CRISPR Therapeutics AG (CRSP) Earnings Call Transcript & Summary

Good afternoon, everyone. Thank you for joining us. Really pleased to have Sam Kulkarni, CEO of CRISPR Therapeutics here with us.

Sam, perhaps to start here. You have a couple of verticals. You have cancer, ex-vivo noncancer regenerative medicine and in-vivo verticals. Can you discuss how you're prioritizing across the pipeline in addition to capital allocation and how you leverage R&D across these separate verticals?

Yes. Thank you for having us here, Salveen. As a company, we've been shaping our portfolio over the last 9 years as -- in the company's journey. And there are a couple of different elements that went into where we ended up today in the portfolio. One is the key question of where can CRISPR be the most transformative and powerful from a technology standpoint? And two is, what are the diseases we want to impact. And the thinking has evolved. In the early days, people said, "Oh, CRISPR is all about rare diseases. Here are the mutations we know about. Here's hundreds of rare diseases we're going to impact." But if I project forward, I think CRISPR is going to have equal impact on rare diseases and common diseases. So we made that bet to say we're going to have a mix of both because we're not going to say these are the diseases we want to play in. It's going to be where can we have the most impact based on the technology we have. The second is the fundamental bet to say, CRISPR, obviously, sickle cell disease and thalassemia is one franchise, and it was very clear that, that was the best place for us to start off with, and we have now an approved drug with CASGEVY. But outside of that, we parlayed competencies. We knew cell handling, we knew cell technologies. So we said we're going to go into allo CAR-Ts or CAR-Ts in general, because we can use CRISPR to make all these modifications to make the best-in-class CAR-Ts to impact cancer and it's going to bring a new frontier in the fight against cancer that's been ongoing for the last 60 years now ever since we declared the modern war on cancer. Then we said regenerative medicine. This is an area that still I think is underinvested from a venture standpoint and everything else because if you're able to replace organ systems, that transforms how we think about not just certain diseases, but even longevity. I went to this longevity conference where people were saying, if your brain is intact and you can replace all the organs, that just -- you think about longevity very differently than you think about it today, with [indiscernible] and everything else. And then we have this other vertical, which is in-vivo gene editing, which was -- we weren't the first there, it was enabled by another company, but now I think we could be sort of the biggest mover in this space because we're going to have many, many programs in the in-vivo setting, not just for liver editing but for other organs as well. So that's the logic of the different franchises and then you -- the orthogonal access of the disease areas, and that's how we think about our entire portfolio from a risk-reward standpoint. All that said, I think the bar for us to enter any -- to call something a program is very high. It has to be something that really changes the disease landscape.

As you spoke about -- you talked about CRISPR being a very important tool here that you can use in the future to treat all these diseases. But there's been so much innovation in gene editing. And so how are you adapting to this dynamic landscape to think about a sustainable pipeline?

Absolutely. I think one of the most important considerations for us is we would never -- we don't get disrupted. We are the leaders in the gene editing space, and we have been. But we want to make sure that we're looking at every improvement that's coming out there. And this is similar to what happened with antibodies in the '80s and '90s -- late '80s, early '90s. And in fact, we're seeing antibody improvement even today. People are creating all sorts of bispecifics to give it sort of a new wind in the sales of biologics. But ultimately, value is going to accrue to the ones that use the improvements to make good drugs. You can't just say I'm doing improvements for improvement's sake. So it's innovation with a purpose. But let me tell you what we're doing at CRISPR. We have established a group called CRISPRX that is dedicated to all sorts of next-gen editing. And the notion of CRISPR has changed, it was an interesting experiment we did. There was an artist who had done a rendering of CRISPR for us when we started the company. And this is like a graffiti art and the notion of CRISPR was molecular scissors. So it was like the art incorporated scissors. And today, the notion of CRISPR is a cargo van that is taking effector protein to a particular site on a genome. So with the very -- the premise is still the same with the 20-base pair, 19-base pair, whatever do you want to call it, sequence that's very specific in the genome, you can bring any effector protein, whether it's a base editor, whether it's a reverse transcriptase or it's a ligase or recombinase or whatever else, right? So you take the entire toolbox of effector proteins and you can do it -- bring them site -- specifically to the genome. So that opens up a lot of possibilities. But you have to be very practical and thoughtful about what are you going to apply because if you just start chasing technologies, you're never going to actually have a program that you're going to move forward. So for each disease, what we're looking at to say is for this disease, what is the best way to address that disease? And we're going to incorporate all these technologies that are available to us. And we're doing a lot of it ourselves. We're developing newer technologies ourselves, in addition to incorporating what others have developed.

Could you just touch on delivery technology in the context here and your strategy around optimizing for the different tissue targets?

Yes. So the state-of-the-art where we are right now, if you go back 7 years and say, what were we thinking then versus where are we now? I think the world was a lot more bullish on virus delivery vehicles versus LNPs or polymers or any other modalities. And what's changed now is -- what we realized is LNPs maybe a better way to go because of 2 reasons. One is, generally, they're degradable and they're safe. Once you're done with the delivery, they're gone. So you don't have viruses hanging around. Second is it's much more titratable than you are with viruses. So just the variability than what you may get with AAVs or lentivirus and lentivirus have their own set of issues. And third point is the regulators feel a lot more comfortable with delivery vehicles like LNPs because it's easier to handicap versus viruses. And so with that sort of backdrop, we're investing quite a bit in LNP not just for the liver, but for other organ systems as well. And we just showed data at ASGCT for delivery using LNPs to the eye, which wasn't where we were -- the field -- it was 5, 6 years ago, everyone was thinking AAV is the way to go for the eye, right? But now you can get delivery with LNPs. So it's been a dramatic shift. That said, there are still challenges. It's not solved outside the liver by any means at this point. People will say, "Oh, here's editing in bone marrow with LNPs and look at the great data." Yes, but at very high doses without having shown durability yet. So you still have ways to work these out where you're targeting only a certain organ and detargeting the liver, for instance, detargeting the spleen. People have shown now LNP data for the lung, people are LNP data for the eye, as I said, kidneys, I think there's more work to do. But when that gets solved for other organ systems, you're going to see another wave of applications with gene editing because you're opening up a whole new opportunity set.

So let's start here with your commercial portfolio and talk about CASGEVY, which is partnered with Vertex here about the launch to date and maybe walk us through how physician and patient feedback and then uptake overall has been.

We're -- first of all, I'll say that we're very pleased to be partnered with Vertex on this important launch. Launch is important not just for us as companies, but in fact, when we were at the ARM meeting that was the most talked about [Technical Difficulty] so then some of the ETR or DMD that people are looking at as investors because CASGEVY for many reasons, I think the unmet need is so high for these patients. They have no other options. Here's a curative option, can be -- the system work out, how a medicine like CASGEVY can also be economically very fruitful. And for that, I think the launch is a nuanced launch. It's different from what people typically think of as the ways to handicap launch or look at launches. And I think, what we're very pleased with this, there is significant demand. And again, Vertex is going to do all the sort of guidance to the Street on how to think about the launch and what the parameters are and how they're going to disclose cell collections for instance, or revenues. But what I'll say is from our own experience, we're deeply involved with a lot of investigators in the community, the demand is there, patients are saying this can change my life, I want to avail this technology. What surprised me is that the system has been very supportive from a reimbursement standpoint, more so than what I've anticipated 8 years ago, for instance. The demand is global. It's not just the U.S. And the -- when you have a therapy like this available, hospitals figure it out. There are a lot of questions, and I would say, misgivings about whether hospital is going to have enough beds or are they going to have enough staff to deal with the autologous therapy like this. And they figured it out the Yescarta case, right? And now they're going to figure out in the CASGEVY case because when there's an available treatment, the system finds solutions around it. And so all the -- I would say the fundamentals are playing in the right direction. But we have to show you how that's all working out. And Vertex, as I said, will disclose these information on cell collections, et cetera, every quarter. But I feel very good about the CASGEVY launch. And I think it's going to be an unusual launch in the sense that it's going to be a growth driver for a very long time to come. Typically, you've seen with pharma launches, you get the early pickup and then they flatten out. And here, it's going to keep growing for a very, very long time to come.

Have there been any sticky [Technical Difficulty].

Without going in specifics, [ just ] in the world of rare disease reimbursement these days. I think what you're seeing is -- on the U.S. side, there was a bit of this reaction to certain things that happened a decade ago or like with the rare disease pricing and there was like a reaction [ there ] but all normalized again. I think people are saying there's real [Technical Difficulty] this is not what's changing like GLP-1 is like dramatically changing how they underwrite their ability to cover medicines for employers, right? But rare disease are not changing that equation for them. And so there's a lot more understanding of how to think about cell and gene therapies in the U.S. and support. I think in Europe, they're still figuring it out. I think the systems are all very customized to each country. They all have their own processes, things don't move as fast as some other countries. But again, there's an appreciation for medicines like CASGEVY, I mean, as evidenced by the early access in France, for instance. So I think you're going to -- there's just maybe a little timeline, but it's going to get sorted out. And I think the rest of the world, there's enough burden and there's significant economic growth in other parts of the world that are non-U.S., non-Europe where the markets have become more attractive now and there's enough patients that you have to take those markets very seriously. So I think that's the great part about having Vertex as a partner that has global presence, the ability to move in different geographies, but also incredible experience with dealing with European payers. So I think not foreshadowing anything, but -- and Vertex will guide, but I feel good from where I'm looking at things.

And any thoughts on how patients may be opting or physicians opting for gene editing versus a gene therapy in this marketplace?

Yes, I think it's hard to handicap that right now because what happened -- what's happened is not every site has both offerings, right? So to get a truly controlled [ experiment ], you have to have a site that's offering both without any investigator or the physician bias to say what are patients picking at the end of the day. But what I heard from one of the nonprofits that support these patients that we help is overwhelmingly, if they're given both options, they're going to choose a CRISPR-based option. It's just for -- it's hard to explain, but it's just easier for patients to understand. They say, "I understand this notion of editing my gene and I've read about CRISPR, I've seen an NPR article X, Y or Z, and this seems like the way to go for me." I don't think they understand lentiviral risks of AML or MDS, and those are all things that the patients don't fully understand or appreciate, don't know how to think about it. But simplistically, I think what you're going to see is a majority of these patients just opt for CRISPR if they're -- both options are available.

And with regard to optimization on the forward, I think currently, it takes -- it could take up to 5 to 6 months to get treated with CASGEVY. In addition, you've got this busulfan preconditioning regimen. And there's potentially a path to get to a more benign preconditioning regimen. Where do you stand with both of those efforts?

Yes. I think the way I imagine the life cycle for CASGEVY is that at some point, a targeted conditioning agent is going to become a reality. And that's going to expand the addressable patient population significantly, 3 to 4x perhaps. And -- but it's not easy to bring that in a commercial setting, we still have a lot of work to do. But for both Vertex and us, this is a high priority. They have multiple agents that they're progressing forward with different targets. We have a c-kit antibody that we acquired from a company called Magenta, and we put a different toxin on it to develop it specifically for the -- for sickle cell and thalassemia, where we want the agent to be relatively safe. So the toxin is not as toxic as you might -- in the oncology settings. And we want a very short half-life where it disappears before we put ourselves in that -- our edited cells, right? And so what that gives you are multiple reasonable shots to get a target conditioning in play. But once we've established the market, established the infrastructure to get CASGEVY to as many patients as we can. So it's going to significantly increase the value of CASGEVY. If we get [Technical Difficulty] even in an NHPs. So let's see where the data land, but this is a high focus for us. The other part they're working on, the 10-year solution is in-vivo editing for the bone marrow or any of the hematopoietic cells. It's more complex than most people imagine right now. I think you're going to see upstarts saying, "Oh, we've figured out HSC editing." The thing is you have to do HSC-editing without editing everything else at doses that are tolerable, that also ensure durability and they've edited the right type -- cell types. But that said, I think we are trying a number of targeted LNPs where we decorate the LNPs with different factors that may give us this preferential selective editing. And so that is an effort that we're putting a lot of resources behind. It just takes time. But that's sort of the 5- and 10-year horizon, if I think about what may happen with an autologous cell therapy associated with sickle cell and thalassemia.

On the in-vivo platform that you commented on earlier, we're going to see, I believe, first data this year in cardiovascular disease. Could you just frame that for us how to think about this first data set and what would be meaningful?

Yes. We haven't guided to a time point for data yet, but we are accruing data. And we have 2 trials ongoing for 2 cardiovascular risk factors that are well described in literature. One is LPA and the second is ANGPTL3. And they both are independent risk factors. LPA, for instance, we just looked at the number of cases where people have high LPA, it's not patients, it's people. And some of them were -- are in their 30s and 40s and they get heart attacks. Even though they're very healthy in their lifestyle, they exercise because they have significantly high LPA, and it's kind of genetic in a way. And what's been shown across all these population studies is lower LPA is better. You have lower risk of cardiac events. What hasn't been shown yet is whether a pharmacological intervention, which reduces LPA, then changes outcomes for people who are born with higher or low LPA. And we're going to get that answer in the next 18 months, hopefully, or the next year, with the trials that Novartis and Amgen are running with ASOs and siRNAs, respectively. And so if you can show that pharmacological correlation of reducing LPA with better outcomes, we're starting off at a very different point in our development journey where those parameters have been established. And we can then say, why not do this with gene editing, which is a much better way of reducing this risk factor in a sustained fashion versus a sawtooth effect that you may get with an ASO or siRNA and combined with the convenience of a one-time dosing. And so those -- we're quite excited about those trials. I think as we were -- as we dose patients and collect data, we'll see what dose level we need to get to, what the therapeutic index is. But a lot of what we're doing is very similar to what Intellia did with HAE and TTR. So we'll see where our data land. But that's going to be a signal for us where if the data are positive, one, we're very excited about these indications, but we're also going to really turbocharge 6 other indications where we need the same LNP platform.

You also have an emerging autoimmune vertical and you're evaluating a drug in lupus, perhaps talk to us just given now how many assets are kind of entering the space in cell therapy, how you could be differentiated? And secondly, are you going to be able to take all these assets forward on your own? Or are you thinking about partnerships on the forward?

Yes, absolutely. I think while we see many cycles with investors and biotech ebbs and flows, there are these moments in time when you first describe certain data. I remember when the Emily Whitehead data, Carl June presented a Emily Whitehead's case study, and it just changed how people thought about cell therapies in oncology. And this was a -- Emily Whitehead was like 4 or 5 years at the time, and she was cured of a terrible leukemia. And so the same sort of thing is happening with the Georg Schett data in -- for cell therapies in autoimmune. You've had patients with very severe autoimmune diseases that are completely in remission and durably with a single administration of cell therapies in this case, CD19 cell therapy. So it just opens up an opportunity that's even larger than oncology with an opportunity to address -- bring so many of these patients who haven't had a solution for a long time. I think we've all seen these TV shows where lupus is the underlying cause of everything that happens. And it actually is a very complex disease. You get all these cerebral symptoms, you've got neuropathic pain. You get obviously, kidney issues and everything else. And if you can have a CD19-directed cell therapy that's potent, that gives you deep B-cell depletion, I think it can be transformative. Now the question is, there's like 20 agents in this space. There's autologous CAR-Ts going into it. There's T-cell engagers, antibodies now, potentially ADCs, and then you have cell allogeneic cell therapies, both T -- allo CAR-Ts and allo NKs. So what's going to win? And I think this is why we are positioned to win this space. And this is sort of -- all these factors coming together that we couldn't imagine we were looking at it and saying, "Gosh, this is sitting there for us to win in this space." The reason is the burden of B cells you're going after is not as high as oncology. So with an allo CAR-T, you can get full B-cell depletion. CAR-T cell therapies go and deplete B cells in the tissue -- with the tissue-resident B cells that bispecifics and antibodies may not be able to. From a safety standpoint, the safety bar is high and autoimmune. You may not want to take any secondary malignancy risk that you may get with lentiviral-derived auto CAR-T. So allo CAR-T is better where it's CRISPR edited and much more directed insertion of the CAR. The safety profile from a CRS and ICAN standpoint also is better for allo CAR-T. Allo CAR-Ts are better than allo NK cells from a dosing standpoint and the ability to reduce cost to a level that's meaningful commercially. And we, as a company, have the best allo CAR-T with a commercial-ready manufacturing facility, the lowest COGS out there and the ability to create hundreds of doses available for trials that others don't. So for all those reasons, I think we've been handed this opportunity where we want to take full advantage of it. We just announced the hiring of our Chief Medical Officer, Naimish Patel, who came from Sanofi, and he was leading their entire autoimmune franchise there and was -- developed DUPIXENT from the early days with incredible experience in the autoimmune space, we've built a team around him to help with autoimmune. And so this is very high priority for us. We're moving as fast as we can, and it helps that we have a strong balance sheet to support all the things we need to do to put us in pole position.

And so will you take all these programs forward?

Yes. I mean we have that -- it's interesting, we have that flexibility, given what we believe about CASGEVY and the outlook. We have the flexibility to take both autoimmune and the in-vivo programs forward ourselves all the way. Now does that mean that we're not active on the BD front? I mean, I would say -- at JPMorgan this year, we had interest from at least half the top-20 pharma companies in these 2 programs, in LPA and autoimmune CAR-T. And so are we -- we'll continue talking to pharma companies because we don't want to turn a blind eye to that. But we're not going to partner both, at best we partner one or the other. But there is the option to take both forward ourselves, which could create tremendous enterprise value for us in the near term as we get to HPAC.

I want to get over to the oncology portfolio because that's one of the verticals you started with. And you've been optimizing along the way and we're potentially going to see some data this year. Maybe walk us through what we could see from that effort and where you stand with the next-generation assets?

Yes. We're glad that we're making a very persistent effort in oncology because it does take that -- the next generation to get there. When we started the first-generation CAR-T in CD19, CTX110, it was incredible to us that you're getting durable responses. Some of the patients that had complete responses with CTX110 are cancer-free 3 years out. The gold standard for oncology to be disease-free is 5 years. And I'm sure we're going to get there with patients who had the original complete response with a single dose of an unoptimized allo CAR-T that we created using CRISPR. Now we have CTX112 that is much more sophisticated, and we made these edits to make them that much more potent yet retain the safety features. And so with DLBCL, while the landscape has changed a lot. There's a few things that have emerged now, which is T-cell engagers are not as good from a durability standpoint, as people originally imagine them to be, okay? When people looked at 9 cycles of glofitamab, whatever you said, "Gosh, 15 months, it looks like everybody is still in CR. So this could be the same thing that we're seeing with Yescarta perhaps, where if people are in CR 1 year, they're probably in CR at 2 years." And that hasn't been the case. They've lost nearly half the CRs between year 1 and year 2. So and you're seeing that in the marketplace. You're not seeing bispecifics all of a sudden have a huge sales trajectory that people anticipated because of the durability reason and the real-world data on CRs is also lower than what -- people on the clinical trials. With autologous CAR-T, you still have a very high bar to beat. But what's also happened is only about 25% of the patients that are eligible or should benefit from this therapy aren't getting it because it's basically saturated all the academic medical centers and all the community practices don't know how to deal with it yet, and they never will. This is too complex for them. There is reimbursement risk, there's inventory risk, there's risk of CRS and not being able to deal with that with the patient. So it's never going to get to that population. And the only way to get to that 75% of the population is to have allogeneic CAR-Ts with that durability. And so we'll have data this year in DLBCL. We've seen some other data sets recently from other allo CAR-Ts, but we'll have our own data set. You may not get the whole durability answer at this point, but you'll get a good indication of which way it's trending based on at least comparisons of 110 to 112 or what you're seeing with this patient population. So we'll have data later this year that informs not only oncology path forward but may also read through to autoimmune.

And just remind us the targets here. So we'll see CD19 and BCMA?

Well, CD19, with CD70 is the other program that we're advancing right now in solid tumors and in heme malignancies. We haven't said when we're going to have the data for that yet. But with CTX130, which was a CD70-targeted allo CAR-T in heme malignancies in T-cell lymphomas, we already saw data that was a product. It was -- we saw CRs in patients that had no hope. In fact, one of the patients was subject of an NPR article where it was a former NBA player who couldn't walk because they were wheelchair bound because they had lymphoma, all over their feet and all over the skin. And a month later, were dancing around and walking around and running. And you've had these cases in these very difficult-to-treat lymphomas. And CTX131 gives us that much better opportunity to treat these patients, to get more patients in the CR, in complete remissions. And some of the patients, we actually want to get into CR that -- and go on to get an allo transplant, which is actually the best outcome they can get. So we'll have multiple data in addition to solid tumors that inform our solid -- our general cancer franchise strategy later this year.

And maybe just to round out here, the regenerative medicine vertical, how much are you prioritizing that effort with type 1 diabetes or anything else?

Yes, it's a significant priority. Again, we have to make bets while others have maybe written it off or saying it's so difficult because that's where we're going to create alpha, that's where we're going to create tremendous value. And what you're seeing is we're already seeing a lot of benefit with the beta-2 M with our cancer programs. We made other edits like HLA-E knock-in, we've made edits like PD-L1 knock-in to make cells stealth. And if we crack the nut on making these cells stealth, it opens up the possibilities not just for type 1 diabetes, but for many of the organ systems, right? I mean you can imagine now stories where people are creating minipig kidneys for human transplantation. They will all need the same edits or around making them stealth. You're seeing -- [indiscernible] cells is the best place to start because that's the best controlled experiment to see these cells truly are stealth. And now we have both the device approach and the device-free approach that we're developing, ultimately, that, that's going to inform us on not just the stealth nature but are we getting enough efficacy from an insulin production standpoint in a glucose-responsive fashion with the cells that allows the dose titrate. So the last part of this is now that we have a program back from Vertex. We're now doing all the development and manufacturing ourselves. Once we can do the manufacturing ourselves, it gives us tremendous flexibility to have multiple generations of products and move them all into clinic and parallel process, different thesis at the same time.

So with that, Sam, thank you so much. Really enjoyed the discussion.

Yes, thank you very much, Salveen.