Earnings Call Transcript - ALLO Q4 2023

Operator, Operator

Thank you for standing by and welcome to Allogene Therapeutics Fourth Quarter and Full Year 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speaker 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 Corporate Affairs and Brand Strategy Officer. Ms. Cassiano, please go ahead.

Christine Cassiano, Chief Corporate Affairs and Brand Strategy Officer

Thank you, operator, and welcome to all who have joined this call. After the market closed today, Allogene issued a press release that provides a business update and financial results for the fourth quarter and full year 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 to as many questions 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 Geoff Parker, Chief Financial Officer. During today's call, we will be making certain 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, the safety and efficacy of our product candidates, and 2024 financial guidance, among other 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 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.

David Chang, President and CEO

Thank you, Christine, and thank you to everyone who has joined our call today. Rather than looking back, which is the norm for this type of call, I would like to take the opportunity to look ahead. We have recently returned from an investor conference in Boston and we are thrilled to feel a renewed enthusiasm for biotech and even more so a resurgence in cell therapy. I would argue this is also true for Allogene, a sentiment seemingly shared by many of our investors following the pivot we announced at the beginning of 2024. From our innovative ALPHA3 trial, which is designed to embed cema-cel as part of a curative first-line regimen for patients with large B-cell lymphoma to specifically creating a CAR T that could meet the unique needs of patients with autoimmune disease and possibly reduce reliance on lymphodepletion, our development approach focuses on the distinctive attributes of an off-the-shelf alternative and creates an advantage for our CAR T programs. We are no longer developing CAR T using an outdated playbook. Now that we have established the viability of our allogeneic platform, our product can be developed using a fresh approach created for what we do, both in design of our trial and design of our constructs to meet the current and future needs of patients and dramatically expand opportunity. ALPHA3, which based on feedback from investors and doctors is perhaps one of the greatest examples of the role an allogeneic CAR T can play in this resurgence for cell therapy. This is the first pivotal trial for frontline consolidation in large B-cell lymphoma with a goal of improving cure rates. There was significant insight gathering work and discussion with the FDA in 2023 to inform and finalize ALPHA3. When we revealed the trial in January, there was acknowledgment almost right away that this groundbreaking trial creates the potential to leapfrog all other CAR T and embed cema-cel in first-line treatment. Equally important is the innovative concept of treating minimum residual disease, or MRD, together with the benefit of drug in a vial, could open the door to make allogeneic CAR T available in community-based cancer centers where most early line patients are treated. The more we've talked about ALPHA3, the deeper the understanding this trial design is something truly unique. A rare opportunity in oncology to do a randomized trial against observation, and the prospect of becoming new standard of care in the first-line setting. Based on the addressable market just in the US, the revenue potential could be upwards of $3 billion and could easily double when expanded ex-US. This type of opportunity only presents itself when you center on patients and their endeavor to be curative. Our second most asked program by investors after ALPHA3 is ALLO-329 in autoimmune disease or AID. Enthusiasm for CAR T in AID is palpable. However, we have chosen not to rush into the already crowded field with an undifferentiated approach. The future result of that could mean an uphill battle in trial enrollment or worse, at commercialization. Instead, we are applying our deep and hard-earned experience to specifically design our targeting CAR T 2.0 for autoimmune disease. Our design is centered on both scalability and reducing or eliminating lymphodepletion which we believe is absolutely critical for rapid clinical development and future commercial success. We expect to be in the clinic with ALLO-329 in a Phase 1 trial in early 2025. Our next two core programs also lean into attributes of allogeneic CAR T. Our new ALPHA2 cohort for cema-cel in chronic lymphocytic leukemia, or CLL, aims to address the growing unmet need among patients whose diseases are not controlled by BTK and/or BCL2 inhibitors. Relapse refractory CLL in these second and third line settings represents a commercially attractive opportunity with revenue potential in the $3 billion range in the US. We believe an allogeneic CAR T product is particularly well suited to overcome the limitations of autologous CAR T, where poor T cell fitness is a known barrier to efficacy. New approvals could reopen the door of interest in CLL and we look to charge through it with our program. Our ongoing TRAVERSE trial tackles one of the hardest industry challenges, but one we are willing to undertake, solid tumors. ALLO-316 in renal cell carcinoma leverages our Dagger technology to optimize CAR T cell expansion and persistence to maximize the potential of an AlloCAR T. In the second quarter, we plan to publish what we believe to be fundamental discovery, the algorithm that may mitigate the treatment-associated hyperinflammatory response without compromising the CAR T function needed to eradicate solid tumors. A more comprehensive update from the TRAVERSE trial is planned for year-end 2024. Now, I'd like to turn the call over to Zach to address some of the more commonly asked questions about our programs.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thank you, David. As I'm sure you can tell, we are all very excited about our new strategy and thrilled that investors and investigators alike share that enthusiasm. I'll start with CLL because that gets a little less attention than ALPHA3, although it has the potential to pack a powerful punch. It's ironic that complete remissions in relapse refractory CLL ignited the CAR T field many years ago, but that excitement waned for the very limitations we've stated. New approvals could offer a much-needed alternative for these patients, but there remains a growing need for effective treatment post BTK inhibitors and B-cell 2 inhibitor therapies. Recent autologous CD19 CAR T data has been a positive step for patients with relapsed refractory CLL, but there is still room for improvement. Durable responses in relapsed refractory CLL are likely hindered by an unfortunate reality that T cell dysfunction and high circulating tumor burden makes manufacturing of highly active T cells difficult. There is strong scientific rationale to believe that an AlloCART product derived from healthy donor cells could create a clinically meaningful advance for these late-stage patients with a one-time dose and simpler administration and logistics. The new Phase 1 ALPHA2 cohort will include 12 patients treated with cema-cel. This study driven by investigator enthusiasm is now enrolling patients, and we plan to have initial data at the end of this year. I'll now talk about ALLO-329 in autoimmune disease, our next intended advance. We believe the approach we are taking to reduce or even eliminate the need for standard lymphodepletion will be critical to meet the unique requirements for these patients. The risk tolerance of these patients is very different than those with cancer, in large part because of patient demographics, wide availability of effective therapies, and rheumatologists' general lack of experience with chemotherapy, leukapheresis procedures, and cell therapies. Our wholly-owned, next-generation, site-specific integration-based dual targeting CD19, CD70 AlloCAR T is designed to reduce or eliminate the need for standard chemotherapy while targeting CD19 positive B-cells and CD70-positive activated T-cells, both of which play a role in autoimmune disorders. We have invested in this highly differentiated dual-targeting approach to set us apart from the pack and position us for long-term success. All current CAR T programs in AID are targeting CD19 and therefore solely addressing the B-cell component. We believe that introducing CD70 will allow the elimination of both pathogenic B and T cells that underlie autoimmunity, thereby potentially increasing effectiveness in diseases with direct or indirect T cell involvement, possibly allowing us to extend beyond indications in which the strict CD19 targeting has demonstrated clinical benefit. Of course, the ability to manufacture hundreds of off-the-shelf CAR T doses from a single healthy donor leukapheresis could provide an additional competitive advantage during clinical trial execution and would much more readily meet the potentially enormous commercial demand. Initiation of this Phase 1 trial with ALLO-329 is expected in early 2025. We are very excited to have partnered with Arbor Biotechnologies for use of their proprietary CRISPR gene editing technology to support our overarching next-generation AlloCAR T platform in autoimmune disease. Finally, I am particularly proud of and excited by ALPHA3. Make no mistake, this was a year of hard work. But bringing this novel trial to life with the broader Allogene team, our Advisory Boards, and potential investigators, both comprised of academic KOLs and community oncologists alike, and securing the support of the FDA is already one of the highlights of my career. The elegant design of this innovative trial and the aha that comes with it is likely why we get asked, why hasn't anyone tried this before? It simply wasn't possible until now. To run a study like ALPHA3, we needed two things to come together: a highly accurate MRD assay and a one-time powerful treatment that could be administered immediately. We believe we now have the right combination. The design of the ALPHA3 first-line consolidation trial builds upon the results demonstrated in the Phase 1 ALPHA2 trial and leverages an investigational cutting-edge diagnostic test developed by Foresight Diagnostics to identify patients who have minimal residual disease at the completion of frontline chemo-immunotherapy for treatment with cema-cel. Approximately one-third of LBCL patients who initially respond to R-CHOP will relapse. Unfortunately, until recently, there has been no way to know which patients would go on to never experience a disease recurrence and which would have their cancer relapse. The standard of care after frontline treatment has for decades been to simply watch and wait for this disease to relapse. ALPHA3 takes advantage of cema-cel as a one-time off-the-shelf treatment that can be administered immediately upon discovery of MRD following six cycles of R-CHOP, positioning it to become the standard seventh cycle of frontline treatment available to all eligible patients with MRD. ALPHA3 builds on the growing understanding that administration of CAR T therapies to patients with low disease burden improves both safety and efficacy outcomes. Cema-cel's Phase 1 safety profile with low rates of CRS and ICANS already permits its use in the outpatient setting in relapse refractory patients and may further improve in patients with no radiological evidence of disease. What's incredibly exciting is that the outcome of this pivotal trial could allow cema-cel to be embedded in the frontline setting, where autologous therapies are far less feasible. Why? Consolidating response with an MRD positive result post R-CHOP requires immediate and definitive action to prevent an impending relapse. A one-time treatment with cema-cel could happen roughly two to three days post MRD positive test results. As we have seen, autologous CAR T's have had difficulty penetrating community cancer centers and accessing earlier-line patients. Use of cema-cel won't rely on the same complex logistics that have hindered CAR T adoption, nor will there be a reliance on referrals, as the intent is for CAR T to be available in these community cancer centers. An allogeneic like cema-cel is what these doctors have been waiting for as entry to the modality in their centers. We believe these differentiated attributes of cema-cel cannot be reproduced by autologous CAR T, bispecifics, or any other treatment modality. Startup activities for ALPHA3 have been initiated. The study will randomize approximately 230 patients who are MRD positive at the end of frontline therapy to either consolidation with cema-cel or the current standard of care, which is observation. The design, with a primary endpoint of event-free survival, will initially include two lymphodepletion arms, one with standard fludarabine and cyclophosphamide plus ALLO-647 and one without ALLO-647. The trial start is planned for mid-2024 and will be conducted in a wide array of cancer treatment centers, including community cancer centers where most earlier-line patients seek care. The outcome of this pivotal trial could allow cema-cel to potentially improve cure rates and become the only treatment approved for frontline consolidation, with the potential to significantly reduce the need for CAR T in later lines. We look forward to answering any additional questions you have on our pipeline during the Q&A. I'll now hand the call over to Geoff.

Geoff Parker, Chief Financial Officer

Thank you, Zach. I'd like to echo David's comments made at the beginning of this call. It's been a very exciting few months, speaking with current and prospective investors. The enthusiasm expressed for our strategy has been greatly appreciated and inspirational for our team. Such broad and unanimous enthusiasm is something that is unique in my career. We look forward to having ample opportunity to continue to share our vision and program updates throughout the year, especially on ALPHA3, TRAVERSE, our CLL trial, and ALLO-329, our CAR T 2.0 for autoimmune disease. Our vision is bold and we recognize the cash runway as critical. We are pleased that the changes we've made following our announcement in early January have focused the strategy and extended our runway into 2026 but acknowledge that extending that runway must remain a focus. Rest assured that while we actively manage costs, we will also be actively pursuing opportunities to build our cash reserves. We do, however, have a strong cash balance ending 2023 with $448.7 million in cash, cash equivalents, and investments, and we have no debt. As we look ahead to a full year 2024, we expect a cash burn of approximately $190 million. We expect our full-year 2024 GAAP operating expenses to be approximately $280 million which includes estimated non-cash stock-based compensation expense of approximately $60 million. From a longer-term perspective, we continue to forecast that our cash runway will support our operations into 2026. This guidance excludes any impact from potential business development activities. Full-year 2023 research and development expenses were $242.9 million, which included $31.9 million in expenses associated with non-cash, stock-based compensation. For the full year of 2023, general and administrative expenses were $71.7 million, which included $34 million of non-cash, stock-based compensation expense. For the full year of 2023, our net loss was $327.3 million or $2.09 per share, including non-cash stock-based compensation expense of $66 million and $13.2 million in non-cash impairment of long-lived asset expense. With that, we will now open the call for your questions.

Operator, Operator

Our first question comes from Tyler Van Buren of TD Cowen. Please go ahead, Tyler.

Tyler Van Buren, Analyst

Great. Hey guys, congrats on all the progress during the quarter. So I want to first ask about your autoimmune approach this time around. I personally have been fascinated by the Dagger technology ever since it was unveiled at the November 22 R&D Day when we saw a response in renal cell without ALLO-647 or the full FCA regimen. So, I'm glad to see that technology being deployed to ALLO-329 for autoimmune disease. However, removing lymphodepletion altogether in AID takes it another big step further. So why do you think this is feasible in autoimmune, and how would you intend to test that in the early innings of clinical trials? And maybe for a second question or half a question, forgive me, could you just briefly talk about the potential impact from the BIOSECURE bill and WuXi to Allogene’s business?

David Chang, President and CEO

Hi, Tyler. Dave Chang here. Thanks for your questions. And I like how you sort of squeezed in that half question after the first one. On the ALLO-329, I mean, this is a product from the design to how we are manufacturing. It's really built on being able to differentiate ALLO-329 from other CAR T products that are going into the autoimmune indications. And this is already getting pretty crowded. I mean, the key differentiation, as Zach had commented during the prepared remarks is really there are three faults. One, this is a dual CD19, CD70 CAR. And what that allows the ALLO-329 to do is not just deplete the pathogenic B cells, it can also deplete CD70 positive activated T cells, which we believe play a pretty significant role in the autoimmune disease itself. The other part is back to the concept of lymphodepletion. Being able to deplete the activated T cell allows, we believe, ALLO-329 or CD70 Dagger-containing products to work well, even as an allogeneic CAR T product, without being dependent on having to use the CD52 antibody. So one, the starting point for us is that lymphodepletion is very much on par with what autologous CD19 CAR T players are doing. But we think that we can go even further. What CD70 Dagger can do is, through going after activated T cells, and even the expansion is much greater, and also it has potential to start tapering off or eliminating the components of lymphodepletion, either fludarabine or cyclophosphamide. And it's not just a laboratory concept. We actually have clinical data coming from our CD70 or ALLO-216 program from the TRAVERSE study. So I think this is going to be a very interesting proposition that we believe is critical, not just to conduct the study rapidly in the autoimmune indications, but also for future commercial success. And that sort of leads to the third point of ALLO-329, which is really the scalability. Not only as an allogeneic CAR T, we also believe in the autoimmune indications, the duration of the persistence, I don't think we need a long duration of CAR T persistence. This is really depleting the pathogenic lymphocytes deep enough, so it can reset the immune system. So when we think about this for the indication that we're going, we believe that the construct, ALLO-329, can be effective at a very low cell dose. So we are very excited and as we have said, this is one of the top priority programs that we have for 2024 and our intent is to accelerate the timeline as much as we can. Currently, we expect ALLO-329 Phase 1 to study to start in 2025 at the potential data readout, Phase 1 data readout, at least the early portions by the end of 2025. So second question, I'm going to give a very brief response. I mean what's going on with the BIOSECURE bill and WuXi and Allogene? It doesn't impact Allogene at all. And that also leads to something that we have been talking about for some time. We always have believed that manufacturing is core to our business. For that reason, from early days, we built a fully integrated CMC manufacturing team that covers not just process and analytic assay development, but the supply chain and manufacturing. And that's really why we invested in building a fully dedicated allogeneic CAR T manufacturing facility, which we call CF1. And that will be a very differentiated and distinctive advantage as we try to expand the use of CAR T, not only in humans, but also in AID, where we believe that scalability is the key.

Salveen Richter, Analyst

Good afternoon. Thanks for taking my question. With regard to your autoimmune disease program, apart from the Dagger technology here, could you speak to the strategy here with regard to bringing in the Arbor CRISPR-based gene editing technology and just how you think about indication preference starting out, just maybe help us understand about that profile you're looking for and then how you're going to go after specific diseases within the basket here?

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thanks, Salveen. This is Zach. Great question. So, what we wanted to do with the Arbor partnership is really create new opportunities for us that would allow us to internalize that technology sort of independently and move away from the talent technology. And so the CRISPR-based platform that Arbor brings will allow us to have some flexibility in introducing site-specific integration, which we also believe will improve the overall product profile and safety profile of this for this unique patient population. So really, it is a tool to allow us to go fast and in new directions with product design. As far as the clinical trial goes, as we get a little bit closer to the launch of that program, we'll be eager to share more details. I'm willing to sort of say and speculate at this point that we will be looking carefully over the data that matures in the coming months from the field and learning what we can learn about inroads being made into other indications. Of course, lupus is the indication in which the clearest clinical proof of concept exists, and so we'll be carefully paying attention to that. The design of the study, again, we'll get into that as we get a little bit closer, but related to Tyler's question before, we are very much looking at how far we can push this lymphodepletion reduction as we can, including potentially testing no lymphodepletion at all. So, stay tuned for more details on the clinical development plan as we get a little bit closer to the launch of the program in early 2025.

Brian Cheng, Analyst

Hey, guys. Thanks for taking my questions today. We're curious if you can walk through your latest thinking around the Phase 1 for ALLO-329. Specifically, how many doses do you plan to execute? Are you doing dose escalation in autoimmune patients? And if so, which indications should we expect since there are quite a few players now already in indications like lupus and myasthenia gravis? Thank you.

David Chang, President and CEO

Hey, Brian. Dave Chang. I'll take that question. Great question. What I can say is stay tuned. In terms of, steps of dose escalation and lymphodepletion, I believe those are details that given our team's track history in conducting the clinical studies, they can execute those pretty well. I more like to think about the objective to start the Phase 1 study with 329. I mean, the three things that we have called out, the differentiation coming from being able to go after B cells and T cells, that's more of a biologic clinical question that needs to be addressed through the conduct of studies and going after different indications. But also, as we have called out, one of the important questions that we want to answer is whether we can administer ALLO-329 would reduce or with no lymphodepletion and have the same type of immune resetting phenomena. I think that will be really the focus of how we design the Phase 1 study. And of course, trying to get that answer as quickly as possible, I mean that leads to a couple of different study designs, but all these things are being discussed right now.

Michael Yee, Analyst

Hi. This is Mac from Michael. I was wondering, switching away from the autoimmune focus, thinking about the first line study for ALPHA3, how do you ensure that you'll be able to enroll this study? And I guess what gives you confidence in your ability to enroll the study in a timely fashion? I guess as a corollary, when would we be able to expect some initial data from these patients? Thank you.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Hey, Matt. This is Zach. Thanks for the question. So, as far as the first part of your question, why are we confident that this study will be able to be enrolled quickly? In a word, enthusiasm. I think what we have seen so far as we have reached out to investigators across the treatment spectrum from academic KOLs who have been part of the CAR T story for 10, 15 years, all the way to community oncology practices that have a large volume of patients but have not yet made the jump into CAR T, the response to the study has been uniform and it's been extremely positive. And we are seeing levels of engagement from investigators clearing obstacles to open the program as quickly as they can. We've seen that left and right. So there is a palpable level of enthusiasm around this concept, really driven by the possibility of curing patients after front line and preventing a relapse from ever occurring. This is a very novel and innovative approach to studies in LBCL and people are really excited to be part of that. As far as data goes, as we get a little bit closer to the start of the study and midyear of this year, I think we'll be in a position to provide a little more clarity on when enrollment is going to complete and when data will be available. What we have said, and I'll reiterate here, is that the study is designed to have an interim analysis that is currently slated for the middle of next year when we will examine MRD conversion from positive to negative. Everybody that comes into the study will be MRD positive. So we're looking for evidence of clearance of MRD as well as safety and translational outcomes and we will use that interim analysis to select the lymphodepletion arm that will be carried forward for the rest of the accrual period. So as we pass through that gate, we will make a modification to the study design, and that will be plainly visible to all who are paying attention. We will not, however, be able to share granular detail from that analysis because this study is pivotal from the very first patient that's enrolled. So lest we jeopardize trial integrity by sharing those results, we will not be sharing a data update at the middle of next year.

David Chang, President and CEO

And, Brian, I would add, I like the question about your focus on enrolling the patient and execution of the study, which I think is the key. When you look at what we're doing in ALPHA3, I mean, that's built on all the data that we have generated from the ALPHA2 in relapse refractory large B-cell lymphoma setting. We shared that data before with all of you and this is really on par with autologous CAR T therapy, which I don't think any of the other allogeneic CAR T companies can say that yet. From the technical perspective, we believe that this is highly de-risked. I mean, after all, this is comparing against observation, watch and wait. So we feel pretty good about that. Execution is the key, and frankly, I think study start and enrollment, I think that is pretty significant, de-risking information about the ALPHA3 study. So, stay tuned. I mean, our team's working really hard to make sure that we execute this study as quickly as possible.

Jack Allen, Analyst

Great, thanks for taking the question and congratulations on the progress. On kind of same vein as the last question, I wanted to ask about that interim analysis in the middle of 2025. I understand that it sounds like you may not be planning to outwardly share the results, but any context you can provide around the number of patients you're looking to have for that data set and is there an internal bar you're thinking about that you're looking to reach as it relates to pushing the study forward, past that interim analysis? Thanks so much.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thank you for the question, Jack. We haven't provided specifics on the number of patients included in the analysis yet. It's safe to say there will be a balanced number—neither too many nor too few. We need sufficient statistical power to draw robust conclusions. Regarding your second question about internal benchmarks, there are two main aspects to consider. First, we aim to improve upon the current standard of care, which is "watch and wait." Based on our Phase 1 experience, we believe we have sufficiently addressed this issue and determined that cema-cel is an effective therapy. Therefore, we are confident we can meet this benchmark, but we will remain vigilant. Additionally, we have a separate set of criteria for deciding on FCA versus FC. Overall, this analysis is well-structured and thoughtfully designed, and we believe it will lead us to the correct outcomes.

John Newman, Analyst

Hi guys, thanks a lot for taking the question and thanks for all the updates. Just curious if you could comment a little bit more regarding the potential targets in autoimmune disease? So obviously your approach is dual targeting. Other companies out there are also looking at CD19, but some are looking at CD20. And we have additional companies with BCMA CAR Ts that are sort of considering treatment of autoimmune disease, namely lupus. Can you say which targets could be better and why, obviously, different targets sort of crop up at different times during the life cycle of B-cells? But just curious as to your thinking on that. Thank you.

David Chang, President and CEO

In response to your question, I appreciate the inquiry. We're currently exploring this topic. When considering the oncogenic characteristics of the cells, the targets you mentioned—CD19, CD20, and BCMA—our CD19 expression appears to be the most extensive and potentially the most advantageous compared to the others. However, this will ultimately be validated through clinical data as various entities test these different targets. Regarding the indications we are focused on, we are looking to establish early proof of concept without needing lymphodepletion, which is a primary goal for us. The proof of concept has already been established with CD9 CAR T, which is promising. Additionally, lupus nephritis stands out as a commercially attractive indication, so we are certainly considering lupus. While the space is becoming competitive, our ALLO-329 employs a unique and differentiated approach. If we can set ourselves apart from the competition, we anticipate gaining solid traction, even in a crowded market. Targeting activated T cells may also create opportunities for treating other autoimmune diseases where targeting CD19 alone may not suffice. Multiple sclerosis, being an autoimmune disease affecting the nervous system, is also included in our considerations. We need to remain focused and pursue specific indications, but at this point, we do not need to make a final decision just yet. We have ample time to refine our choices over the next three to four months, so stay tuned.

Sami Corwin, Analyst

Hi. This is Caleb on for Sami Corwin. Thanks for taking the question. So, given the number of CAR T cell companies pursuing autoimmune disease indications, how are you guys thinking about competing for patients in future trials? Would you be more focused on enrolling patients in US or ex-US or a combination of both?

David Chang, President and CEO

I think this situation is quite straightforward. There are various companies bringing different assets into this area, which is true. However, considering the vast number of potential patients, the current clinical studies are only scratching the surface. We are likely looking at fewer than 100 patients out of a potential pool of 20, 30, or even 100,000 patients that we could target. Therefore, our perspective is that we are not overly worried about this as long as we maintain our uniqueness. Additionally, if we can eliminate the need for lymphodepletion, the chances of executing a swift development program become much more feasible, allowing us to move quickly.

Kelsey Goodwin, Analyst

Hey. Good afternoon, and thanks for taking my question. Mine is on CLL. How do you think about the ideal placement for CAR T given kind of the age of this patient population and the durability that we see with BTK and BCL2 inhibitors? Thank you.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

The question was around the durability that we expect? More so the positioning and what kind of patients would you want to get on this given kind of the age at diagnosis and how durable the responses are with the inhibitors that are already approved. Yes, okay. Thank you. So, well, as a reminder, the study will enroll patients that have BTK inhibitors and BCL2. Now there is a non-covalent BTK inhibitor, pirtobrutinib that's been approved. That has shown that in a similar patient population, there is some benefit to that drug. However, similar to the established modalities, this is non-curative. And so what we have seen from the autologous experience in CD19 for CLL is that some patients, a significant fraction of these patients, can actually have very meaningful, durable complete remissions that go on for months or even years in a patient population that has failed these prior therapies. So, number one, I think that the modality is promising in this patient population. Number two, I'll point out that just looking at our experience from LBCL is that our toxicity profile is wholly consistent with a somewhat more frail population with very low rates of high-grade CRS and ICANS and consistent with outpatient dosing, which we do have experience with. So while we are getting our feet wet with this Phase 1 study and getting ready to share data later on this year, we will be paying very close attention to how that toxicity profile plays out in this patient population, as well as being able to meet or even exceed the bar that has been established by the autologous players.

Reni Benjamin, Analyst

Thanks guys, thanks for taking the questions and congrats on the progress. Maybe just continuing with the thought of questions around CLL, what would you consider to be kind of the go, no-go results that you would like to see by the end of this year? I know there's only going to be about 12 patients' worth of data. How do you plan on kind of dissecting that? And I guess just as a second part of that, just given your experience with LBCL, do you think there might be an opportunity to move cema-cel to some type of consolidation or more of a frontline treatment in combination with drugs that are already out there? I remember way back when, there were thoughts around combination studies in a frontline setting, and just wanted to know how you guys were thinking about this. Thanks.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

We will monitor the incoming data closely as part of our internal decision-making. However, the threshold for making decisions is not particularly high. This is why we believe that transitioning cema-cel into CLL is the right approach, as the data currently under consideration by the FDA indicates a 50% overall response rate and a less than 20% complete response rate. This outcome is appealing to both treating physicians and patients who have not succeeded with existing therapies. We will pay close attention to the FDA's response to this dataset and, as our data progresses, we will decide whether to advance to a Phase 2 registrational study. Regarding consolidation and/or combinations, I believe those are promising avenues to explore. Our focus on consolidation in large B-cell with ALPHA3 demonstrates our conviction that using CAR T cells in resistant disease phases is intriguing and might be relevant for other indications as well. While combinations present a more complex challenge, there is substantial biological reasoning to support them, and we will examine that closely as the program develops.

Kalpit Patel, Analyst

Yeah, hey, thanks for taking the question. Maybe just one on ALLO-329. Can you discuss any thoughts on broader immunomodulatory effects beyond direct cytotoxicity, such as any impact on regulatory T cells since you have targeting of CD70, and how might these effects influence outcomes for autoimmune disease patients?

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thanks, Kalpit, that's a great question. We are currently exploring the different subsets of T cells within our 316 program to better understand if specific compartments of the T cell lymphocyte population are more significantly impacted by CD70 targeting therapy. This investigation is informed by the strong evidence supporting the targeting of activated T cells, as noted from the translational results of the TRAVERSE trial. Our findings from both in vitro studies and the clinical trial with CD70 CAR indicate that we see different levels of suppression in activated T cells, which include both conventional and regulatory types that play a role in autoimmune disorders. There's existing literature that highlights the involvement of CD70 in conditions like lupus. Hence, in addition to the Dagger effect—which is a key reason we are pursuing the combination of CD70 with ALLO-329—we believe we can modulate specific activated T cell subsets. We will carefully analyze these subpopulations as we move forward with the 316 study, and we will also monitor these aspects in the 329 study.

Luca Issi, Analyst

Oh, great, thanks so much for taking my question and congrats on all the progress. Maybe Zach, can you just expand a little bit more on the interim look in mid-2025. I think when you were running the trial in the third line setting, the FDA basically asked you to show PFS superiority when you actually in a dedicated randomized trial. However, it looks like the FDA is not okay. We're just showing patients converting from MRD positive to MRD negative within the context of the same pivotal trial and actually not a separate trial, which is not randomized, but feels to me that the FDA has kind of lowered the bar here despite your action moving into earlier settings. One, would that be fair? And two, if so, what drove that change in posture from the regulators? Any thoughts there? Much appreciated.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thank you, Luca, for the question. I don't believe there has been a change in the FDA's views regarding what qualifies as a contribution of effect data package. In designing ALPHA3, we have consolidated what used to be two trials in the third-line setting into a single trial in the frontline consolidation setting. Essentially, we have created a trial within a trial. The first phase of the study, which will conclude with an interim analysis next year, is intended to generate the contribution of effect that will support the approval of ALLO-647. Additionally, we are conducting this part of the study in a randomized manner to address whether ALLO-647 is necessary for patients with no radiographic evidence of disease. There remains a good possibility that we might select the arm that does not include ALLO-647. However, the way we have structured this study is specifically to meet the FDA's requirement for the contribution of effect for ALLO-647. Therefore, I would not assert that there has been a change in the regulatory stance on this matter.

Operator, Operator

Thank you. Our next question comes from the line of Asthika Goonewardene of Truist. Please go ahead, Asthika.

Asthika Goonewardene, Analyst

Hi, this is Asthika from Truist, thanks for taking the question. Following up on CLL, has there been an 18% CR rate? How does the efficacy of alternate CAR T compare to autologous in CLL, particularly considering the superior T cell fitness? What data would you want to see to validate the efficacy of AlloCAR T in this context?

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thanks, Karina. So I think I like the way you asked that question because I think it really speaks to a primary motivator for us opening this trial. And that is that we believe that the underlying T cell fitness coming from a healthy donor-derived product is going to be superior to the T cell fitness that is derived from a patient leukapheresis because CLLs are notoriously immunosuppressive malignancies, number one. Number two, often, those T cells are surrounded by a very high circulating leukemic burden, which makes isolation of those cells for manufacturing, all the more difficult. We dodged both of those problems starting with healthy donor material. So we think that there is a chance that we will actually have a meaningful improvement over what has been shown by autologous, but of course, that's why we're running the experiment. And I've sort of addressed what we think the target is here, of course, the 18% CR rate. That's been established as potentially registerable. We'll see what happens with the decision by the FDA there. But we think that given the comparability that we believe we've shown in large B-cell against autologous products that we should at least be able to meet that.

Laura Prendergast, Analyst

Hey, thanks for taking the question. I'm just curious, is MRD testing as expected becomes more broadly used, do you expect having any issues in enrolling ALPHA3, especially since some patients will be randomized to a control arm with no therapy? How do you think about this? And if you expect in the future competition in this setting, given the broad use of MRD testing?

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

Thanks, Laura. We're not concerned at all about the patients who will be randomized to observation, as that is the current standard of care. There is no data or approved agent to direct physicians to offer an alternative therapy to these patients in the observation arm. Based on our research during the study start-up, there is widespread agreement that observation is the most suitable management for these patients. They will be closely monitored within the clinical trial, likely as closely, if not more so, than if they weren't participating in the trial. This is a fundamental aspect of clinical investigation, which we believe will encourage patients to enroll in the study. Regarding competition, there's a possibility that we may see other companies developing agents for patients with MRD-only disease. However, we feel confident about our unique product profile that offers a one-time administration, eliminating the need for prolonged treatment or maintenance therapy. This is comparable to a seventh cycle of treatment, allowing patients to complete it and return home. Additionally, these patients can progress rapidly after finishing frontline therapy with MRD disease, so the ability to act swiftly is crucial. We started treatment within two to three days after patient enrollment in our third-line study, demonstrating our capability to implement this treatment very quickly. We believe our approach gives us a built-in advantage, especially since we launched this study ahead of our competitors.

William Pickering, Analyst

Hi, thank you for taking my question. In your ALPHA3 trial, you've talked about including community centers, could you speak to the level of interest that you're getting from these centers? Do you expect it to be a large or a small percent of total sites? And do these centers need to already be equipped to participate? Thank you.

Zachary Roberts, Executive Vice President of Research and Development and Chief Medical Officer

The feedback we have received from community practices has been very positive, showing a high level of engagement and enthusiasm. Many of them are moving quickly to prepare for the study's opening, and there is a bit of friendly competition among some to be the first to start. We are encouraged by this response. Regarding the percentage, we will include some academic centers as they share the same excitement about this concept as community oncologists. There will be a range in participation, and while we have not finalized the full selection of programs yet, I can say that a significant percentage of patients will come from these community practices in the overall study.

David Chang, President and CEO

Thank you for joining our call today and your continued support. We are more excited than ever about the potential for Allogene and the opportunity to fulfill the promise of allogeneic CAR T for patients with cancer and now extending that promise to patients with autoimmune disease with our CAR T 2.0 ALLO-329. As someone who has been involved in developing cell therapies, I'm particularly excited about what's happening in the field today, thinking differently and putting innovation at the forefront. That is exactly what is needed to fuel this new resurgence in cell therapy. I look forward to providing updates to our exciting programs throughout the year. With that, goodbye.

Operator, Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.