Conference Transcript - ALLO 2026-06-03

Roger Song, Analyst — Jefferies

Good morning everyone Welcome to Jeffrey 2026 global healthcare conference. My name is Roger Song senior analyst covers me cap biotech It is my pleasure to have a five-star chat with our next company allergen therapeutics. We have a CEO David Chen and then CMO back Roberts. Welcome gentlemen.

David Chen, CEO

Thanks Thanks for having us here, and I was sort of correct Zach Roberts He's the CMO right now, but he's the new incoming CEO.

Roger Song, Analyst — Jefferies

I want you to make that introduction. Yes Awesome since then David why not you give us a state-of-art two minutes about Allergy and then we definitely have a lot to talk today Yeah, so two minutes the way that I talk is relatively short time So I'll try to be as succinct as possible.

David Chen, CEO

I just like to point out one thing that as I'm sitting here as soon-to-be outgoing CEO Allergen was launched in 2018, and it was launched at the Jeffreys Healthcare Conference. Different analyst, but still Jeffreys. I think that also brings out a point that in a course of organization, I always view that transition can be very positive. I've been at Allergen for eight years, sort of growing what was a nascent concept of allergenic cell therapy going through some growing pains and understanding the science and when I think about you know 2026 where we stand the strategy that we set out about three years ago instead of pursuing relapse refractory setting bring the allogeneic car key not just trying to differentiate that from the science perspective but from the clinical perspective moving into the earlier line now that we have seen the interim fertility analysis of MRD clearance rate differential that we have released earlier I would say that strategy is panning out and alpha 3 study you know at this point looks extremely good not only that we also have launched our autoimmune program and we have provided a little update in our latest earnings call where we have indicated that we're beginning to see you know clinical responses in the our 329 program so you know pipeline moving along very well and also we have recently financed you know taking away any kind of financial overhang you know giving us a runway to 2029 so the company is in really good place so with that I think you know I feel that the right time is now to make the transition I mean, Zach was brought in specifically not only to lead the clinical programs, but eventually as my successor, I've known Zach ever since he entered industry, and we have worked very closely. And I think this transition is very timely, and I think it's going to be very good for allergen. And also, I'd like to point out, I'm not, you know, stepping away. I will continue to be on the board and will be very involved with the company going forward.

Roger Song, Analyst — Jefferies

Excellent. David, you absolutely will be missed, but you're not away, right? So you're still with Allergy, and then obviously you're in good hands with VAC. And then maybe VAC, do you want to take a minute to, you know, what's your history with Allergy with David and then with the company?

Speaker 3

Yeah, so David's absolutely correct. He actually helped recruit me out of academia to Amgen, and then I followed him to Kite. So I've been working directly with David Ari and Christine Cassiano, who leads our IR team, for 11 years now. I joined Allogene in 2023 and have had a really excellent time running the R&D team, and I'm very excited to take over for CEO.

Roger Song, Analyst — Jefferies

Awesome. All right. So the biotech company, obviously, the top leadership is paramount. And then also you have a very impressive platform. And then recently, I think David just mentioned that you reported some very important data from CMOSEL and then some of the other early pipelines. So why not we take a couple of minutes to talk about the CMOSEL as the focus. So, what we have seen for the interim read-off, for the MRD-negative, for the LBLC, and then how we, you know, how this will translate into the EFS later next year?

Speaker 3

Yeah, so, I mean, we know a growing amount about MRD and its relationship to EFS. This has been shown now in lymphoma, as well as across multiple other solid tumors and other clinical settings. And so the results that we showed in April from the interim futility analysis, which indicated that Semicel, when delivered as a consolidation treatment for patients who remain MRD-positive after first-line treatment for large B-cell lymphoma, we were able to clear 58.3 percent of those patients MRD, moving them from MRD-positive to MRD-negative. And based on historical data from lymphoma using the very same test that we're using in Alpha-3, a test called phased-seq, we do expect that this is likely to translate into a strong EFS. For example, in the TRANSFORM study of Brionzi in the second line, they illustrated a 24% improvement in MRD clearance between the CAR-T arm versus the standard of care arm. And that translated into a 63% improvement in the risk of EFS in the final analysis, also translating to a very significant, about 27% delta in the plateau of those two curves. So highly prognostic for these patients. And so, you know, as David mentioned, we think that alpha-3 is in a very good place right now, and it's really on the strength of that interim data that we believe that we are headed towards a good outcome for this trial.

Roger Song, Analyst — Jefferies

Yeah, so when we assume the coverage about the allergy a couple of months ago, so we went through all the literature, tried to link the MRD negativity or the delta, the achievement to the EFS. We do see that, but we have to say, you are still the first one to demonstrate in this setting with this modality. So inherently, you have some risk and certainty there, but I think we have enough to say you we have a good chance to be able to achieve that. Did that resonate with you in terms of the risk and some of the evidence?

Speaker 3

Absolutely, so I think that the Alpha-3 study is really the culmination of quite a number of years of us learning how best to use CAR T-cells in patients with cancer. We have known for quite a number of years, based on a growing body of evidence, that treating patients with low disease burden, even with autologous products, tends to lead to better outcomes, both on the safety side as well as on the efficacy side. So as the MRD data itself was beginning to mature and we could see that MRD status at the end of treatment really did carry a very strong prognostic sign in that if you're MRD positive, you're likely to progress. If you're MRD negative, you're likely to be cured. That gave us an opportunity to treat patients at the lowest possible disease burden, and that's exactly what we're doing in Alpha 3. So while you're correct that this is the first time someone is using CAR T-cells as a consolidation, it really is a natural outgrowth of some of the observations that we've been making as a field for the last several years.

David Chen, CEO

And, Roger, it will be a miss if I do not point out, and this is really brainchild of what Zach has done, you know, the uniqueness, I mean, the innovation that the alpha-3 brings. Frontline, you know, treatment of large B-cell lymphoma, that is a very well-established treatment. About 60% of the patients do well with a standard treatment. What we are doing is trying to address those 40% whose needs are insufficiently met with existing treatment. Rather than just adding to the existing treatment, which obviously could potentially create toxicity, but it's really over-treating 60% of the patients who do not need a treatment because they do well anyway. So that's where the MRD is coming in to identify those patients who are likely to relapse. And the ultimate goal is to improve the cure rate of the frontline treatment with one additional cycle of consolidation. This is a very innovative concept. But frankly, the concept of consolidation really came from the treatment of leukemia and lymphoma in the early days. From the high-level thinking, this is why the study resonates so well with the key opinion leaders as well as the study investigators. And another thing that we felt was very important is that we know the transformative potential of the CAR-T, the curative potential. But one of the limitations of CAR-T being widely used is its manufacturing and also the logistics that comes with the manufacturing and administration, which limited the use of CAR-T to specialized centers. Alpha-3 study is really trying to break that barrier by taking the study into the community-based cancer centers where patients are being treated and really taking the treatments to patients zip code and thereby making the treatment more widely available. And Zach mentioned, I mean, in the futile analysis, another thing that was extremely interesting and we believe it is very important is the safety profile that we have seen. Most patients were treated as an outpatient and was managed as an outpatient. And it really gives us, you know, good initial proof of concept that this treatment can go to the community-based cancer centers where the patients are cared for.

Roger Song, Analyst — Jefferies

Yep, that's right. By the way, so investors, sometimes they ask me or maybe they have some question related to we haven't have any, like, consolidation for LBCL, which may be true because it's not in the standard care. But I think that, you know, some of the, you know, years ago, they do have some, you know, transplanting for the consolidation therapy. So the outcome is kind of a mix. So can you give us some background? So how should we think about that translation to this, you know, cell therapy compared to the past kind of consolidation for LBCL?

Speaker 3

So for any consolidation strategy to be useful, and consolidation is the term that we use for adjuvant therapy and hemolygnancy, We've used it in acute leukemias and other, in myeloma, we use transplanted myeloma. But in solid tumors, we use adjuvant therapy all the time. So those are the same two concepts. For adjuvant or consolidation treatment to be useful, you need two things. You need, number one, an accurate way to identify high-risk patients. And number two, you need an efficacious treatment. And so in those historical experiences in LBCL, they tried to use bone marrow transplant. However, they did not have a very good way at selecting the patients who would benefit the most from that consolidation therapy. So while there was a trend towards improvement in adding bone marrow transplant to patients with LBCL who've completed frontline and are in remission, it was not statistically significant. However, in a post hoc analysis, they went back and looked at the very highest risk patients and there they did see a signal there that was beneficial. So that is additional evidence that this strategy of selecting high-risk patients and then using an efficacious therapy could be beneficial. In alpha-3, we've improved both of those variables. So first, we're using MRD at the end of treatment. So effectively, we are finding residual tumor in these patients. So it's not a matter of risk. It's really a matter of was this patient cured or were they not? And secondly, we're switching away from a chemotherapy-based treatment, which is what autotransplant is, into CAR T cells, which, of course, we all know are highly efficacious for large B-cell lymphoma. So in alpha 3, we've optimized both of the two variables that you need for a successful consolidation or adjuvant strategy.

Roger Song, Analyst — Jefferies

Okay, good. All right, and then the other thing is, you know, people kind of keep asking, and I believe you have a reason to do that, is you take a snapshot of the MRD negativity a couple weeks ago, and then how much the kinetics we know, and how do we expect the kinetics going to change over time? Will be that even more favorable as they, you know, keep this down and then keep down, or the delta will continue to be wider?

Speaker 3

So, just to remind everybody, the Alpha-3 is designed with, it's a randomized study and the patients are either allocated to the standard of care, which is observation, so no further treatment, we just watch these patients in the usual way, versus a dose of Semicel following flu psi. And in the data that we released last month, or in April, we looked at the kinetics of of MRD clearance in addition to the overall status of the clearance. So the data that I cited a moment ago was the MRD status at the last assessment that the patients had undergone, but we also paired that with just a snapshot at the first measurement of MRD after randomization, the day 45 MRD assessment. And at that day 45 time point, we saw a median decrease in the semicell arm of 97% of the circulating tumor DNA. And in contrast, in the patients in the observation arm, we saw a median increase of about 27%, sometimes referred to as molecular disease progression. We expect, when you give a single infusion of CAR T cells, that most of the tumor killing is going to occur very quickly after that infusion, beginning probably within the first few hours and maybe lasting for the first week or two. Even in the relapse refractory setting, most patients who achieve remission do so by day 28. So, it was very reassuring to see in this analysis that, in fact, most of that tumor clearance was occurring by the first time that we measured MRD. We expect, as that first time point illustrated in the observation arm, that the patients who do not receive any further care will continue to have molecular and eventually clinical disease progression. That is the natural history of patients who are MRD positive after their first line treatment. So, we do expect those curves will continue to separate with time.

Roger Song, Analyst — Jefferies

Yeah, they don't get anything, and then just observation, and then you're expecting. Maybe early on, I would say some risk, they will get to MRD, but the majority of them will lose MRD if they are not getting treatment over a long time, so that's the delta will kind of get wider.

Speaker 3

Correct, yeah. With no further treatment, we expect that MRD to become clinical progression.

Roger Song, Analyst — Jefferies

Yeah, and then in terms of the EFS, we know the current guidance is you're going to take an intern look, mid-next year. So what is the statistical assumption there, and I don't know if you disclose or high-level disclosure about that, and then what will be considered as a clinically meaningful EFS delta at the intern look?

Speaker 3

So we've recently disclosed that the overall target hazard ratio for the study, not at the interim analysis next year, but at the primary analysis, which is currently scheduled for mid-2028, we expect that the, we've designed the study statistically to illustrate a 50% reduction in the risk of EFS events, so a hazard ratio of 0.5. For the, specifically for the interim EFS analysis that we have planned for middle of next year, it will be conducted on a smaller number of EFS events, so that does change a little bit the powering of that analysis. We haven't gone into the details of what that could be, only to say that based on the MRD results that we showed at the futility analysis, that, you know, we think that that is an interim analysis on EFS that could be positive. Of course, we wrote it knowing that we had a chance of it being positive, but we were pretty encouraged based on the results that we saw in April.

Roger Song, Analyst — Jefferies

I have to say I have a couple of emails that reach out to me and say, based on this MRD negative negativity data, interim going to hit, but, you know, we'll see. So I don't want to set the expectation too high, but I think that's the chance to show the benefit at the first interim next year, and then the final result, 50% have the ratio, that's clinically meaningful, I think, you know, we just come back from ASCO, I think, 50% risk reduction in the setting is a pretty...

Speaker 3

Absolutely, and as David very rightly pointed out a moment ago, the safety profile here is really you have to take that into account right these patients are in remission they're doing well they're probably as healthy as they've been since they were diagnosed with with lymphoma and so having a product that is very well tolerated can be administered as an outpatient the patients generally did not need to be readmitted to the hospital fact there were no treatment related hospitalizations in that internet futility analysis no tocilizumab no steroids were given either before or after the semicell. That safety profile means that getting, hitting a hazard ratio of 0.5 or better is absolutely highly clinically relevant because it's, you know, it's letting these patients get into that cured category with really very little risk of toxicity.

Roger Song, Analyst — Jefferies

Got it. Fast forward, let's say EFS hits either at intern or final. You can potentially file for approval. So, how big the market it is, and then just walk us through the TAM and the haircut there, and then maybe ask another question, a follow-up question after.

Speaker 3

Yeah, so there's quite a number of patients with who are treated for first-line large B-cell lymphoma, somewhere in the neighborhood of about 30,000 diagnosed in the United States each year. Most of those patients will undergo curative intent for first-line therapy. So we estimate that the the TAM here is about five billion dollars between the US and the EU five Now one of the questions that we often get is how prevalent is is the MRD testing? Today and how how prevalent do we expect it to get right now? It's probably around one in five one in four patients undergoing MRD testing routinely at the end of frontline treatment primarily that's driven by doctors and patients desire to understand their prognosis better than what can be offered by the current PET-CT disease assessment approach. We know from lots of historical data that MRD status, especially MRD negativity, does significantly improve the quality of that prognosis. So most of those tests are being ordered for that now. Currently, there is no approved therapy that can be administered based on the MRD test result alone, and that is in fact what Alpha 3 is designed to do. So Alpha 3, if positive, will be the first, Semisol will be the first drug that could be used in response to an MRD positive result. So we do expect, and we're seeing now, quarter over quarter growth in MRD utilization as it stands today. We have done some fairly extensive market research already, talking to KOLs, as well as community oncologists, about 30, in a blinded survey using blinded product profiles. And in that survey, we noticed that the MRD expectation around MRD utilization will actually jump to probably 75 or 80 percent once there is an opportunity to actually respond to the MRD positive result. One of the things that's holding docs back now is, what do you do with a positive result? With in the context of an approved agent that question goes away. So even with the haircut around MRD utilization we will have a Sort of competition free opportunity here We expect that that the market opportunity for semiselle could be about two and a half to three and a half billion dollars between the EU five in the u.s. At the time of launch Got it.

Roger Song, Analyst — Jefferies

Okay, and then the So, how about the MRD testing as a positive in that population? What's the assumption there? And then one of the questions we're getting is the first line, LBCL, may evolve over time with, you know, we know that AutoCartier is doing this, and then maybe TCL Engager, maybe some others, they're doing this. How does MRD positivity will change? Maybe the quick one is, just want to highlight this, your alpha-3, if it's positive, the potential label will be pretty unique. You're going to, after any first-line treatment, and then as long as you're positive on the MRD, you can use CMA cell. Is that true?

Speaker 3

That's how the study is written currently. So any standard regimen, right now that's RCHOP in its variants, or polotuzumab, RCHP. Those are the two regimens that are currently approved for use in first-line LBCL. So we obviously haven't had any label negotiations yet. We're still running the study, so we don't know exactly how that's going to look. But I think most likely it would be after any standard front-line regimen. If you remain MRD positive, then you would be eligible for Semicel should Semicel be approved in this context. So first, the question around, you know, what does our sort of market opportunity or share of market in that first-line consolidation setting. We expect, based on that same market research that I just mentioned a moment ago, that about 50 to 70 percent of practitioners would use SemiCell to respond to an MRD-positive result. So we feel pretty good, and that's probably a fairly conservative estimate. So that's how we get into that $2.5 to $3.5 billion market opportunity. as pertain to the second question that you asked around what does the evolving first-line landscape mean for that market opportunity so there was some data at ASCO just this past weekend both some pivotal data with the CD19 monoclonal the Tathalene regimen plus our chop as well as some some new data cuts with the bispecifics and the golcat amide in all three cases these These are all proposed to be first-line regimens. There's ongoing phase threes with TCEs as well as the Golcadamide plus RCHOP. In all three cases, you know, clearly there seems to be an improvement on the efficacy to RCHOP. It's I think up for discussion whether RCHOP is the best comparator in that context given that Pola RCHIP is becoming more and more prevalently used in this context. But secondarily, there's, you know, I think some safety concerns with those regimens and And whether a significant fraction of doctors and patients would opt for a more intense and more toxic regimen at diagnosis, given the fact that RCHOP or polar RCHIP is actually really good at curing patients with lymphoma, even in the highest risk subsets, close to 50% of these patients are going to be cured with that regimen, which can be delivered safely as an outpatient. So the requirement for inpatient dosing, CRS rates of 25% to 40% in some cases, high rates of febrile neutropenia and infections, these are all, I think, would be concerns for doctors and patients. So knowing that, you know, you could treat with an RCHOP or a Polar RCHIP, get to the end, ask the question, did this regimen cure me of my lymphoma using the MRD test? And if it didn't, to then have the option for Semicel, I think, would be a very attractive option, even in the context of those frontline approvals.

Roger Song, Analyst — Jefferies

Yep, got it.

David Chen, CEO

I mean, you know, just to reiterate my points, RCHOP takes care of about 60% of patients. And the beauty of alpha-3 study is that there is no over-treatment. Essentially the patients who are destined to do well, you know, we do not touch them. I mean, we identify those who have a residual disease with an MRD test and they are the target of our population. So I think in terms of healthcare utilization, this is probably one of the most effective way to not only, you know, develop the drug, but in the future utilization, you know, taking into consideration about not over-treating and only treating the right, you know, group of patients who need some treatment.

Roger Song, Analyst — Jefferies

Yep, got it. And maybe just a follow-up on this. Right now, our chart, about, you know, 60 percent, they're cured, MRD negative, and then 40 percent is positive. And then how should we think about those, you know, potential new first-line treatment? and with that MRD positivity will change. But I think on the other side is, I think that you mentioned, David mentioned as well. So those are toxic drugs. And then they may not, you know, kind of overtreat. Maybe they don't, they won't use that. Weighted kind of MRD positivity may be much lower than if everyone used the first line TCE.

Speaker 3

Yeah, I mean, I think we have to wait for the pivotal results. I mean, we have the tafacinamab and lenalidomide data from this weekend, and that was published as well, so we can look at that carefully. I would say that was a modest improvement over our CHOP on the PFS side, similar to what polituzumab and the Polarix trial showed, about a 6% or 7% improvement to PFS at two So, you know, I think advances are important for patients, and having more frontline options is a good thing. But I don't see this or even the TCEs significantly reducing that market opportunity in the number of patients who are MRD positive at the end of treatment. It's just between the toxicity of those regimens, their complexity, as well as the reliability of our CHOP, you know, the likelihood of there being a significant reduction in the rate of MRD positivity in patients with LBCL is pretty low.

Roger Song, Analyst — Jefferies

Excellent. We did spend, you know, a decent amount of time on the CIMA cell, which is your lead program. But just as David mentioned earlier, just a recent earning, you released some early look of the autoimmune CO2-9. So how should we think about the next step from here? I know it seems you want to move forward with additional dose in the patient, and then how the strategy over there in terms of indication selection and then also the expansion into the late-stage development.

David Chen, CEO

Yeah, so the program that you're talking about is our Allo329. It is highly differentiated product. It's a dual targeting. The target for the Allo329 is CD19 and CD70 with the idea that not only we sort of tackle the B cell dysfunctions that contributes to autoimmune disorders, but also targeting CD70 positive cells that underlie pathogenesis of the autoimmunity. So that's a very differentiated program. And, you know, we sort of intended for the product to be used with a low lymphal depletion or possibly even with no lymphal depletion. So we've been conducting the study for the past six months since we first enrolled the patient back in November. However, you know, I have to say the investigator enthusiasm for that study is extremely high. I mean, we were able to enroll nine patients, essentially completing first two dose levels within a matter of four to five months. So the study is enrolling and we are very excited. And, you know, we are not quite ready to, you know, fully analyze and, you know, detail the data but early signs that patients are responding clinically to the point that we are constantly getting calls from our investigators about you know we are seeing something that we are not expected to see in this patient population so we are very excited about it studies enrolling extremely well and the next update which we are planning towards the fourth quarter is really going to not only, you know, carry the longer-term follow-up on patients who have already been treated, but patients who are also being treated now at the more higher cell dose level. I mean, we so far have tested 20 and 40 million, and we're testing 80 million cells, which, you know, is in the range that we may start seeing some meaningful effects. So we are very excited about the program, so stay tuned.

Roger Song, Analyst — Jefferies

Awesome. Yeah, this is certainly a huge optionality, and then, you know, not in the current valuation for the allergen at this moment. Maybe just the last 30 seconds, what's the cash runway, and then what is the most important catalyst for the rest of the 2026?

David Chen, CEO

Yeah, so with our recent financing, you know, our cash runway goes into the first quarter of 2029. So that covers not only the interpret analysis that we have talked about in the semester alpha-3 study, but also study completion and the primary analysis and possibly even VLA submission. So I would say that our cash position is really strong. And what's really left is a stay on course, execute alpha-3 study, deliver the data. And, you know, probably the biggest unknown is what we will see in Alpha 329 study. If autoimmune program gives a strong indication, that's going to be another tremendous opportunity where we can advance the allogeneic CAR T for the patient care.

Roger Song, Analyst — Jefferies

Excellent. Thank you, everyone, for listening and watching, and thank you, gentlemen, for joining us for the conference.

David Chen, CEO

Thanks, Roger. Thanks for having us here. Thank you.