Earnings Call Transcript - ALLO Q1 2023

Operator, Operator

Hello and thank you for standing by. And welcome to the Allogene Therapeutics First Quarter 2023 Conference Call. After the speaker’s presentation, there will be a question-and-answer session. Please be aware that today’s conference call is being recorded. I would now like to turn the call over to Christine Cassiano, Chief Communications Officer. Ms. Cassiano, please go ahead.

Christine Cassiano, Chief Communications Officer

Thank you, Operator, and welcome to our call. Today, after market closed, Allogene issued a press release that provides a business update and financial results for the first quarter of 2023. This press release and today’s webcast are both available on our website. Following our prepared remarks, we will host a Q&A session. We ask you to limit your questions to one per person as we will keep this call to an hour and do our best to get in as many as possible. Joining me today are Dr. David Chang, President and Chief Executive Officer; Dr. Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer; and Dr. Eric Schmidt, Chief Financial Officer. During today’s call we will be making forward-looking statements. These may include statements regarding the success and timing of our ongoing and planned clinical trials, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities and 2023 financial guidance, among certain things. These forward-looking statements are based on current information, assumptions and expectations that are subject to change. A description of potential risks can be found in our earnings press release and latest SEC disclosure documents. You are cautioned not to place undue reliance on these forward-looking statements and Allogene disclaims any obligation to update these statements. I’ll now turn the call over to David.

Dr. David Chang, President and CEO

Thank you, Christine, and thank you all for joining today’s call. When we launched Allogene in May 2018, we understood that our mission to reinforce a new generation of CAR T products was an important one. Like other industry pioneers, we knew that along our journey, we might face many obstacles and that our progress would be marked by several first-in-class milestones. Most importantly, we knew that our compass has to be standard on doing right for patients. This is why each year on the company’s founding anniversary, we celebrate Patient Day at Allogene. This year, we are honored to have two patients join us live at our headquarters, one who received ALLO-501 for the treatment of relapsed/refractory non-Hodgkin lymphoma and one who received ALLO-715 for relapsed/refractory multiple myeloma, each of whom continues in long-term response. They both spoke eloquently of their own journey with cancer and the impact that our AlloCAR T product candidates have had on their lives. Why do I mention this? We often get questions about our stock price weakness. Yes, the market is challenging. Yes, cell therapy stocks are temporarily out of favor. And yes, many of us in the industry find it frustrating that progress is not always rewarded in real-time. But it helps to remember that the best marker of success is not necessarily a stock price; rather, it is the impact companies in our sector are having on patients. We at Allogene not only have confidence in the clinical data sets that we have delivered, but we also know that we are on the right path by looking into the eyes of patients who are with us today because of our investigational products. The two patients I met earlier this week are living proof of Allogene’s success. As we hear their stories, we also hear the growing rumble of discontent around the inability of autologous CAR T therapies to satisfy patient demand. By 2030, it is estimated that 300,000 patients with lymphoma or myeloma will be eligible for autologous CAR T therapy as it moves to earlier lines. Only an estimated 10% will be able to receive treatment, yet achieving even that goal will require 30,000 individual manufacturing runs. Last year, based on reported sales, 6,000 to 7,000 runs were required, which strained the system. We are keenly aware that shareholder interest is best served by bringing AlloCAR T products to market as soon as possible, but the real sense of urgency originates from the many patients who are on the sidelines today waiting their turn. In contrast to autologous cell therapies, patients in our trials don’t have to wait on the sidelines. They are able to start treatment within days of enrollment, without the need for bridging therapy, which often comes with marginal benefit but with toxicities. Treatment consists of a one-time infusion of cells, free of the hassle and inconvenience of having to return to the clinic for treatment repeatedly, which often leads to cumulative toxicities that come with lengthy chronic therapy. AlloCAR T is unique in its ability to potentially provide a one-time off-the-shelf product capable of achieving long-term remissions. As we march towards our goal of a BLA submission for ALLO-501A upon completion of the ALPHA2 trial and evaluate manufacturing processes across our BCMA candidates to achieve optimal clinical performance, I am particularly excited to welcome Tim Moore to Allogene as our new Chief Technical Officer. Tim was my colleague at Kite, trusted to deliver CAR T products for every patient we enrolled in clinical studies and post-approval. As the Executive Vice President of Technical Operations, he oversaw the global development of the most commercially successful CAR T manufacturing processes in the industry. More importantly, he successfully navigated the complex CMC processes for the BLA submission of YESCARTA that led to on-time approval and Kite’s commercial manufacturing facility. He is a true pioneer who defines operational strategy to reduce manufacturing risk and mitigate supply chain challenges inherent to engineered cell therapy. His joining Allogene recognizes that the only way to deliver CAR T at scale and in a timely manner is through an allogeneic approach. Of course, to get to a BLA, we need to execute on clinical development, which is Zach Roberts' main focus. With that in mind, I now turn the call over to Zach for an update on our R&D activities.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

Thank you, David. When Allogene began this journey, the biggest question faced in the field was whether or not the safety and efficacy of an allogeneic product would be comparable to approved autologous CAR T therapies, particularly whether AlloCAR T would achieve the long-term remissions that are the hallmark of cell therapy. While data from our ongoing Phase II trials will be required for confirmation, we strongly believe that the available data from the Phase I ALPHA and ALPHA2 trials establish the feasibility of this new modality. Our unique experience and track record across our teams, derived from prior successes developing autologous CAR T therapies that led to approvals in late- and earlier-line disease, give us confidence in our approach in clinical data. When you combine that history with the nearly 200 patients we have treated with our AlloCAR T investigational products, including nearly 50 patients alone with LBCL, we are in an unparalleled position regarding depth of understanding. Our experience now extends even further with the addition of Tim to our team. I doubt there are any better positioned to ensure that our capabilities and product sciences scale successfully with our advances in the clinic. Another important benefit of our experience in this field is our longstanding relationships with investigators. We recently held a meeting with many of our Phase II investigators, as we progress enrollment of the ALPHA2 trial and begin enrolling patients in the EXPAND trial. As our clinical safety and efficacy data continue to mature, our investigators are increasingly excited about the potential of allogeneic CAR T. In an effort to increase awareness of our programs to an even broader set of physicians, we are pleased to present updated Phase I data from our trials with ALLO-501 and ALLO-501A at the upcoming American Society of Clinical Oncology Annual Meeting in Chicago. While the field of allogeneic CAR T has been marked by inconsistent data sets, especially concerning durability of response, we believe the data we presented at our R&D showcase late last year demonstrate that our CD19 AlloCAR T product candidates have the potential to provide durability on par with autologous therapies. We believe we have succeeded where many have fallen short due to our ability to control premature CAR T-cell rejection. Our platform is enabled by ALLO-647, our anti-CD52 monoclonal antibody that permits an extended window of CAR T cell expansion and persistence. What ALLO-647 does cannot be reproduced, even with high doses of chemotherapy that might be associated with severe toxicity. I’m pleased to report that we have recently initiated the Phase II EXPAND trial designed to support the licensure of ALLO-647 as a lymphodepleting agent for ALLO-501A in LBCL. This study aims to demonstrate the superiority of ALLO-647 containing lymphodepletion regimens over a regimen of fludarabine alone. The preponderance of data we’ve already presented from our CD19 program points to improved clinical performance with ALLO-647 in terms of depth and durability of response. Our safety data to date are generally comparable to that of autologous CAR T. We’ve not observed GvHD or severe ICANS, and our rates and severity of cytopenias and infections are in line with what has been reported for autologous CAR T. Based on our emerging product profile, you can understand why we remain confident in the potential outcomes of both of our ongoing Phase II trials. I’d like to next turn your attention to our ALLO-316 program, where we recently presented interim Phase I data in renal cell carcinoma at the Clinical Trials Plenary Session of the American Association of Cancer Research Annual Meeting. Clear cell renal cell carcinoma is the most common form of kidney cancer. The unmet need in patients with metastatic or advanced disease, who have progressed on standard-of-care therapies such as tyrosine kinase inhibitors and immune checkpoint inhibitors, is high. Once patients have progressed on these two classes of drugs, there are limited options. In fact, it’s estimated that 90% of patients with advanced or metastatic RCC will die from their disease within five years. The data we presented at AACR showed that ALLO-316 has the potential to make a difference for patients with RCC whose disease progressed on TKIs and immune checkpoint inhibitors. Initial results from the dose escalation portion of the trial showed that a single infusion of ALLO-316 demonstrated antitumor activity in patients with CD70 expressing tumors, providing a 100% disease control rate, meaning tumors shrank or remained stable over a certain time period. In the 10 patients whose tumors are known to express CD70, the overall response rate was 30%, including three partial responses, meaning the size of the tumors was reduced by at least 30%. The longest partial response lasted to month eight. This is remarkable given that we are still in the dose escalation phase of the study with most patients being treated with relatively low doses of 40 million to 80 million total AlloCAR T cells. As in our CD19 program, the safety profile of ALLO-316 to date appears generally consistent with what is seen with autologous CAR T cell therapies. With all 19 patients in the Phase I study, including nine who did not have CD70 expressing tumors or had CD70 expression unknown, there was a single case of Grade 3 CRS neurotoxicity, which is now more broadly defined with generally low grade and reversibility, with most events being fatigue or headache. There were no cases of GvHD or ICANS. Infections occurred in eight patients and included four cases of Grade 3 or higher infection. Grade 3 or higher prolonged cytopenia was observed in three patients. One dose limiting toxicity of Grade 3 autoimmune hepatitis was reported. This event has been resolved and may have been confounded by prior use of the checkpoint inhibitor. One feature of ALLO-316 that we are particularly excited about is the expansion of persistence of ALLO-316, which we believe compares favorably with what has been reported for autologous CAR T therapies. ALLO-316 was engineered so that the anti-CD70 CAR can exhibit an additional function beyond cancer cell killing: avoidance of premature rejection by the host immune system. Because CD70 is expressed on activated T cells, there is potential for ALLO-316 to target and eradicate alloreactive T cells in addition to CD70-positive cancer cells. This unique feature of ALLO-316 highlighted in the TRAVERSE translational data shared at AACR is the basis of our proprietary Dagger technology that has become the foundation of our next-generation anti-rejection approach. Dagger technology is designed to prevent early rejection of AlloCAR T cells by suppressing host immune cells, thereby supporting CAR T cell expansion and enabling a prolonged window of persistence. We are excited by the possibility to deploy Dagger alongside CARs directed at other antigen targets in the same cell to create a novel allogeneic CAR T platform for a suite of next-generation products that are less dependent on traditional chemotherapy-based lymphodepletion. I will now turn the call over to Eric.

Dr. Eric Schmidt, Chief Financial Officer

Thank you, Zach, and good afternoon, everyone. While the market environment for biotech companies continues to present challenges, one thing remains certain: success will ultimately be driven by a combination of scientific innovation, experience, and financial stewardship. Our scientific innovation is proving itself in the clinic. The experience of the Allogene team has never been in doubt, and in fact, the addition of Tim as our CTO has only added to our strength. Lastly, we are proud that we have been, and continue to be, very thoughtful about how we deploy our resources. Our balance sheet remains strong as we ended the quarter with $514 million in cash, cash equivalents, and investments. We also continue to execute cost savings measures directed at preserving our balance sheet strength. We believe these efforts have extended our cash runway into Q2 of 2025, long enough to complete our pivotal trials for ALLO-501A and prepare for a potential BLA submission. In the first quarter of 2023, our research and development expenses were $80.2 million, which includes $9.2 million of non-cash stock-based compensation expense. General and administrative expenses were $18.9 million for the first quarter of 2023, which includes $9.6 million of non-cash stock-based compensation expense. Our net loss for the first quarter of 2023 was $98.7 million or $0.68 per share, including non-cash stock-based compensation expense of $18.8 million. We now expect a decrease in cash, cash equivalents, and investments of approximately $230 million in 2023. We expect that our full year 2023 GAAP operating expenses to be approximately $340 million, which includes estimated non-cash stock-based compensation expense of approximately $80 million. This guidance excludes any impact from potential business development activities. With that, we will now open the call for your questions.

Operator, Operator

Thank you. Our first question will come from Tyler Van Buren of TD Cowen. Your line is open. Mr. Van Buren, please unmute.

Tyler Van Buren, Analyst

Okay. I’m here. Yeah. Thanks. Congrats on the progress, guys. Thanks for taking the question. As we think about the ASCO update and what we should expect, can you just help frame that a little further? We’ve seen good durability, obviously, with the early patients and the majority of Alloy patients have made it past 12 months. So the focus at ASCO on the single-dose FCA90 alloy patients and will all 12 be past 12 months at the time of cutoff just before ASCO?

Dr. David Chang, President and CEO

Tyler, good afternoon. Thanks for that question. This is David Chang. Certainly, we will be updating providing the data at ASCO. One thing we are really trying to do is to have our data be in front of the investigators and the KOLs. Previously, we shared the information, but that was in a corporate presentation setting. It has become apparent to us that much of the information we communicated to our investors was not readily available to the academic and clinical community. The purpose of the ASCO presentation is to ensure that KOLs and our investigators and their teams have a chance to see our data in a peer-reviewed format.

Dr. Eric Schmidt, Chief Financial Officer

And Tyler, this is Eric. Just in terms of the specific details, we’re going to have to wait until ASCO or the conference itself. We don’t want to preempt the conference organizers. I do want to remind everyone that we stopped enrolling patients in the Phase I study when we began the Phase II program, so there won’t be additional patients. But, yes, we’ll have additional follow-up on patients previously treated as you presumed, and obviously, we’re just keen to share this update in the medical forum, as David mentioned.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Salveen Richter of Goldman Sachs. Your line is open.

Matt Borsch, Analyst

Hey. Thanks. This is Matt on for Salveen. Could you give us any more details on the progress of the pivotal ALPHA2 trial in particular? Have you begun treating patients, and when could we expect initial data? Thank you.

Dr. David Chang, President and CEO

Yeah. Thanks for that question. The study is open to enrollment and it is progressing as expected. Our guidance remains the same; we expect to complete enrollment in the first half of next year and we expect a Phase II readout by the end of next year.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Michael Yee of Jefferies. Your line is open.

Michael Yee, Analyst

Hey, guys. Good afternoon, and thanks for the update. We had one question and a follow-up. On the enrollment of ALPHA2 and also the EXPAND trial. Could you comment on how you think about the types of patients that are getting enrolled in ALPHA2? And even specifically, the EXPAND trial given that’s actually a randomized study, where the control arm doesn’t necessarily get to ALLO-647. And if you think about how efficacy would be on that, the types of patients that would actually enroll in that trial. The reason I ask about this is just leading to the confidence around the timing, alluding to the prior question, as well as other options that are out there for people in a competitive environment. That’s a complicated but I think important first question. And the follow-up is on myeloma; could you comment on how you’re thinking about the timing of the next update there as it relates to the manufacturing and what we’re sort of waiting for, when we could get some disclosures this year? Thank you, guys.

Dr. David Chang, President and CEO

Thanks, Michael. Regarding the first question, the patients we are enrolling in the trials are those who would have been considered eligible for the original autologous CAR T studies. These are patients who are in their third line, whose disease is progressing but are fit enough to meet the eligibility criteria. We do not expect to see a measurable difference in the patients treated between the EXPAND and ALPHA2 trials from the target population studied in the autologous CAR T world. On the second question around myeloma, as we’ve guided previously, we are focused on reviewing the manufacturing process used for ALLO-715 and 605. We expect that to be the focus of the remaining months of this year and to potentially resume dosing in 2024.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Michael Schmidt of Guggenheim Partners. Your line is open.

Unidentified Analyst, Analyst

Hi. Good afternoon. This is Ed on for Michael. Thanks for taking our questions. Congrats on the progress on initiating EXPAND. How do you plan to allocate patients to ALPHA2 and EXPAND so that the two studies won’t compete with each other in terms of patient enrollment? And can you talk about the powering assumption for EXPAND or what level of PFS separation you expect to see from the two arms? Thank you.

Dr. David Chang, President and CEO

In terms of competing for enrollment into the two studies, ALPHA2 and EXPAND, we have addressed this largely operationally through the sites that we intend to open for the two programs. They are not overlapping. If you have one CD19 program from Allogene open at your center, it will be either ALPHA2 or EXPAND. That is the primary mechanism by which we are managing that. As far as the powering assumptions, we’ve not gone into the details of the study design and won’t be doing so today. Rest assured that with the sample size of 35 in each arm, we believe there will be a significant difference between the two arms.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Mark Breidenbach of OpCo. Your line is open.

Mark Breidenbach, Analyst

Hey. Good afternoon, guys. Thanks for taking my question. Just to kind of set expectations on next data from the TRAVERSE study, can we kind of expect dose level 3 and dose level 4 cohorts to enroll similar numbers of patients as we saw in the first two cohorts? And I guess I’m wondering if we should expect data from those later this year and if they’re also going to be selected for based on CD70 positivity and receive FCA conditioning. I know some of the patients in dose level 1 and dose level 2 cohorts did not receive FCA conditioning. Thanks for taking those questions.

Dr. David Chang, President and CEO

As we’ve mentioned in the past, the dose escalation is indeed ongoing. We do expect to enroll patients in both FC and FCA arms in at least dose level 3 and potentially dose level 4. As for data updates, we expect to be able to share data in the second half of this year and will decide when to share those updates according to when we have a reasonable number of patients and some decent follow-up, so it's a meaningful update.

Operator, Operator

Thank you. One moment for our next question. Our next question will come from Jack Allen of Baird. Your line is open.

Jack Allen, Analyst

Great. Thank you so much and congratulations to the team on all the progress made over the quarter. A bit of an abstract question, but I do get a number of inquiries from investors surrounding the one late progressor from the FCA90 Alloy treatment cohort of the ALPHA1, ALPHA2 study. I was wondering if you had any additional thoughts as to why that may be occurring with allogeneic cell therapy and any scientific context you can provide around that patient?

Dr. David Chang, President and CEO

Hi, Jack. Let me take on that question. Even in the autologous CAR T therapy setting, late progression happens, and we don’t view what happened to that patient to be a unique event for the allogeneic CAR T. During the course of CAR T, we are learning a lot. Yes, we get patients who stay very stable after six months or so, but late progression is known to occur.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Brian Cheng of JPMorgan. Your line is open.

Brian Cheng, Analyst

Hey, guys. Thanks for taking my questions. Just going back to your earlier comments related to Dagger technology. Are you planning to push out Dagger in specific liquid and solid tumor indications? And I don’t know whether you have any early view on your strategy today with the next steps and how does that fit into your current plan? Thank you.

Dr. David Chang, President and CEO

Brian, that’s a great question. As we review more data, we get more excited about what we’re seeing with Dagger. We are able to transfer Dagger to another CAR, as we presented earlier this year in a scientific forum. We see this as potentially a next-generation platform. As we talk, our research team is generating the next-generation construct. They will be ready to go into the clinic once we make a strategic choice on which ones to go forward first.

Operator, Operator

Thank you. And one moment for our next question. Our next question will come from John Newman of Canaccord Genuity. Your line is open.

John Newman, Analyst

Hi there team. Thanks for taking my question. So I think it’s interesting, last year you showed us data at your R&D showcase that suggested progression-free survival on your CD19 product is basically equivalent to autologous CAR T. You’ve also commented previously that the percentage of patients receiving autologous CAR T is actually quite low. I wondered if you could discuss just for a moment the impact that enrolling patients from the community could have here. Just thinking that there’s got to be some reason why these patients are actually not receiving autologous CAR T. I’m just wondering if it’s because they’re not suitable or perhaps they just don’t have access to these larger centers? Thanks.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

Thanks for that question. There are enough patients out there with relapsed and refractory diffuse large B-cell lymphoma, and they’re being treated in different places. Often, patients are from the community who are being treated with standard frontline combination chemotherapy and then have a short remission before they progress. They get started on something before they are referred to a tertiary care center where CAR T is available. It’s often those patients who are coming in with a relapse after that frontline therapy with still disease present. We are actively looking for these patients. They come from a variety of different places.

Operator, Operator

Thank you. One moment for our next question. Our next question will come from Kalpit Patel of B. Riley. Your line is open.

Kalpit Patel, Analyst

Yeah. Hey. Good afternoon. Thanks for taking the question. Maybe one more on the Dagger technology. As you continue to explore 316, do you think you may be able to incorporate re-dosing of the AlloCAR Ts without traditional flu cy and the anti-CD52 antibody given the use of or the benefit of Dagger?

Dr. David Chang, President and CEO

That’s a great question. It drills down on exactly what we’re excited about with Dagger technology. We see very nice expansion, in fact, impressive expansion with Fc alone. This gives us confidence that the Dagger effect is real in patients. Potentially, we could introduce a consolidation strategy where we dose patients shortly after their initial infusion or potentially later following a period of durable stable disease or a partial remission. Your question around whether we would need standard lymphodepletion is a great one and is one that we will be considering as we move through the study.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Asthika Goonewardene of Truist. Your line is open.

Asthika Goonewardene, Analyst

Hey, guys. Thanks for taking the question. I just wanted to go back to what’s coming up at ASCO. If you can talk to us a little bit about what kind of translational data and additional new data you think we’ll be seeing in the presentation deck? Just want to get a better sense of what you want to be showing through the potential PIs in the prescriber community. As we get more of a feel for how multiple myeloma patients are being treated with autologous CAR T or at least those who are lucky enough to get a manufacturing slot and get a product, has your idea of what your allogeneic CAR T for multiple myeloma evolved? Thanks.

Dr. David Chang, President and CEO

In terms of the ASCO presentation, we will need to curtail our comments out of respect for the organizers, aside from what is shown in the abstract. We have started enrolling into the Phase I, so it’s the same patients as previously communicated at the RDS. We will also have a longer-term follow-up on these patients. Regarding myeloma, we are monitoring the situation. The number of patients receiving autologous CAR T continues to be limited by flat manufacturing limits. With our ALLO-715, we observed a durable response, indicating that autologous CAR T with ALLO-715 works in multiple myeloma. We're reviewing the manufacturing to look for an opportunity to increase potency to be closer to what CAR T has been able to achieve. If everything goes well, our plan is to reintroduce ALLO-715 into the clinic in 2024.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Reni Benjamin of JMP Securities. Your line is open.

Reni Benjamin, Analyst

Hey, guys. Thanks for taking the question. As we think about ALLO-316 from the data that we saw at AACR, we saw one unconfirmed PR and two confirmed PRs. Has that one unconfirmed PR subsequently been confirmed? When you talk about that 30% response rate, I assume it has been confirmed. I didn’t know from the data if that person had been re-dosed or if any re-dosing is happening in this particular study. Just related to that, there were two additional patients from the November update to the AACR update; is that kind of the cadence of enrollment we should be expecting as we set up for the second half of this year and expect an update from the TRAVERSE study? Thanks.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

This is Zach. The detail you're seeking is in the swim lane plot. The two patients that did have confirmed PRs were confirmed as per RECIST. The third patient with the unconfirmed did have a period of partial remission before the tumor grew slightly, which then put that patient out of the RECIST PR definition. We couldn’t confirm that remission per RECIST, but there was a period of durable reduction in tumor burden over 30%, consistent with RECIST. We did retreat two patients; both experienced a period of disease control following retreatment. Regarding the cadence of enrollment, the protocol was recently amended to allow only patients with known positive CD70 tumors into the trial. That amendment took time to work through the system, but I’m pleased to report that the majority of centers now have that amendment in hand, and we are seeing a significant increase in the pace of enrollment.

Operator, Operator

Thank you. One moment please for our next question. Our next question comes from Jason Gerberry of Bank of America Securities. Your line is open.

Jason Gerberry, Analyst

Hey, guys. Thanks for taking my question. Just a follow-up on the BCMA front. If you get the potency to where you feel like you need to be from a competitive standpoint, just curious how open you guys are to partnerships, like others on the autologous side have explored from a cost-sharing perspective? Or do you feel like, with the allogeneic approach, development to marketability wouldn’t be as cost-prohibitive as the autologous counterparts? And if I could squeeze a follow-up in, when would you expect the complete enrollment of the EXPAND study? Thanks.

Dr. David Chang, President and CEO

On the BCMA partnership question, a year or two ago, we would not have taken this approach. Right now, we have three clinically validated programs that we are not fully able to invest in. Earlier this year, we made a strategic choice to focus on executing the pivotal study in non-Hodgkin lymphoma with ALLO-501A. We are looking into opportunities to bring in a partner who is committed to advancing the allogeneic CAR T approach to accelerate programs like BCMA, where we have not only the lead program that has shown proof-of-concept but also potential to bring in next-generation technologies like the Dagger technology. On the EXPAND trial, we have recently initiated that trial, so it’s still too early to say how enrollment is proceeding at this point in time, but it remains our goal to have results from the EXPAND study roughly at the same time we have results from the ALPHA2 trial.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from William Pickering of Bernstein. Your line is open.

William Pickering, Analyst

Hi. Thank you for taking my questions. I want to confirm I heard you correctly earlier in the call that you expect to read out the pivotal trial before the end of 2024. Is the duration of follow-up that will be reported sufficient to file? And if I may, on the partnership comments you just made, David, is that specific to BCMA or is 316 also in scope for that?

Dr. David Chang, President and CEO

Thank you for the question, William. Yes, the ALPHA2 timelines are accurate. Data readouts will depend on how quickly we can enroll the study; thus it is hard to be exact at this point. But year-end 2024 is a reasonable timeline to think about.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

Regarding the partnership, we are not specific to one particular program. Since we have three viable programs, partnering on one will allow us to advance the overall operations not just for those two but all three programs faster. The real goal of the partnership is to maintain momentum and move as quickly as possible.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Luca Issi of RBC Capital. Your line is open.

Luca Issi, Analyst

Thank you for taking my question. I have a quick one. You're reducing your cash flow guidance for the year by about $20 million, if I'm not mistaken. I'm wondering if

Dr. David Chang, President and CEO

Operator, are you there?

Operator, Operator

Mr. Luca. Mr. Luca, are you completed? It sounds like your line went mute; could you please unmute your line?

Dr. David Chang, President and CEO

Operator, maybe we can get him back in the queue. Let’s move on.

Operator, Operator

Okay. One moment. And one moment for our next question. Our next question will come from Sami Corwin of William Blair. Your line is open.

Sami Corwin, Analyst

Hi there. Thanks for taking my questions. I have a couple on the EXPAND trial. I noticed that in your 10-Q, it stated that a couple of the clinical trial sites have declined to participate because of its randomized design. So I guess I was curious if that sentiment or hesitation was also echoed by patients and if this will impact enrollment in the trial at all. Also, when can we expect data from that trial, and if that trial ends up not being statistically significant, would you still submit a BLA for ALLO-501A with just using cy flu? Thank you.

Dr. David Chang, President and CEO

Thanks, Sami. Those are terrific questions. Regarding our plans to run ALPHA2 the way we are treating patients, we are confident in that study’s ability to demonstrate a benefit for patients who meet the eligibility criteria. With respect to how EXPAND is enrolling and what that eventual outcome may look like, we are having a lot of conversations with sites. Some sites may decline for any number of reasons, but many others see the value and scientific merit of this trial, and we’re excited to participate with them. As for data availability, we are targeting the same timing for data availability from EXPAND as we are from ALPHA2.

Operator, Operator

Thank you. One moment please for our next question. And we have a question again from Mr. Luca Issi of RBC Capital. Your line is open.

Luca Issi, Analyst

Oh! Great. Can you guys see me okay?

Dr. David Chang, President and CEO

We can.

Luca Issi, Analyst

Great. So maybe a quick one, Eric. You’re lowering your cash flow guidance for the year by $20 million. So if I’m not mistaken, can you expand on where some of those savings are coming from? And then second on CD70; in the past, you’ve spoken about tumor types beyond renal cell carcinoma either as monotherapy or combination with checkpoint and is that...

Dr. David Chang, President and CEO

Luca, we’re losing you again. Let me answer your first question; I’m not sure we heard your second. But with regard to our cash burn guidance for 2023, that’s correct. We’ve lowered our cash burn target from $250 million to $230 million. We continue to be very mindful of everything we spend our resources on. Any dollar spent gets a second look given the nature of the capital markets and our need to focus on our highest priority items. Across the board, we’ve investigated all our spending and have tightened our belts a little bit.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

Regarding the second question, the potential for using CD70 outside renal cell cancer, we have considered various options including CD70 positive solid tumors or hematologic malignancies and combining with immune checkpoint inhibitors. All those are still under consideration. The goal this year is to get to lymphodepletion and cell dose to start expanding the cohort to those different considerations.

Operator, Operator

Thank you. One moment please for our next question. Our next question will come from Ben Burnett of Stifel. Your line is open.

Ben Burnett, Analyst

Excellent. Thank you very much. I guess also a question regarding the ALLO-316 program, following up on an earlier question about CD70 positivity. You disclosed some interesting results showing a correlation or a trend of greater tumor reduction with higher CD70 expression, referred to as an H-Score. Have you defined what level of CD70 expression constitutes positive in this case? Is it just any amount of CD70 expression, or is there a certain threshold that you’re looking for, and would that threshold be used to select patients?

Dr. David Chang, President and CEO

Great question. I think your question needs a few months; we’ll be able to provide more answers. Right now, essentially, patients are selected using the investigational in vitro diagnostic assay to ensure we do not involve any CD70 negative renal cell carcinoma patients. The cutoff point will be further defined as we gain more clinical experience.

Dr. Zachary Roberts, Executive Vice President of Research and Development and CMO

I'll add one point to that. The figure we shared at AACR shows preliminary evidence that the higher the expression of CD70, the deeper the response. This gives us a lot of enthusiasm that this is a truly active agent in this disease.

Operator, Operator

Thank you.