Cullinan Therapeutics, Inc. (CGEM) Earnings Call Transcript & Summary

Good morning, and welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley research disclosures website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Cullinan Oncology with CEO, Nadim Ahmed. Welcome Nadim.

Thanks, Jeff. Good to be here.

For those who may not be familiar with Cullinan, can you provide a brief introduction?

Sure. So Cullinan Oncology as the name suggests, we're purely focused on cancer. We have a broad a deep pipeline currently of 8 programs in the clinic, and they span a range of hematology and solid tumor indications across a range of different modalities as well. We currently have 3 programs in the clinic. And by this time next year, we'll have 5 programs in the clinic. And within each of our programs, we really focus on developing either first-in-class or best-in-class assets. So that's kind of strategic approach that we take. We're fortunate to have a pretty robust cash position. So at the end of Q2, over $650 million in cash, which gives us a 5-year cash runway to and through the end of 2026. We have a leadership team that has great depth in oncology, again, across hematology, solid tumor indications, across different modalities. And functionally, we have expertise in research, development, and commercialization as well now on the leadership team as we build out the leadership team. And so talking again about the cash, we're looking at ways of how can we accelerate kind of our current pipeline, how can we continue to bring in interesting assets, especially in the current market dislocated conditions. And ultimately, our goal is to kind of evolve from a discovery machine to a late-stage development company and ultimately to become a commercial stage fully integrated biotech company. So that's a little bit of background about Cullinan Oncology.

Great. And maybe before going into the pipeline, let's talk about Cullinan's approach, you kind of, touched upon this, but you take a pretty unique approach to driving innovation. So maybe if you can talk a little bit about that.

Sure. So I would say modality agnostic precision oncology is kind of at the heart of our discovery effort. So our discovery team focuses on identifying high-impact targets and then identifying the best way to prosecute against those targets. So we do the target first and then the modality, rather than the other way around. So that's allowed us to build out a very diversified portfolio. And if you look at our portfolio, we range from small molecules to biologics to fusion proteins. And so we're very much driven by the target as opposed to the platform. And that means we're not dependent on one specific platform. So that's one aspect of it. We're very, very -- as well as modality agnostic, we're very agnostic to the source of innovation, too. So we look to the external environment and external partnerships. We call it innovating without borders. So we recognize there's a world outside of our shop where there's excellent innovation taking place. And you can see that reflected in our pipeline. And ultimately, our goal is to make sure that we're bringing forward only the most promising oncology assets. So we're pretty rigorous in our early-stage discovery efforts. Through what we call thriller or killer experiment. So if it doesn't meet the criteria, we kill it. And if it does meet the criteria, we double down on the investment to progress those molecules. And the areas we really target, we have kind of 3 key criteria for advancing our assets or as we look at business development opportunities, as I mentioned earlier, it has to have the potential at least to either be first-in-class or best-in-class. Assets that either activate the immune system or target key oncogenic drivers. And preclinically, at least we have to see monotherapy activity. So we're very disciplined about the way we progress assets and as we bring assets in as well, again, modality agnostic and also agnostic for the source of innovation. Ultimately, our goal is to create new standards of care for patients of cancer.

Now in June, Cullinan announced an agreement where Taiho gets ex U.S. rights to CLN-081. And you jointly develop and commercialize in the U.S. So can you talk about that deal? And why was now the right time?

Sure. So I -- this is one of my first projects as I walked through the doors at Cullinan Oncology back in October 2021. And so I asked the team to look at the range of strategic options that we had for CLN-081. And ultimately, for us, a couple of things I've mentioned. One, it was a competitive process. And two, we picked the deal that had the best financial terms and strategic terms for us. And so as a reminder, you got $275 million upfront, which is obviously cash is king right now, so that's important to us. We get an extra $130 million based on U.S. regulatory milestones on the core indications of frontline and second-line exon 20 small cell lung cancer and strategically important for us, we get to participate in the 50-50 profits in the U.S. which obviously is an important oncology market. So it's a co-development and co-commercialization agreement. So the co-development is 50% funding of the U.S. development, and we have a strategic option to co-commercialize in the future.

And so why have an option to co-promote in the U.S., what -- why not just get a royalty on U.S. sales?

Sure. Great question. So I would take a couple of things. One, arguably, the U.S. is the most important oncology market in the world. And so for us, it was really important to be able to participate at a much higher rate through a 50-50 profit share than it was to kind of just set up a royalty stream, right? So the 50-50 participation is really important for us. And then strategically, I mentioned earlier that our ultimate goal is to become a commercial stage biotech company, right? So through a 50-50 profit share and co-commercialization agreement, it allows us to build a commercial infrastructure in a very lean and cost-efficient way that can be applied to CLN-081, but also the rest of the pipeline that I spoke about. So the overwhelming financial benefits and strategic benefits of the deal made it quite an easy decision for us to move forward with Taiho Oncology, who, by the way, has been a great partner for us.

And when is the deadline for exercising the right to co-promote in the U.S., like what would be the deciding factors for that? And how are you thinking about the sales force that would be needed at Cullinan?

Sure. So as I mentioned, the co-commercialization is an option. So we're going to make a decision as we get closer to launch. So we have plenty of time to think about both the market conditions, the competitive environment, et cetera. So any sort of decision on what that structure would look like. We're going to defer until we need to make that decision. But we have that strategic optionality, which is important for us.

Great. So maybe moving on to CLN-049, that Florentine program. That's a bispecific antibody. Like what are the limitations of current FLT3 inhibitors? And how is 049 potentially better?

Sure. So again, as a reminder, I spoke about going with first-in-class assets or best-in-class assets. So CLN-049 is another example of a first-in-class asset, the first bispecific antibody to enter the clinic that targets FLT3 in AML patients. And the key areas of differentiation are: one, obviously, there are approved FLT3 agents in AML currently, at least 2 commercially approved. And they focus in on the mutant form of FLT3, which is about 20% to 30% of patients. The way CLN-049 works, it addresses the extracellular domain of FLT3. So basically, it doesn't matter whether it's wild-type FLT3 or mutant FLT3. And so when you put that together, you're talking about 80% to 90% plus of patients. So it's a much larger addressable pool of patients that we can address with CLN-049.

And then can you talk about the preclinical data that you have 049 that gives you confidence in the approach?

Sure. So for us, it was important to look at both wild-type and mutant FLT3. So through AML cell line experimentation, we were able to show that -- very significant tumor cell lysis across both mutant and wild-type FLT3. So that was important for us. In terms of potential safety profile, we also showed preclinically that our antibody only activates T cells in the presence of FLT3. So hopefully, things like CRS, et cetera, it will make our molecule much more specific. In mice, that were leukemia bearing. We've showed improved survival in those mice with very low doses of CLN-049. And also when we transfected human AML blast into rodents, we were able to show complete eradication. So our preclinical package is very robust. But now, of course, we have an ongoing Phase I study. And so we're obviously looking forward to generating data in that setting.

And can you talk about that study and what we should look for in the upcoming clinical update?

Sure. So as I mentioned, ongoing Phase I study with dose escalation. So we've guided to clinical data available in mid-2023. So it is a Phase I study. So the primary objective is safety. And so as we get closer to that time, we'll be able to more accurately describe the data set that we'll be sharing.

Any sense for -- maybe it's a bit early still, but any sense for how many patients of data you might provide in that update, whether any early glimpses of that efficacy, that kind of thing?

Yes. So I would say a couple of things. So one, because 049 is a T cell engager, many of you may be aware, the FDA has been quite cautious with T cell engagers, right? So we have to make sure we do the dose escalation in the right way and matching the requirements of the FDA. So again, its primary goal is safety. And so again, I'll go back to the guidance of mid-2023. Of course, as accrual happens and if we can give clearer guidance, we'll do that. But at the moment, that's what we're saying. But we'll have an initial clinical data set mid-2023.

Okay. Great. Well, maybe moving on to CLN-619, that targets MICA/B. How do tumor cells use those as evasion mechanism?

Sure. So the interesting thing is MICA/B, we find in various conditions in the human body. So stress cells express MICA/B, tumor cells express MICA/B. And normally, what happens is when MICA/B sits on the cell surface, it's able to invoke immune cells, especially NK cells and subsets of T cells through the NKG2D axis. And so those cells then come in and then -- those immune cells then come in and destroy the stress cell or the tumor cell. The issue with cancer is, cancer is very clever. And in the tumor microenvironment, you see proteases generated. Those proteases then are able to cleave MICA and MICB off the cell surface of tumor cells, which basically renders those cells invisible to the immune system. It's a way that it evades the immune system. And so we think there's very interesting and unique biology here. CLN-619, by the way, is another example of a first-in-class approach that we're taking. So it's the first antibody to enter the clinic targeting MICA and MICB. So we're very excited about that opportunity. And MICA/B ubiquitously expressed across solid tumors and hematologic indications. And so we think this could really be a pan-cancer opportunity for us.

And so how does 619 prevent shedding of MICA/B? And then how do other programs targeting MICA/B differ from 619?

Sure. So 619 actually, the antibody binds to the side of proteolytic cleavage, as I described with what happens in the normal tumor microenvironment. So it prevents the shedding of MICA/B. So in a way, it's tagging the tumor cells, again, to be attacked by NK cells and subset of T cells through the NKG2D axis. So that's one main mechanism of working. So those tumor cells, because they have MICA/B on the cell surface, they're no longer able to hide from the immune system. So that's a key way it works. Also 619 induces ADCC as well. So you're able to use ADCC. So with 619, we're invoking both the adaptive and the innate immune system. So almost a double mechanism of action there. And so again, that's why both excited by the biology of MICA/B, but also the molecule that we've created to kind of address that opportunity, which again, can be pan-cancer.

So can you walk us through the preclinical and biomarker data that you've collected so far for the [indiscernible]?

Sure. So I'd say a couple of things. In the literature, you'll see that soluble levels of MICA/B -- basic MICA/B that shed in cancer patients, portends for poorer survival. So that's one point. Number two, when you look across a host of different diseases. You see that the ligand that's most expressed across tumor types is MICA followed closely by MICB, which is why we talk about pan-cancer potential opportunity. We've also shown in xenograft models, significant tumor shrinkage, even at very low doses of 619 as a monotherapy agent. So that's been encouraging. In those same models at the same time as we've seen tumor aggression, we've also seen reduction in shed MICA/B as well. So the preclinical package is tying up nicely with the hypothesis that I've just described. And so now we're in Phase I in the clinic with 619.

And so how is your ongoing trial design to examine both monotherapy and combination activity? And what should we look for in that upcoming data that you just mentioned?

Sure. I think, look, one of the advantages of having -- being in a fortunate position of having the robust cash position that we have is that we're now able to do things in parallel that perhaps we would have done sequentially before. An example of that is with 619 where we're doing parallel development of both monotherapy dose escalation as well as combination therapy dose escalation in combination with pembrolizumab, because we think there's a very strong rationale to both combined MICA/B approach as well as checkpoint inhibition. So that study is ongoing. And so again, we're excited that the opportunity to address a range of cancers, both through a monotherapy approach as well as a combination therapy approach.

Great. So maybe moving on to CLN-617. Can you just talk about the historical limitations of cytokine delivery? And how does 617 address that?

Sure. I mean one thing we know about cyto is kind of a historical treatment, IL-2, IL-12, very potent molecules, very efficacious. But unfortunately, when given systemically, we've just seen tremendous toxicity, which has kind of limited widespread use of those agents. With 617, we've developed a fusion protein that combined for the first time, IL-2 and IL-12, so potent cytokines to be able to deliver that fusion protein intratumorally. It also has a collagen binding domain, which is important because that will help to keep IL-2 and IL-12 and limit it to stay within the tumor. So we think that's a novel approach. Again, a first-in-class approach. We've also seen -- preclinically, we've been able to generate both a robust memory T cell response as well as an abscopal effect. And the abscopal effect is really important because if we want to be able to go beyond the tumor and reach other sites and other lesions. And so we're pretty excited about the preclinical data that we've seen, very robust, and we plan to advance 617 into the clinic in the first half of next year.

Great. Well, maybe in the last minute or 2, are there any other aspects of the Cullinan pipeline that you'd like to highlight or any aspects of the story that you think the Street is missing?

Yes. I think like many companies, we're actually trading a little bit below cash. And so we're in a very funky environment, which many of you know about, right? So I would say a couple of things. One, as I described earlier, the fact that we take this modality agnostic precision oncology approach means we have multiple shots on goal and a very diversified pipeline. So we're not limited by a singular platform. We have assets that -- across the range of cancer solid tumors hematology. And so I think from that perspective, again, very diversified pipeline. And as I mentioned earlier, we're very disciplined about only advancing the most promising assets. So very early on, we decided to either thrill or kill. And I think that's something unique to Cullinan Oncology. We want to make a big difference for cancer patient outcomes. So that's why we only advance the most exciting assets. So when I joined the company October '21, we had 1 program in the clinic. As now, we have 3 programs in the clinic, by this time next year, we'll have 5 programs in the clinic, all very novel, either first-in-class, best-in-class. Combine that with our cash position, that will then allow us to accelerate the pipeline and doing lots of things in parallel, as I described. We're still looking externally as well as a source of innovation, as I mentioned earlier. So if there's the right asset out there, that's a good strategic fit, hopefully, at the right price under current conditions, we have the firepower to bring additional innovation in. And with CLN-081, given that we have a co-commercialization arrangement post launch, that will continue to bring an annuity annual revenue into the company to do additional things. So I would argue we have one the most rich and diverse portfolios for a company of our size, but we also have the cash firepower to do all the things that we want to do. Building out an amazing leadership team, many of whom are in this audience. And then ultimately, I think that will help us to deliver the vision of becoming a fully integrated commercial stage end-to-end biotech company. So we're really excited about the opportunity ahead of us. And our stock is trading at a great discount. Right now, with such a great pipeline. And so we're just really excited about the opportunity. I hope you can hear that in my voice.

Great. Looks like we'll have to leave it there. Thanks so much for your time.

Appreciate it. Thanks so much, Jeff. Thanks, everyone.