Earnings Call Transcript - ALLO Q2 2023

Operator, Operator

Hello. Thank you for standing by, and welcome to Allogene Therapeutics Second Quarter 2023 Conference Call. After the speaker's presentation, there will be a question-and-answer session. Please be aware that today's conference 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 the market closed, Allogene issued a press release that provides a business update and financial results for the second 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 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 Dr. Eric Schmidt, 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 and 2023 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 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.

David Chang, President and CEO

Thank you, Christine, and thank you to those joining the call today. During the second quarter, we presented updated Phase I data on our lead allogeneic CAR T program targeting CD19 for relapse and refractory lymphoma. We are immensely proud that our off-the-shelf product candidate has shown the ability to generate durable complete responses that by all accounts appear to be similar to approved autologous CAR T therapies. This is a significant milestone for the field and represents a great opportunity to reflect on the current state of CAR T, including the advancement of allogeneic options. To that end, I would like to focus my comments today on the allogeneic CAR T field at large. I will then ask Zach to talk specifically about our CD19 program, including reviewing the data presented in June at the American Society of Clinical Oncology, European Hematology Association and Lugano meetings. During the Q&A, we will welcome questions on other programs within our pipeline. First, let's talk about the field of cell therapy. As Autolus CAR T franchise reports increasing sales and detailed initiatives to address manufacturing constraints, some ask if there is a place for an allogeneic product. Indeed, as one of the early developers of Autolus CAR T therapy, I am proud that this model has become a commercial success capable of changing the lives of many patients. On the other hand, allogeneic CAR T products represent a fundamentally different modality with properties that are inherently more attractive than Autolus CAR T therapy, and therefore, capable of changing and expanding the landscape of CAR T access. Perhaps the most fundamental difference between cell therapy and our generic product is that the former represents an individualized procedure that can never be manufactured at scale. As Autolus CAR T therapies move into earlier lines, the potential patient population that is eligible for therapy will undergo dramatic expansion and companies producing therapies at a linear scale will be hard-pressed to keep up with accelerating demand. Today, in the market for refractory lymphoma and myeloma, we are seeing that only a fraction of eligible patients can gain access to these revolutionary therapies. Potentially left out of the mix are patients who cannot secure a manufacturing slot, patients with rapidly progressing disease, or patients who cannot undergo successful collection of cells. Also, as CAR T therapies move to earlier lines, patients now need to be referred from the community-based oncology centers to specialized CAR T centers, which leads to yet another potential delay. By 2030, it is estimated that the number of patients with lymphoma or myeloma who will be eligible for CAR T will grow to 300,000. To put this figure in perspective, it is estimated that approximately 10,000 patients will receive CAR T therapies in 2023. Several autologous providers are making large investments in manufacturing infrastructure and delivery that are designed to increase capacity. These companies are now forecasting the ability to perform as many as 10,000 individual manufacturing runs in a few years' time. But even if successful, the forecasted supply is dwarfed by the number of patients who could benefit from treatment. The unfortunate outcome is that, even under more optimistic forecasts for capacity expansion, there will be far more patients without access to this modality than those who can be treated. Adding more linear scale manufacturing is simply not a viable model for serving an increasingly large addressable market, which will most likely lead to a constrained market and patients without access to a potentially life-saving treatment. My next point of reflection focuses on the innovative nature of allogeneic CAR T products. The $1 trillion biopharmaceutical industry is based on very few therapeutic modalities. Often, new classes of drugs are met with skepticism or even disbelief. In 2012, Kite and the National Cancer Institute entered into a Cooperative Research and Development Agreement that would ultimately lead to the approval of CAR T, but what many forget or may not know is how many biopharmaceutical companies offered the same opportunity as Kite, but declined. The development of Autolus CAR T therapies, now a multibillion-dollar industry, was a lonely endeavor. The cacophony of naysayers and the development challenges that needed to be overcome required unwavering belief in the science. As the year progressed and a wealth of data on this new modality accumulated, there was a shift in attitude towards Autolus CAR T therapies. History doesn't repeat itself, but it often rhymes. We are very excited to see progress not just from Allogene, but others who are developing allogeneic CAR T products. We view this as a sign that the viability of the modality is becoming increasingly evident. The more companies that enter the arena with promising approaches, the more investment we see from large pharma companies, the better it is for the field. The work we have done to progress our clinical trial has allowed us to accumulate and master technology knowledge that is second to none. The lessons that must come from the Phase 1 trial are often hard-won, but the outcomes we have seen in our recent dataset makes it clearly worthwhile and keeps us excited for what is to come. A future where patients do not have to wait and fight for access to CAR T, they can start treatment within days without the need to undergo leukapheresis or bridging therapy. An allogeneic CAR T product provides one, if not the only way, to broaden the use of CAR T therapy, making the delivery of therapy much easier and convenient for patients and their treating physicians. Ultimately, I believe the convenience of an off-the-shelf allogeneic CAR T product is the only way to introduce the potentially life-saving modality of CAR T to a wider community setting, where the majority of earlier line patients are currently treated, while preserving the potential for a one-time treatment, an off-the-shelf option that is free of the hassle and inconvenience of returning to the clinic for treatment again and again, and without the cumulative toxicities that often come with lengthy chronic therapy. With that, now I would like to turn the call over to Zach.

Zachary Roberts, Executive Vice President of R&D and Chief Medical Officer

Thank you, David. As we have noted in previous calls, some of the biggest questions facing allogeneic CAR T development were whether the safety and efficacy of an allogeneic product would be comparable to approved autologous CAR T therapies and, perhaps even more importantly, whether an off-the-shelf product can induce durable complete remissions. At the American Society of Clinical Oncology Annual Meeting, the European Hematology Association Congress, and the International Conference on Malignant Lymphoma in Lugano, we shared long-term durability data from our Phase 1 trial that answered these very important questions and substantially reinforced that our off-the-shelf CD19 AlloCAR T product candidates demonstrate promise in large B-cell lymphoma. At ASCO, with an oral presentation at EHA, we presented an updated analysis of the ALPHA and ALPHA2 trials focused on patients who received the regimen that is being deployed in our potentially pivotal Phase 2 trial. These 12 CAR T-naive patients with relapsed/refractory LBCL received a single dose of ALLO-501 or ALLO-501A manufactured using the ALLO process following a lymphodepletion regimen of FCA90, which is comprised of standard low doses of fludarabine and cyclophosphamide plus 90 milligrams of ALLO-647. The median time from enrollment to the start of therapy was three days. As of the April 20, 2023 data cut-off, all 12 patients were followed through a minimum of six months. 7 of 12 patients or 58% achieved a complete response and five patients or 42% maintained a complete response through month six. Of the five patients who were in complete response at six months, 80% had an ongoing remission, and the fifth patient had disease progression at 24 months. The median duration of response was 23.1 months with three patients remaining in remission for over 24 months and the longest remaining in remission for over 31 months. To put these data in context, our complete response rate of 58% can be viewed in light of approved autologous CAR T therapy complete response rates that range from 32% to 54% per label. Of course, the appeal of CAR T therapy is that complete responses can be durable. Our complete response rate at month six of 42% compares favorably with autologous CAR T as their rates range from 29% to approximately 40%. At the meeting in Lugano, we presented data from all 33 patients with relapsed/refractory LBCL who received ALLO-501 or ALLO-501A made using the ALLO manufacturing process. In addition to the 12 patient data reported at ASCO, this data set included additional patients who received either lower doses of ALLO-647 and/or two infusions of ALLO-501 501A spaced approximately one month apart in our consolidation regimen. Across these 33 patients, 100% received product per specifications and no patients received bridging therapy. In these 33 patients, a complete response was achieved by 14 patients or 42%, of whom 10 maintained a complete response at month six. The median duration of response in these 33 patients was also 23.1 months, demonstrating that we could still achieve results within the parameters established by approved autologous CAR T therapies even using less optimized dosing. We also observed robust CAR T cell expansion and persistence in patients, particularly in responders, arguably a first for an off-the-shelf allogeneic cell product. In all presentations, our safety analysis included all 33 CAR T-naive LBCL patients who received ALLO product. Treatment was generally well tolerated with no incidences of Grade 3 or greater CRS and no cases of ICANS or GvHD. Cytopenias and infections were manageable and comparable to the experience with autologous CAR T therapies in patients with relapsed/refractory LBCL. We showed patients' neutrophil and lymphocyte counts beginning to recover within the first month of infusion and achieving baseline levels with kinetics similar to autologous cell therapies, providing additional insight into our comparable infection rates. Our data are the first to demonstrate the potential of an allogeneic CD19 CAR T to induce durable complete remissions and set the stage for a potentially competitive profile to approved autologous CD19 CAR Ts. Our focus now turns to two important objectives for this program. The first being enrollment in the ongoing Phase 2 Alpha2 trial, where we hope to definitively establish the potential of this new modality. We are very pleased to have extended enrollment in this trial into Canada and expect to begin enrolling patients in Europe in Q3 and Australia before year-end. We also continue to focus on enrollment in our Phase 2 EXPAND trial, which is designed to demonstrate the superiority of ALLO-647 containing lymphodepletion regimens over a regimen of FluCy ALLO. In parallel, we are working through a trial design strategy that could support regulatory approval in earlier line LBCL. We believe our proposed approach may be particularly advantageous and look forward to sharing more detail on this strategy by the end of the year. We believe our success to date, where others may have fallen short, is attributable to our ability to support the expansion and persistence of our allogeneic CAR T cells necessary to achieve durable tumor elimination. The preponderance of data we've already presented from our CD19 program point to an improved clinical performance when they include ALLO-647, our anti-CD52 monoclonal antibody, with standard low doses of FluCy. Our platform, enabled by ALLO-647, 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. We are now focused on applying a rigorous approach to explore the boundaries of what works best in enriching our understanding of CAR T cell expansion and persistence as we investigate next-generation technologies, including Dagger, which is currently being utilized in our ALLO-316 anti-CD70 solid tumor trial. I will now turn the call over to Eric.

Eric Schmidt, Chief Financial Officer

Thank you, Zach, and good afternoon, everyone. I want to start by noting that today is my last day at Allogene, which is quite bittersweet. The last five years have been fulfilling, exhilarating, and enjoyable. They brought new challenges, helped me forge life-changing relationships, and revealed a perspective on the industry that I never imagined. My understanding and admiration for the complexities involved in management decisions and drug development have significantly increased. It has genuinely been an honor to serve as the CFO of Allogene. I am excited about spending more time in New York with my family. Allogene will always hold a special place in my heart. I appreciate David and the team for their trust and the opportunities they have provided, and I look forward to seeing the company's advancements as we work towards realizing the potential of AlloCAR T for patients. Now, regarding our financials, I’m happy to report that our balance sheet remains very strong. As of June 30, 2023, we had $544.5 million in cash, cash equivalents, and investments. Alongside our drive for operational efficiency, we raised about $88 million in net proceeds in the second quarter through our at-the-market equity financing facility. With our current expectations, we believe our cash runway is extended into the second half of 2025. In the second quarter of 2023, our research and development expenses totaled $62.0 million, which included $6.9 million in non-cash stock-based compensation. General and administrative expenses were $18.5 million in the second quarter, which also included $9.7 million in non-cash stock-based compensation. Our net loss for the second quarter was $78.0 million, or $0.53 per share, accounting for $16.6 million in non-cash stock-based compensation. We still anticipate a decline in cash, cash equivalents, and investments by about $230 million in 2023. We expect our total GAAP operating expenses for 2023 to be around $340 million, which consists of an estimated non-cash stock-based compensation expense of about $80 million. This guidance does not factor in any potential impacts from business development activities. With that, we will now open the call to your questions.

Operator, Operator

Thank you. Our first question comes from the line of Tyler Van Baron with TD Cowen. Your line is now open.

Tyler Van Baron, Analyst

Great. Good afternoon, guys. Thanks very much for taking the question, and congratulations, Eric, on all that you helped the company achieve during your tenure at Allogene. With that said, my question is, I'd like to ask you to elaborate on the pace of enrollment in ALPHA2 and whether you've seen an increase in the pace of enrollment, especially with all the recent conference presentations.

Zachary Roberts, Executive Vice President of R&D and Chief Medical Officer

Hi Tyler, it's Zach. Thanks for the question. So the guidance that we have provided is that we expect to complete enrollment in the first half of next year. We're maintaining that guidance today. I think the pace of enrollment is going to change over time, and we always expect to see enrollment pick up towards the end of the enrollment period, that is very standard for clinical trials. Additionally, we have gotten approval by the EMA to open sites in Europe, and we expect to do that in the coming weeks. Furthermore, our plan to add Australia to the roster of enrolling sites by the end of the year. So, all signs are pointing in the direction of momentum building in terms of geographies coming online. We expect to have the study enrolled by the first half.

Operator, Operator

Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Unidentified Analyst, Analyst

Good afternoon. This is someone asking on behalf of Salveen. I have a two-part question. As you mentioned in your prepared remarks, it appears that the supply situation with autologous CAR T is improving, especially concerning BCMA CAR T. In this regard, how are you viewing the competitive landscape given the ongoing optimization needed for ALLO-715? Additionally, regarding the lymphoma space, how do you see the recent data from the Caribou CD19 program, which is starting to assess the asset in earlier line patients? Thank you.

David Chang, President and CEO

Yes. This is David Chang. Let me take the first question on the BCMA, and I'll ask Zach to comment on the competitive data. In terms of the autologous CAR T supply, I mean, we are definitely hearing what you're hearing, that pharma in this space is putting a lot of effort to increase the manufacturing capacity. Along with that, I think there has been some improvement in reducing the out of spec, which also leads to not being able to provide commercial materials to the patients. I mean, certainly, that is happening, and we were expecting that to happen. But the pace of that is how it's happening as we follow, is as expected. There will be a lot of ramp-up time that's needed. Now that leads to, I think, what you are really asking about our BCMA program. We are continuing to look for the opportunity to improve the manufacturing process. I mean, certainly, we always knew that manufacturing is one of the key components of making the product viable and also maintaining the level of efficacy that we are hoping to do. So we're making good progress, and we are continuously reviewing what we will be doing with the BCMA program as we complete the manufacturing review. Zach, on CD19?

Zachary Roberts, Executive Vice President of R&D and Chief Medical Officer

Yes, so a great question about the Caribou update. Overall, we were very pleased to see another sponsor present data supporting the use of alpha/beta T cells in an off-the-shelf allogeneic platform and driving benefit for patients. We see that this is a very validating milestone for the field. Having been at this now for five years and arguably some of the most experienced in this field, we are very proud to see an additional company join this field, but we also stand very much by the data that we presented this summer as part of the overall and growing experience in off-the-shelf AlloCAR T cells.

Operator, Operator

Thank you. Our next question comes from the line of Michael Yee with Jefferies. Your line is now open.

Michael Yee, Analyst

Hey guys, thanks for the question. One of the things that comes up is the use of CAR-T after Yescarta. And since there's uncertainties about that, one could envision that your product would be an obvious fit earlier lines, particularly given its off-the-shelf nature. To do that, you would need to run a second-line study. You suggested you would give us some tidbits and some insight into how you would think about a design for that later this year. But can you just remind us, could you actually start a second-line study next year? Are there things relevant to sort of having to make progress on the third line? Would you have the money to do that? Could a pharma company help you out a lot easier? Maybe just talk through the different challenges of second line, how you should think about that because I would think that's even more important than third line. Thank you.

David Chang, President and CEO

Mike, I'll begin by addressing the first part of your question. You’re raising very important and insightful points. I'll ask Zach to discuss the study design, which is progressing well. Regarding the earlier treatment line, this highlights the potential of cell therapy to offer a one-time treatment that might resemble a cure, where patients successfully treated wouldn’t need additional therapies. This is truly what we aspire to achieve in oncology. When considering how patients are treated in the earlier treatment line, it's important to note that most are handled not in specialized centers but in local oncology clinics by community oncologists. This is where we envision the advantages of off-the-shelf allogeneic CAR T becoming apparent. This is the direction we want to pursue as we expand our CD19 program beyond the current refractory and relapse third-line setting. We have previously indicated that we will collaborate with the investigator to finalize the study design, obtain regulatory feedback, and aim to launch the study in 2024. This plan remains intact. Now, let me have Zach elaborate on the study design, which is still in the early stages.

Zachary Roberts, Executive Vice President of R&D and Chief Medical Officer

Yes. Thanks, Mike, for the question. So, I think the premise of it is spot on. You look across CD19 and also BCMA, and what we're learning is that for as powerful as these therapies are in relapsed/refractory disease, their utility in earlier lines is as compelling, if not more so. And obviously, the numbers of patients are greater there. We have been keenly focused on coming up with a study design in earlier lines that I think will play to our strengths and also serve an unmet need that exists in that second line. We're not quite ready yet to share a lot of details on this study. We hope to be able to do that by the end of this year. But suffice it to say, we think that this is a great opportunity for the field and for Allogene in particular.

Operator, Operator

Thank you. Our next question comes from the line of Brian Cheng with JPMorgan. Your line is open.

Brian Cheng, Analyst

Hi, guys. Thanks for taking my call. You mentioned that you're thinking of exploring combining CAR-T with the Dagger technology in human solid tumors. Just as you need to be efficient on resources since most of your focus today is now on CD19, how does the potential exploration strategy fit into your current portfolio? And timing for the next set of T-Cell. Is this more of a business development play?

David Chang, President and CEO

Brian, David Chang here. Today, I mean you guys are really asking excellent questions. I mean when we think about allogeneic, and I think this is something that we can say for cell therapy as a whole. This is still very early stages of cell therapy we are in right now. The potential of cell therapy is the ability to engineer CAR T cells, in this case, through the available technology, whether it's lentiviral gene transduction. And that's essentially what the autologous cell therapy players are doing to how the field has evolved to include gene editing, possibly multistep gene engineering, and that's really the holy grail of cell therapy that not just us, but everybody in the allogeneic cell field is trying to accomplish. In that context, we don't necessarily see the programs that we are advancing as the answer to all the solutions that we are trying to provide and advance this field. Some of the things we internally discuss is not just how to make the cells work better, but also can we potentially reduce the lymphodepletion, make the therapy easier to administer than outpatient, all these questions. That's where the concept of next generation, such as the Dagger technology, comes in. The question about how much can we do in the current environment where the spending is highly scrutinized is a very good one. This is something that we are trying to address through prioritization as well as trying to do things as efficiently. This is another situation where any kind of partnership could further accelerate what we are trying to do by bringing additional resources and capabilities that we may not have at this point.

Operator, Operator

Thank you. Our next question comes from the line of Michael Schmidt with Guggenheim. Your line is now open.

Michael Schmidt, Analyst

Hi, guys. This is Kelsey on for Michael. Congrats, Eric, on your last day, but sad to see you go. I just had a couple of quick questions. I guess, first, building on your prepared remarks, David, there's a small percentage of eligible patients actually getting CAR T, and we hear a lot about capacity specifically in myeloma, of course, because they're early in the launches. But I guess for DLBCL, is capacity still the biggest limiting factor, or is it something else? And then maybe building on that last question, how does kind of the Notch partnership fit into tighter capital allocation? Thanks so much.

David Chang, President and CEO

Yes. The question about what's happening in autologous; truthfully, we follow what the large companies in this space release in their quarterly updates, so you know as much information as we do. The bottom line is, by estimates from some pharma in the CAR-T space, in the third-line setting, only about 30% of the eligible patients are receiving CAR-T therapy. That remark was made in 2022. Now in 2023, there may have been some uptick in the percentage of eligible patients receiving CAR-T. We continue looking into quarterly earnings releases to triangulate revenue increases due to earlier line usage versus penetration in the third line. We also talk with CAR-T experts and other hematology oncologists, especially at centers that do not have access to commercial CAR-T. Let's be reminded, CAR-T is only used in certified centers, and the number of certified centers that can administer commercial supply is still limited. Our current estimate is that there are still a significant number of eligible patients who are not receiving CAR-T in the non-Hodgkin's lymphoma space. The second part of the question with Notch; they are doing something incredible, trying to differentiate the iPSC cells into functioning T cells, which has been the holy grail of what the field may be able to do. We're sensitive to the time horizon, but that technology can scale up and be realistic in clinical introduction. I’m always humbled by how difficult it is. Back in 2015, I thought in the next 7 to 10 years, iPSC would be more or less a mainstay of CAR-T. We are about 10 years from that time and still think it's several years before IPS-derived CAR-T can enter clinics. The future is definitely there, but it's taking time, and we are putting this in the context of our partnership with Notch.

Operator, Operator

Thank you. Our next question comes from the line of John Newman with Canaccord.

John Newman, Analyst

Hi, guys. Thanks for taking my question. So you mentioned that you're going to be enrolling patients in the pivotal study in Europe and Australia here, I think Europe shortly and Australia by the end of the year. I'm curious if you could talk about whether or not there's any difference in the availability of the autologous CAR-T therapies there. The reason I'm asking the question is I'm just wondering if perhaps enrolling patients in those two regions could really increase the chances that you're getting patients that would otherwise be getting autologous therapies. Thanks.

David Chang, President and CEO

Yes. We know that the utilization of CAR-T generally in those regions is significantly less common than it is in the United States. Obviously, we expect that over time, that will change. As additional pivotal data sets come to the table and regulators begin to approve these therapies, payers will get onboard as well. The whole field is moving towards utilization of CAR T in third and second lines. But these regions are significantly behind the United States, so there are plenty of patients in both of those regions where the unmet need in third line is substantially higher. We feel that it makes a lot of sense to broaden the footprint and be able to bring on those patients whose needs are not being met by current standards in those ex-U.S. regions.

Operator, Operator

Thank you. Our next question comes from the line of Jack Allen with Baird. Your line is now open.

Jack Allen, Analyst

Great. Congratulations to the team on the progress and Eric, congratulations to you on all of your accomplishments over the last five years. I'm going to try to do my best to put you to work on your last day here. I wanted to talk for a second about the Servier relationship. Could you remind us how things stand as it relates to Servier? I'm seeing in the 10-K that or the 10-Q that you received very de minimis payments from Servier in the last couple of quarters here. Do you expect that those payments could be higher as you move into the European region with the ALPHA2 study? And what's baked in as it relates to the cash flow guidance surrounding Servier and the relationship there? Thanks so much.

Eric Schmidt, Chief Financial Officer

Jack, thank you very much for the kind personal comments and the question; it's good to hear your voice. We continue to have a little bit of a challenging relationship with Servier, as we've discussed previously and in our SEC filings. There are disputes over certain aspects of our collaboration. As you noted, there are disputes over cost recoveries, which we believe we're entitled to, as well as our ability to opt into ex-U.S. development at a future date. Rather than delve into legal matters, I'll just leave it to what's published in our 10-Q in terms of the update. Hopefully, we'll be able to find a solution going forward.

Operator, Operator

Thank you. Our next question comes from the line of Asthika Goonewardene with Truist. Your line is now open.

Unidentified Analyst, Analyst

Hi. This is Karina for Asthika. I had a question about ALLO-715. Are you considering changing the cytokines used during culture days to achieve a more nascent cell phenotype? Also, are you aiming for an increase in Carvykti efficacy? If you could provide some guidance on the timing as well, that would be great.

Eric Schmidt, Chief Financial Officer

Yeah, Karina, there are multiple things that we are doing with the manufacturing process review. As your question pointed out, cytokines are an important aspect of what we are reviewing. Without going into further details, in terms of the timeline of what we will say about our BCMA program, let's defer that until we complete the review and decide what we will do and when we will think about introducing back into the clinics.

Operator, Operator

Thank you. Our next question comes from the line of Kalpit Patel with B. Riley. Your line is now open.

Kalpit Patel, Analyst

Yes. Hey. Good afternoon. Thanks for taking the question. One more on the enrollment. Could you please comment on how many additional clinical sites you expect to include for the EXPAND trial? And is the guidance still unchanged to report data roughly around the same time from this study as with the ALPHA2 study?

David Chang, President and CEO

Yes. Thank you for the question. So we haven't gone into exact detail on the number of sites for either ALPHA2 or EXPAND. We are continuing to bring on sites in North America for EXPAND. As you know, this is a relatively newer trial than ALPHA2, so we didn't have the benefit of long-standing relationships with Phase 1 sites there. Everything is starting from scratch, but sites are coming online as we speak. Similar to the plan for ALPHA2, we also intend to bring EXPAND into both EU and Australia. The last point that you asked about is still correct. Yes, we do expect to have data for EXPAND coming up roughly the same time as ALPHA2.

Operator, Operator

Thank you. Our next question comes from the line of Sami Corwin with William Blair. Your line is now open.

Sami Corwin, Analyst

Hi there. Thanks for taking my question. Given that the current commercial CAR T therapies are commercialized by large pharma players or through partnerships with large pharma, I guess, how are you thinking about commercializing ALPHA-501 alone, or do you think you'll need a commercial partner?

David Chang, President and CEO

Yes, Sami, let me take that; great question. I mean, that's something that we are internally discussing, and I think once we further the position and how we're going to commercialize, we will share that information. But I think it's a little bit too early for us to say one way or the other.

Operator, Operator

Thank you. Our next question comes from the line of Luca Issi with RBC Capital. Your line is now open.

Luca Issi, Analyst

Great. Thanks so much for taking my question. Maybe, Jack, if I may circle back on a prior question. Can you just talk a little bit about your enrollment projections for ALPHA2 versus EXPAND? What gives you confidence you can complete enrollment of both trials in the first half of 2024? Do you see something in enrolling EXPAND being much harder than rolling out ALPHA2? I would love to hear your thoughts on that. And then, Eric, thanks again for all your help and all the best in your next chapter.

Zachary Roberts, Executive Vice President of R&D and Chief Medical Officer

Thanks, Luca, for the question. This is Zach. The enrollment of each study is ongoing currently, as we've said. We've guided to completion of enrollment of ALPHA2 by the first half of next year. We actually haven't specified exactly when we expect EXPAND to complete enrollment. But based on the study designs of these two trials, our current projections are that between the fewer patients required to enroll in EXPAND, as well as our belief that the endpoint will actually take less time to come about with that study, we do think that — those data sets will be available at roughly the same time.

Operator, Operator

Thank you. Our next question comes from the line of Tony Butler with EF Hutton. Your line is now open.

Tony Butler, Analyst

Thanks very much. David or Zach, I wanted to revisit Dagger. I understand there is a diagnostic currently in use. My question is regarding Dr. Sauer’s presentation at ACR; I didn't see any data for patients given 240 million cells. Can you clarify if that dosage was administered to any patients? Additionally, do you have efficacy data? I'm not asking specifically about it, but I’m curious if you can make any statements since the data seemed promising and the side effect profile was consistent with other studies. Notably, there was minimal fatigue, syncope, and/or minimal CRS observed at the lower doses. And finally, Eric, thank you very much, and good luck again.

David Chang, President and CEO

Thank you for the question. So as we said at AACR and is still true today, we are continuing with the dose-finding or exploration part of this trial. I don't want to get into details about how many patients have been treated at each dose beyond what has been shared publicly at AACR. We do expect to be able to share additional information from this trial later on. Other than that, though, I very much agree with your assessment that the data shared at AACR certainly is compelling and superior to what these patients could expect from standard of care.

Operator, Operator

Thank you. Our next question comes from the line of Akash Singh with Oppenheimer. Your line is now open.

Akash Singh, Analyst

Great, thank you. Thanks for the question. And also a good lot, Eric, not to renew, but best of luck. The question I have is just when you read out ALPHA2 later in 2024, I was wondering what sort of comparison or what are you looking for that would give you comfort given your discussions with the FDA to sort of enable BLA filing activities, whether it's response rates and duration of response? I mean, what's the ballpark figures you're thinking about or that would make you comfortable? And then just a minor follow-up to a previous question, which is that are you dosing patients in ALPHA2 from your commercial facility? Thank you. Thanks for the question.

David Chang, President and CEO

So maybe I'll take the first one. So I think primarily, what's giving us comfort about the Phase II program is all of the experience that we have from Phase I, which was really, again, brought to the surface in June at the various conferences where we shared data feedback there and since it's been overwhelmingly positive from investigators, both those that are involved in the trial and those that are not. Those are in patients that meet the eligibility criteria for our Phase II program. That's sort of our view going forward. I don't want to get into specifics about conversations with FDA, but we think that this is filling a much-needed niche in the landscape currently given all of the access limitations that David alluded to previously in the prepared remarks. Maybe David, I'll hand it to you for the commercial facility question. Yes. So the second question is about patient dosing. As we have previously communicated, the patients are currently being dosed from the materials that our contract manufacturer has produced in the same way that we have treated the patients in the Phase I study.

Operator, Operator

Thank you. Our next question comes from the line of Kishore Gangangari with JMP Securities. Your line is now open.

Reni Benjamin, Analyst

Hey, this is Reni Benjamin. Can you hear me?

David Chang, President and CEO

Hi Reni.

Reni Benjamin, Analyst

Hey, thanks for taking the question. I don't know where they got Kishore from, but Eric, all the best in your future endeavors. The question I have has to do with ALLO-316. I view that as kind of the next main value driver and driver of shareholder value. I'm curious, as you're looking at the in-vitro companion diagnostic, can you talk more about this? How invasive is the process? Are you identifying patients in the real world that are kind of different from what you might have predicted from the hematological studies? And I guess, finally, you expect dose escalation to complete by the end of 2023. But how many patients do you think you'll have by the end of the year? Thanks.

Eric Schmidt, Chief Financial Officer

The first question regarding the companion diagnostic is that it involves biopsies, but we are permitting the use of biopsies taken before study enrollment for evaluation. Some patients may need fresh biopsies if previous material is unavailable. However, many patients are providing blocks from their original diagnosis or a recent biopsy. In this sense, it is no more invasive than any other routine tissue assessments conducted in oncology. Regarding the second question about the number of patients, I prefer not to delve too deeply into specifics and set expectations for future updates. Interest in this program has been very high, particularly spiking after the ACR presentation, and it has remained elevated since then. Therefore, there is a significant number of patients interested, along with numerous investigators eager to enroll patients in the trial.

Operator, Operator

Thank you. Our next question comes from the line of Jason Gerberry with Bank of America Securities. Your line is now open.

Jason Gerberry, Analyst

Hey guys. Thanks for squeezing me in. Just had a question for David. I wanted to come back to earlier comments just about the challenges of autologous CAR-T, pacing of linearly scaling manufacturing? I really wanted to get your perspective on what you see as the biggest impediment in the autologous approaches moving forward with centralized point-of-site models like is being explored by companies like Galapagos. What do you see as sort of the biggest hurdle to operationalizing that and scaling? Thanks.

David Chang, President and CEO

Yes, I have the same questions you're asking. I need to respect how different companies are approaching autologous cell therapy, and the idea of quick or point-of-care manufacturing is often mentioned. We're still in the early stages, and I don't have a definitive view on how this will develop. Autologous cell therapy involves several aspects; it must be produced individually, requiring patients to undergo leukapheresis and waiting for the necessary release tests, just like other human products, before they can be used. I believe these factors create some barriers to fully realizing the potential of CAR T therapy, which highlights the value of allogeneic cell therapies.

Operator, Operator

Thank you. Our next question comes from the line of William Pickering with Bernstein. Your line is now open.

William Pickering, Analyst

Good morning. Thanks so much for squeezing me in. In your ALPHA2 study, how much outpatient dosing have you seen so far in the trial? What are your expectations for how common that might potentially be in a commercial setting? Additionally, what are your expectations for the time horizon for an allogeneic therapy to be rolled out at hospitals that don't administer autologous CAR-T today, such as a community hospital? I'm basically trying to understand when you might be able to access some of these market segments where you're not competing head-to-head with autologous. Thank you.

David Chang, President and CEO

Hi Bill, great question. In terms of our patient dosing, the ongoing studies to allow that. At this point, it’s still early to provide specific details, but as we treat more patients, we will be able to provide more information. In terms of the second question about allogeneic in the outpatient setting and all that, I think that's the direction we want to take our programs. So, it’s still early, so stay tuned.

Operator, Operator

Thank you. Our next question comes from the line of Carolina Ibanez Ventoso with Stifel.

Carolina Ibanez Ventoso, Analyst

This is Carolina Ibanez Ventoso on for Ben Burnett. Thank you for taking my question. A follow-up on the in vitro companion diagnostic, you have designed for ALLO-316, you mentioned that this is tissue-based. Is this an IHC type assay, and I wonder if you are planning to conduct a centralized diagnostic assessment, and would appreciate also if you can talk to how you plan to account for heterogeneity in CD70 expression? Thank you.

David Chang, President and CEO

So it is an IHC-based assay. This gives us an opportunity to address and understand and score the heterogeneity. We've taken that into account in developing the assay.

Operator, Operator

Thank you. That concludes our question-and-answer session. I would like to turn the conference back over to management for any additional comments.

David Chang, President and CEO

Thank you very much for joining our call today. We are thrilled that our off-the-shelf CD19 AlloCAR T data continues to demonstrate both great promise in hematologic cancers. We remain focused on advancing the industry's first potentially pivotal allogeneic CAR-T trial in order to enable more patients to access CAR-T. Operator, you may now disconnect.

Operator, Operator

Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now log off and disconnect.