. And we have the balance sheet to keep investing in it. We now have our manufacturing facility so we can move faster than anyone else. And the competitive landscape, obviously, is very competitive, and this market downturn is probably the best thing that can happen to cool off some of the competition, not that we would wish that upon anyone because we want to advance the science and bring more options for patients. But anyways, it just consolidates our competitive position in a way that we can ultimately be the leaders in this marketplace.

Right. And so retreatment may be the key to solving one of the hindrances previously of allo CAR-Ts?

In the near term. So I think when -- if you say the current generation program, [ what's -- once 1 rate improves ] the durable remissions, that will be with the second dose retreatment. But I think the real magic's going to be in further edits. I think if you talk to some of the key opinion leaders in the CAR-T space, people are playing around with cytokines and different edits, and we think we've done some of this editing. And in mouse models at least, our next-gen CAR-Ts are quite potent. And so if you increase the potency of these CAR-Ts even more, you have to deal with tox, of course, and balance that out. But you could push the CR rate even higher.

And 130 though is for solid tumors, right? So that is one of the unusual -- the -- very few companies have gone after solid tumors. Is there -- just talk through the challenges of that and maybe the reason why we haven't had a lot of success previously.

Well, yes, so 130 is both solid tumors and hem malignancies. So interestingly, for us, it made a lot of sense because the good thing about hem malignancies, you want to actually understand the pharmacodynamics and pharmacokinetics of these cell therapies, which we can then extrapolate into solid tumors. In solid tumors, renal cell carcinoma, especially, the options are very limited once you get past the second or third line. And we have patients who literally say, "Gosh, I wish I had 6 more months to live, so I can do family -- plan for my family and set them all up." And it's just a very bleak situation. And in that setting, we're trying to see, are CAR-Ts going to make a meaningful dent? Now solid tumors are harder to treat because of the tumor microenvironment and all the factors that go into making the cancer stealth or evading the immune system. But if you can see any benefit in solid tumors with CTX130, that's already a big step forward for the field. And in hem malignancies, if you see any meaningful benefit again in patients that don't have many options that you're already looking at a drug that could be, again, make a meaningful difference for a lot of patients.

Right. Perfect. And then beyond that, though, you have a number of programs in more rare diseases and the like. So just give us kind of highlights from that.

Yes. If you ask me where I spend most of my time right now, I think it's in the in vivo setting, we're pedal to the metal on in vivo with lipid nanoparticles and AAVs. So lipid nanoparticles have been derisked for liver. So we have a number of programs we're putting into play there, both rare and common. And by the way, there's a number of common diseases that can be treated with gene-editing. The world is more accepting of common diseases now. Five years ago, if you asked someone, "Are you going to do -- treat a broad indication with gene-editing?" People would say, "No way. Why would I? It's too risky." Now people will be -- I have people calling me up all the time and saying, "I'll pay self-pay, out-of-pocket, a lot of money if you can edit one of my genes and make me live longer." I think people are willing to take that risk. Mindsets have changed. I'm not saying that, that one example is an indication of how the system's going to go. But mindsets are changing rapidly, and we've established CRISPR as a very safe system. So on in vivo, we'll be pushing forward quite hard. And then regen med is -- we don't talk too much about it. This is organs off the shelf. We literally take stem cell and make artificial pancreas out of it and put the artificial pancreatic cells into a device and implant them into a patient as their artificial pancreas. I mean that's organs off the shelf. That can apply to pancreas, liver, so many other different organs. The thymus, for instance. And I think that's an area that's going to see tremendous growth over the next few years. We don't talk too much about it, but we're in the clinic now with gene-edited, pancreatic adenoma cells that will differentiate fully into pancreatic islet cells and sends glucose in the blood and produce insulin. I mean it's the stuff of rocket science, but I think we're -- actually, we've made it happen, and we're dosing patients now with it, and we'll have data around immune invasion of these cells at some point later this year. I don't know when we're going to disclose the data, but we'll certainly accrue data on this program as well. So all in all, I think we're incredibly excited with CRISPR. Everybody comes in. Now we're all back at work, and we're all excited to be there. I think there's new science, new data every week. There's infectious enthusiasm and energy, the likes of which I think we saw in 2004, 2005 time frame at Genentech. And I think it helps us, even in this macro environment, to set the stage for building what could be a truly innovative biopharma of the future.

Awesome. With that, we're out of time. So Sam, thank you very much. Exciting.

It's our pleasure. Thank you, Geoff.