Earnings Call Transcript - ALLO Q2 2021

Operator, Operator

Hello, thank you for standing by, and welcome to Allogene Therapeutics Second Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. 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 to all on the line. Welcome. We will continue to limit questions to one per person so we can get to as many as possible during the hour. After the market closed today, Allogene issued a press release that provides a corporate update and financial results for Q2 2021. This press release and today's webcast are both available on our website. Joining me on the call today are Dr. David Chang, President and Chief Executive Officer; Dr. Rafael Amado, 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, including the timing and ability to advance our ALPHA2 trial to phase 2, data presentations, regulatory filings, future research and development efforts, manufacturing capabilities, and 2021 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 good afternoon. We launched Allogene in the second quarter of 2018 with a bold mission: to create and lead the Next Revolution in cancer treatment by delivering to patients the first AlloCAR-T therapies for blood cancers and solid tumors. Three years later, we have made significant progress for both Allogene and the field of cell therapy, as data from our lead program brings us one step closer to realizing our goal of commercializing a first-in-class and best-in-class off-the-shelf cell therapy. As we enter a new stage in our lifecycle, our focus turns towards advancing our lead development candidate ALLO-501A into a pivotal phase 2 trial for relapsed refractory non-Hodgkin's lymphoma by the end of 2021. Following initial data presented at our CD19 forum in May and ASCO in June, we are increasingly confident in the safety and efficacy profile of ALLO-501A and its path forward. The ALPHA trial demonstrated that ALLO-501 can achieve deep and durable responses in patients with relapsed-refractory non-Hodgkin's lymphoma who are CAR-T naive, with an overall response rate of 75% and a complete response rate of 50% and the six-month complete response rate of 36% in patients with large B-cell lymphoma histology, which is the patient population of our first pivotal trial. The safety profile was also very encouraging. No dose-limiting toxicities or graft versus host disease, and limited eye cause and cytokine release syndrome were observed. I have been involved in the development of CAR-T therapies from the early days, and the available efficacy and safety profile of ALLO-501 and ALLO-501A clearly show that all the key principles that we learned from autologous CD19 CAR-T therapies are holding true in our allogeneic CAR-T therapy. Our AlloCAR-T therapies can be delivered to patients within days rather than weeks. In the ALPHA trial, 98% of the enrolled patients received ALLO-501 within a median time of five days from enrollment to therapy initiation. By comparison, in trials deploying autologous therapies, up to 30% of patients who have undergone leukapheresis were unable to receive treatment due to disease progression while waiting for the CAR-T cell products. Given the tremendous benefit that ALLO-501A can bring to patients, we remain highly focused on execution. Today, our preparation for the industry's first allogeneic pivotal trial is top of mind. As our planning towards this important milestone progresses, we look forward to providing a clinical update on our CD19 program in the fourth quarter. Shortening the time to treatment and ensuring access for nearly all suitable patients is just the beginning of how we can leverage the attributes of allogeneic CAR-T therapies. Our research team is actively working on new strategies to abate premature rejection, enhance cell potency, improve product consistency, and overcome the solid tumor microenvironment. Some of these technologies, such as our TurboCAR-T approach, have now advanced into clinical development. While the initiation of our first pivotal trial will represent an important milestone for Allogene, it represents just the beginning of our new product innovation cycle. We are now also preparing for the potential transition from a clinical stage company to a commercial enterprise. We have begun to build our commercial team, which will focus on product positioning, maximizing adoption, and ensuring access. We have expanded our Board with the appointment of Liz Barrett and Vicki Sato as Directors. Liz, currently the President and CEO of UroGen and former CEO of Novartis Oncology, is one of the rare executives with deep experience in the commercialization and launch of novel oncology therapies. Vicki, a former professor in practice of molecular and cell biology at Harvard University and President of Vertex, has an exceptional operational execution track record at several leading biotechnology companies. Our new Board members will be vitally important as we prepare for the potential launch of a first-in-class product, which brings us to manufacturing. From the beginning of Allogene, we have maintained that in-house manufacturing capabilities will be key to controlling our ability to deliver off-the-shelf CAR-T cell therapies faster, more reliably, and at greater scale to all patients. Later this month, we will host an event to inaugurate our Cell Forge 1 manufacturing facility in Newark, California. This facility is intended to house commercial manufacturing, analytical testing, formulation, packaging, and distribution of cell therapies, allowing us to optimize important steps in the cell therapy production process and enabling AlloCAR-T therapies to be available to patients within days. The rapid build-out and operationalization of this facility is another example of our team's determination to overcome the unforeseen challenges presented by a global pandemic. I thank them for their tireless efforts to bring this facility online in preparation for cGMP manufacturing in the second half of 2021. Positive phase 1 data from our ALPHA and ALPHA2 trials, as presented at ASCO, continue to validate our allogeneic platform, and we are aggressively advancing our pipeline with more confidence than ever before. We currently have five clinical trials underway, including two in our CD19 program, two candidates targeting BCMA including one that incorporates our novel TurboCAR technology, and one program in solid tumors. Our robust multiple myeloma program demonstrates how we have rapidly advanced and delivered meaningful progress across multiple strategic approaches to allogeneic CAR-T. Beyond our ongoing Universal trial, we were pleased that our first TurboCAR clinical candidate, ALLO-605, received US FDA Fast Track designation for the treatment of patients with relapsed and refractory multiple myeloma. We have begun dosing patients in phase 1 of the IGNITE study of ALLO-605. We also plan to confront solid tumors where the need is unquestionably high for new innovation. Our initial program targets CD70 and, earlier this year, we launched our traverse trial evaluating ALLO-316 in clear cell renal cell carcinoma. As we continue to treat patients, we plan to share initial data next year. Over the next 6 to 12 months, we expect to have an increasing amount of data across our multiple programs that will provide critical insights for optimizing the promise of our platform. Our unwavering execution has already allowed us to generate the largest set of clinical and translational data on AlloCAR-T therapies, which we will continue to deploy toward enhancing our product candidates. We are incredibly proud of what we have achieved thus far, made possible by our team's steadfast focus on making allogeneic CAR-T therapy a reality for patients. As an industry leader, we believe that we are up to this challenge and are grateful for your support as our vision for the future of allogeneic CAR-T therapies continues to materialize. I will now turn the call over to Rafael for a more in-depth look at our research and development activities.

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

Thank you, David. As you might anticipate, our research and clinical teams have been increasingly focused on advancing our portfolio of AlloCAR-T therapy. As David mentioned, we are on track with our plans to initiate a pivotal phase 2 trial for ALLO-501A in non-Hodgkin's lymphoma. We are encouraged by the data we reported in May for the ALPHA trial, which included a 36% complete response rate at six months in large B-cell lymphoma. We look forward to exploring whether the use of consolidation therapy might lead to even greater promise. Across all non-Hodgkin's lymphoma histologies, ALLO-501 demonstrated an overall response rate of 75% and a complete response rate of 50% in CAR-T naive patients. At the time of the data cut-off, the longest ongoing complete response was 15 months in both T-cell lymphoma and follicular lymphoma. Importantly, given our intent to move ALLO-501A into our pivotal study, we were also able to demonstrate comparably safety and efficacy to ALLO-501. Our approach to consolidation dosing is not currently available for autologous therapies, which traditionally eliminate previously infused T-cells. In contrast, ALLO-607 is capable of supplementing the activity of the first dose and allowing for expansion and persistence after the second dose. This is an important advantage, one we plan to fully investigate in both our CD19 and BCMA portfolios. We are currently finalizing our proposed plan to discuss proceeding into the phase 2 trial with the FDA. Given the positive feedback on the design for the registration of both ALLO-501A and ALLO-607, we intend to initiate the phase 2 portion of the ALPHA2 trial at the end of 2021. We are committed to advancing AlloCAR-T therapies across a broad spectrum of targets in both liquid and solid tumors. We received Regenerative Medicine Advanced Therapy designation from the FDA for ALLO-715 based on early clinical data and the potential benefit for patients with unmet medical needs. The UNIVERSAL trial continues to enroll patients to ALLO-715, including in combination with Nirogacestat, a gamma secretase inhibitor, and in consolidation therapy. We anticipate having updated data to share from the ALLO-715 monotherapy arm of our universal trial by the end of the year and we are on course to provide updates on ALLO-715 in combination with Nirogacestat in 2022. We are excited to be dosing patients in our IGNITE clinical trial with ALLO-605. Our first TurboCAR clinical candidate is part of our broader BCMA strategy. TurboCAR represents our next generation cell therapy with built-in cytokine signaling, eliminating the need for systemic cytokine administration and inducing broader immune system stimulation. With TurboCAR, we anticipate improving the potency and persistence of AlloCAR-T cells while delaying exhaustion traits that are key to our performance in both liquid and solid tumors. Finally, we are progressing in the dose escalation portion of the Traverse trial, our first venture into solid tumors with ALLO-316 in clear cell renal cell carcinoma. We expect to present data on this important program next year. I'd like to echo David in thanking you for your ongoing support. Our science and clinical teams are making consistent progress in advancing a promising portfolio of AlloCAR-T candidates for patients in need, something we could not achieve without the backing of the investment community. I'd like to now turn the call over to Eric for an update on our financials.

Eric Schmidt, Chief Financial Officer

Thank you and good afternoon. To open my portion of the prepared remarks, I'd like to highlight progress made in our joint venture with Overland Pharmaceuticals to develop and commercialize our AlloCAR-T therapies in Greater China, Taiwan, South Korea, and Singapore. In June, we announced the appointment of Dr. Shuyuan Yao as CEO of Allogene Overland Biopharm. Dr. Yao has over 15 years of experience in cell therapy and was most recently the Chief Scientific Officer and Head of Research and Technology Development at WuXi Advanced Therapeutics, where he led new technology acquisition, development, translation, and application. We are delighted to welcome Dr. Yao to the team and are already seeing his presence translate into meaningful activities as we seek to bring the promise of allogeneic cell therapies to individuals with cancer in Asia. In the second quarter of 2021, our research and development expenses were $52.3 million, which includes $10.5 million of non-cash stock-based compensation expense. General and administrative expenses were $18.8 million for Q2 2021, including $10.6 million of non-cash stock-based compensation expense. Our net loss for Q2 2021 was $70.9 million or $0.53 per share, including non-cash stock-based compensation expense of $21.1 million. As David and Rafael mentioned, we're on track to support five clinical trials during 2021, including the initiation of a pivotal trial for ALLO-501A toward year-end. We also look forward to initiating manufacturing at Cell Forge 1, our Newark manufacturing facility. Overall, we continue to expect our full-year 2021 operating expenses to be between $300 million and $330 million, implying a meaningful ramp in expenses during the second half of the year. This includes an estimated non-cash stock-based compensation expense of $80 million to $90 million and excludes any impact from potential business development activities. With that, we will now open the call for your questions.

Operator, Operator

Our first question comes from the line of Michael Yee from Jefferies. Your line is now open.

Unidentified Analyst, Analyst

This is Dennis staying on for Mike. I just have a quick question around the lymphoma data coming at year-end. Can you just comment on what type of data we will get specifically for consolidation? Can you help us kind of set expectations for that data relative to what we've seen at ASCO? Thank you.

David Chang, President and CEO

Hi, this is David Chang. I usually take a lot of questions, but much of today's discussion, I expect to be around CD19 and I'm going to ask our Chief Medical Officer, Rafael, to comment on the expectations of what data we will be presenting at the year-end.

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

Sure. So at the ASCO time point, we had 10 patients that received consolidation, and we were pretty encouraged by what we saw, with 80% of patients responding, with seven out of the ten in complete response. Importantly, we observed some conversions from partial response to complete response. This gave us the impetus to continue to accrue, and investigators have been enthusiastic about the ability of consolidation to boost the complete response rates, which can be a surrogate for longer durability. So, when we present towards the end of the year, we expect longer follow-up on those ASCO patients, as well as more patients who have continued to accrue across both ALPHA and ALPHA2 trials in follicular lymphoma and diffuse large cell lymphoma. The durability will be variable, but will include those patients we presented at ASCO, and I think there will be sufficient data to assess the merits of consolidation. I can't give you an exact number, but it will be more volume compared to what we shared at ASCO, considering we've continued this approach.

Operator, Operator

Our next question comes from the line of Salveen Richter from Goldman Sachs. Your line is now open. Please check your mute button.

Marc Frahm, Analyst

Thanks for taking my questions. I guess, on your comments about defaulting to using the consolidation dosing as your default assumption, would you expect the pivotal trial to be just a single dose? Do you think it will be single-arm, or might the FDA require a randomized trial for the consolidation piece of it to establish the utility of that second dose? Also, as you evaluate early data from the trial, what are your latest thoughts on the minimum difference in durable complete response rate needed to justify that second dose?

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

Yes. Those are very good questions. The fact that one gives more than one dose of a product doesn't necessarily lead to a mandate from regulators to test single-dose in a randomized fashion. There will be agency negotiations, but just a keen to what may happen with the vaccine or with any product that requires periodic dosing. The sponsor establishes the regimen and proposes that advancement. I don't foresee a mandate requiring us to establish whether consolidation is better than single-dose or not. Regarding the second part of your question, the evidence would be a composite of high complete response rates, durability of the responses, and we are accumulating more months on some of these patients. Additionally, we'll consider surrogates like minimal residual disease, persistence of CAR-positive cells, which we've seen after the second dose. We're excited about what we're seeing and believe we will likely incorporate consolidation in our pivotal trial but will continue to observe the data before making a decision.

David Chang, President and CEO

And Marc, this is Dave Chang. I can add that there will be many questions about the study design that we will discuss with the FDA. We will clarify exactly what will happen for our pivotal study after those discussions.

Luca Issi, Analyst

Thanks so much for taking my question and congrats on all the progress. Regarding Sage Therapeutics, they are planning to show some clinical data for CD19 CAR-NK cells in the next weeks. I wonder if you can comment on your expectations regarding that data and, more broadly, your latest thoughts on the debate between CAR-T cells versus CAR-NK cells.

David Chang, President and CEO

Our focus now is advancing our allogeneic CAR-T program ALLO-501A into the pivotal study. We have treated a number of patients and have a good understanding from the emerging data. The allogeneic cell therapy field is very active. Many companies are exploring off-the-shelf therapy with the potential for deep, durable responses. Companies are taking different approaches, and we eagerly await to see what those leveraging NK cells will provide in their data updates. We can have another conversation after the data presentation, which I believe is planned for August.

Salveen Richter, Analyst

Could you discuss CD70 and your clinical bar for your CAR-T program? Also, regarding BCMA, do you understand the optimization levers required to get closer to the autologous profile?

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

On CD70, the program began not long ago, and we need to treat patients and observe them before we can proceed with dose escalation. We're treating patients that have failed all pathway directed therapies. I think, we hope to see some early evidence of activity to show next year. It's premature to discuss the clinical bar, but complete responses or partial responses will be of interest. For optimizing BCMA, we are continuing dosing and have finished dose escalation. We are committed to advancing AlloCAR-T therapies, as we have received RMAT designation for the product, recognizing both its effects and the ability to treat quickly while avoiding bridging therapy – key features not seen in the autologous setting.

Unidentified Analyst, Analyst

This is Kelsey on for Michael. Building on the multiple myeloma side, what should we expect at ASH in regard to the consolidation regimen? Will there be a meaningful amount of patients to interpret single-agent versus consolidation? Will we see initial data points from the Nirogacestat combination?

David Chang, President and CEO

On consolidation, this started recently. There will be patients, but there may not be long follow-up. There will be more follow-up on the higher doses which we've noted are more effective. As for Nirogacestat, we are doing well but we believe data will likely be available in 2022, similarly for ALLO-605.

Jason Gerberry, Analyst

Thanks for taking my questions. Regarding BCMA, do you feel ready to determine whether a single dose is the right path forward at ASH, or will you focus on gamma secretase or TurboCAR programs for consolidation?

David Chang, President and CEO

We've set up our BCMA program differently than our CD19 program. There are different levers to test, including higher doses and stronger lymphodepletion. We’re concurrently developing the next-generation ALLO-605 that utilizes TurboCAR technology. We will take all the generated information into account, and I believe that in 2022, we could converge data that provides clarity for the path forward with our BCMA program.

John Newman, Analyst

A follow-up on ALLO-715 in terms of combining with Nirogacestat. Are there plans to consider multiple doses of Nirogacestat in the future?

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

Yes, we haven't specifically discussed our dosing strategy for competitive reasons, but our intent is to maximize the benefits of BCMA expression provided by Nirogacestat. We will be testing its dosing potential – it may take the form of several doses, which is currently under exploration.

Mark Breidenbach, Analyst

Just a quick one. I know the main focus of the upcoming pivotal trial will be on large B-cell lymphomas. But, do you plan to continue developing ALLO-501A in follicular lymphoma or is that off the table for now?

David Chang, President and CEO

We are currently conducting a comprehensive program that includes studies across various lines of therapy and histologies. There are second-line results that have come up, and we're thinking about follow-up trials for both the allogeneic 501A therapy in follicular lymphoma and other histologies, while focusing on third-line histology.

Reni Benjamin, Analyst

When we go to ALLO-316, why choose RCC opposed to other solid tumors? When developing ALLO-316, how are allogeneic cell therapies evaluated in combination with checkpoints?

David Chang, President and CEO

With ALLO-316 targeting CD70, there are several different development opportunities. CD70 is an attractive target in both hematological malignancies and solid tumors. We chose renal cell carcinoma as our initial indication, and we are interested in evaluating combined CAR-T therapy with checkpoint inhibitors. We will consider that as we accumulate safety and efficacy data for ALLO-316.

Raju Prasad, Analyst

I wanted your thoughts on the ZUMA-7 trial and the transformative results regarding how the B-cell landscape might change. How might this influence ALLO-501 in its pivotal trial, considering CAR-Ts are moving into earlier therapy lines?

David Chang, President and CEO

The ZUMA-7 trial highlights the capability of CAR-T therapy beyond the relapsed-refractory setting and demonstrates its effectiveness in earlier lines of therapy. This presents an opportunity for allogeneic to follow what was established by the autologous CAR-T therapy. The data emerging from ALLO-501 and ALLO-501A is consistent with what we see in collateral CAR-T, and it is why we are confident about the future of ALLO-501A and exploring its advancement into earlier lines of therapy.

Dane Leone, Analyst

I wanted to focus on the infection risk profile surrounding your data set in aggressive B-cell lymphoma. Specifically, could you remind us how the lymphodepletion works for the consolidation regimen? Additionally, what are your expectations regarding infection rates for that regimen compared to what was reported at ASCO? How could this factor into FDA discussions about clinical trial design?

David Chang, President and CEO

In terms of consolidation, we provide doses that are the same intensity as the 90 milligrams seen in a single dose, but those are split into two doses. We've been pleased with the tolerability of both initial and consolidation infusion, and there's been no significant class effects. Overall infection risk, looking at current patient data indicates rates similar to those found in the USPI of the approved products. The way we are utilizing ALLO-607 does not lead to higher infection rates, and we are optimistic that the split dosing may lead to lower rates as well.

Rafael Amado, Executive Vice President of Research and Development and Chief Medical Officer

Having treated over 100 patients across different programs, the clinical data supports our conclusions regarding the infection rate. The data doesn't indicate that our rate is any higher than what's been reported with other AlloCAR-T therapies.

Catherina, Analyst

For your solid tumor program with ALLO-316, how should we think of cell expansion data, and what time points can we expect for tissue biopsy?

David Chang, President and CEO

For ALLO-316, we monitor cell expansion closely, and while we haven't shared specific data yet, we see persistence extending to six months and beyond. We perform biopsies early to assess CAR presence and evaluate the tumor microenvironment. The data results will be part of our future presentations.

Asthika Goonewardene, Analyst

Regarding ALLO-705 and its combination with Nirogacestat, can you confirm if we are still expecting an early 2022 update, and what other measurements and data can we anticipate for the first look at this combination?

David Chang, President and CEO

While we mentioned the data will be in 2022, specific timelines will depend on the accumulation of meaningful data. We're looking at BCMA expression, soluble BCMA, MRD levels, persistence, and capacity to address extramedullary disease as significant measures in the early stages.

Kalpit Patel, Analyst

In the renal cell study, at what dose level should we expect to see clinical activity signals based on preclinical modeling? Are the lymphodepleting doses in renal cell studies consistent with those in liquid tumor trials?

David Chang, President and CEO

The predictability of results in the CAR-T field is complex. We'll observe how the clinical study unfolds. It may vary between the first and second dose levels, and we're planning to proceed with three dose levels for the study. As for lymphodepletion strategy, we're keeping that information relatively private for now. But expect data presentation for ALLO-316 in 2022. It’s an exciting time for Allogene as we look ahead to two near-term events that begin the journey towards commercialization, the planned initiation of our first pivotal trial and taking control of our manufacturing with Cell Forge 1, our first world-class facility. Thank you for joining us today and for taking part in our journey to define the future of allogeneic cell therapy.

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.